So the boards don't have totally unchecked power. But despite that policy being 22 pages long, it doesn't pay any attention to companies' individual circumstances.
Vanguard's voting policy doesn't have an opinion on EA's lootboxes, or Intel's 18A node, or Disney's approach to Star Wars.
You can’t easily dismiss the problem by pointing to history.
In those historic times, stock ownership was much more restricted to rich investors (not a good thing) who are far more opinionated in AGMs (a very good thing) than some faceless index fund or Robin Hooder who doesn’t even realize they should vote at all.
So boards used to perform but they also used to have pressure to perform. Will they still perform on autopilot? Maybe, but chaos always wins unless there’s a forcing function (your votes at the AGM).
> So when a company's ownership reaches 50%+ of index funds
well luckily, this isn't the case. And most index funds do ask index fund holders for the vote, tho not individually. But if the majority holders end up not following the board recommendations, the index fund would vote that (at least with vanguard - not sure about others).
Great, that. However the point of capitalism is that people who know the business would invest and make good decisions. In the situation that index funds hold most of the capital accountants will be making all decisions.
The point of capitalism is that the businesses that have people who know the business and make good decisions eventually win out over the businesses that don’t.