Most fund managers are cowards. They always try to stick with the herd, and they never want to stand up for anything. And the bigger and more blue-chip their companies, the more spineless they are.
At least, that's what the cynics say. Are they wrong? I hope so. And some of the biggest names in the fund world, including the folks at
, have just been given a golden chance to prove it.
The scene: Google's annual stockholders' meeting in Mountain View, Calif., on May 10.
If you remember,
management came under fire a couple of years ago for giving in to China's Communist dictatorship on censorship. In return for being allowed access to the country and its vast market, Google agreed to censor the Chinese version of its Web site to exclude politically sensitive subjects.
Enter New York City comptroller William Thompson, who is taking a stand for freedom. Thompson is overseer of the big public pension funds in the city, including the police, firefighters and teachers pension money. That gives him a fair amount of clout at stockholder meetings. Total assets under Thompson's management: $105 billion.
Let's concede that Thompson may have noticed what taking on Big Finance did for Eliot Spitzer's popularity. There's nothing wrong with that. And this year he is proving an activist shareholder at a number of big companies.
Among them, Google.
Thompson wants the Internet search giant to fight for freedom of speech by refusing to censor itself and by using "all legal means to resist demands for censorship" from others. In other words: If you want us to block sites, take us to court and force us to do it.
But it's not just about China. Thompson's motion names Belarus, Burma, China, Cuba, Egypt, Iran, North Korea, Saudi Arabia, Syria, Tunisia, Turkmenistan, Uzbekistan and Vietnam as countries where the government seeks to restrict citizens' access to information.
Oh yes, and it's a live issue. Thailand and Turkey took censorship steps against Google's YouTube site just last week. Thompson also wants Google to protect those of its users who live in Internet-restrictive countries, where "political speech can be treated as a crime by the legal system," by storing their data on servers abroad.
It's not too much to ask. Even the motion calls these "minimum standards" to help protect freedom of access to the Internet and couches the demands as a "request" to management. Thompson wants the company to act responsibly and within the law.
Nonetheless, Google management is opposing the motion and urging shareholders to back them up. Top dogs Sergey Brin, Larry Page and Eric Schmidt have made more than $30 billion among them in less than 10 years thanks to freedom here in America. But when it comes to exporting that freedom, forget about it.
It's an easy way for fund managers to take a stand. The motion can't pass anyway because the managers control the voting stock, so it's a free vote in favor of freedom of speech, privacy and legal resistance to oppression.
What American fund manager could refuse to stand up for those?
We're about to find out.
And it just so happens that this is going to be a poll of the biggest names in the business, including Fidelity, American Funds, Vanguard, Legg Mason and Janus, because they're all among the top owners of Google.
The stance of Fidelity, where company boss Ned Johnson is chairman of each fund's board of trustees, should be especially interesting. Not only is his company based in Boston, one of the historical cornerstones of American liberty, but the area is also home to institutions such as Harvard and MIT that exist only because of freedom of thought, speech and knowledge.
None of the fund management companies would comment on Thompson's motion when I called on Thursday. American Funds, where funds are run by different teams, would not even say who would make the decision about how it would vote. The company's
Growth Fund of America (AGTHX) was the biggest mutual fund investor in Google as of Dec. 31, according to public filings.
Let the record show that Growth Fund of America's proxy voting report last year was signed by James F. Rothenberg, fund president and principal executive officer.
It's too easy to see these proxy votes as a technical issue of little interest to anyone outside corporate governance circles. They're not. Big corporations wield an enormous amount of power over our society and over the world. And one of the few groups of people who can influence those corporations to act responsibly is the fund managers who control the stock.
On May 10, those managers have an opportunity to cast a clear vote. Thompson's pension fund holds only about $330 million worth of Google stock. Fidelity, the biggest outside shareholder, holds about $12.1 billion. American Funds has another $6 billion. If they vote for freedom, it would be a shot heard 'round the world.
Will they? Stay tuned to find out.
In keeping with TSC's editorial policy, Brett Arends doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Arends takes a critical look inside mutual funds and the personal finance industry in a twice-weekly column that ranges from investment advice for the general reader to the industry's latest scoop. Prior to joining TheStreet.com in 2006, he worked for more than two years at the Boston Herald, where he revived the paper's well-known 'On State Street' finance column and was part of a team that won two SABEW awards in 2005. He had previously written for the Daily Telegraph and Daily Mail newspapers in London, the magazine Private Eye, and for Global Agenda, the official magazine of the World Economic Summit in Davos, Switzerland. Arends has also written a book on sports 'futures' betting.