So social agendas will be another form of agency cost?

Exactly. Social agendas will be agency costs just like bloated executive compensation or cronyism. Some social agendas with broad popular appeal will be advanced through the proxy exchange. Some CEOs will still be able to secure perks for themselves. Agency costs aren’t going to go away, but the proxy exchange will use competition to limit them, ensuring that shareholder value is enhanced.

Also, the agency costs that remain will tend to be more palatable than those that exist today. Most people will agree that, say, diverting corporate resources to ending the exploitation of child labor is a more desirable agency cost than is paying some CEO excessive compensation. Indeed, when we describe social agendas as agency costs, it is only to explain their economic role on the proxy exchange. The description should in no way detract from the merits of any social cause that may be promoted through the proxy exchange.