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This Article focuses on the power and corporate governance significance of the three largest index fund managers commonly referred to collectively as the "Big Three." We present current evidence on the substantial voting power of the Big Three and explain why it is likely to persist and, indeed, further grow. We show that, due to their voting power, the Big Three have considerable influence on corporate outcomes through both what they do and what they fail to do. We also discuss the Big Three's undesirable incentives both to underinvest in stewardship and to be excessively deferential to corporate managers. In the course of our analysis, we reply to responses and challenges to our earlier work on these issues that have been put forward by high-level officers of the Big Three and by a significant number of prominent academics. We show that these attempts to downplay Big Three power or the problems with their incentives do not hold up to scrutiny. We conclude by discussing the substantial stakes in this debate--the critical importance of recognizing the power of the Big Three, and why it matters. [ABSTRACT FROM AUTHOR]

Managers' pay, and the way it is determined, can have an important impact on the success of firms, and even of whole economies. While there is a rich literature exploring these issues in the for-profit sector, managerial pay at nonprofit firms has received little attention. Yet nonprofit organizations suffer from agency problems that are similar to, or perhaps even more severe than, those observed at for-profit companies. Accordingly, this Article explores the implications for nonprofit governance of a world in which "managerial power" can affect nonprofit pay setting. This Article develops the theory and provides support in the form of original empirical evidence based on data from a large panel of colleges and universities collected across a ten-year period. Our findings support the hypothesis that donors with less leverage suffer from significant agency costs in setting president pay. For example, we find for the first time evidence of an otherwise counterintuitive negative association between the fraction of university revenue provided by current donations and president compensation, which we suggest shows that schools that are less dependent on donors are freer to set high pay. We discuss the implications of these findings for the regulation of nonprofits and for a broader understanding of the pay-setting process at for-profit as well as nonprofit organizations. [ABSTRACT FROM AUTHOR]