So, do we really want to put substantial effort into bringing individual investors to the corporate ballot box? I think not, only because these days it’s just not realistic. The subject has attracted significant airtime lately. The SEC has a website explaining the rights of individual shareholders, and how retail investors can participate in corporate votes. Broadridge, the principal service that brokers use to communicate with customers on proxy matters, has one, too.
Some corporations also have this sort of outreach. Boeing sent separate mailings to investors urging them to vote in the upcoming annual meeting. Prudential will exchange a free tote bag for votes at theirs.
Furthermore, services have emerged in the past year or so to help individual investors work through the thick fog surrounding corporate votes. MoxyVote, ProxyDemocracy, and TransparentDemocracy will vote an investors’ shares following standard guidelines, either provided by the investor or pursuant to the recommendations of a proxy advisory or fund. As MoxyVote implores, “Stop throwing away your proxy ballots.”
These efforts have led to a couple of fundamental reform proposals that would facilitate greater retail investor voting. Client Directed Voting, from Frank Zarb (Chairman of NASDAQ during the late 1990s boom, and later interim CEO at AIG) prompted spirited debate. Mark Latham, a noted activist thinker and member of the SEC’s new Investor Advisory Committee, counters with the FAVE system.
Why all the hubbub? Clearly, retail investors participate in corporate votes at abysmally low levels. For starters, individuals own only about 30% of all equity shares in the U.S., according to the latest Federal Reserve figures. In his CDV essay, Frank Zarb estimates that only 20% of these investors then participate in elections, so perhaps 6% of votes cast come from individuals. And, these voters supported management 90% of the time, which is possibly one of the results that all these efforts seek to change.
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