Individual investors are losing their ability to vote in important shareholder matters, either in person or through proxies. The reason for this lack of representation has nothing to do with shady business practises or secret votes, which might be more interesting. It's just that fewer shareholders choose to send back their proxies.
This lack of return makes the voting process hard for companies that want to move forward. After all, a quorum, which is the number of shareholder and/or proxy votes needed to do business, must be reached for voting to take place (typically a majority of the shareholders). The Ten-Day Rule is often used when there aren't enough votes to reach a quorum.
The Ten-Day Rule lets brokers vote proxies for shareholders who haven't sent in their votes ten days before an election meeting. This rule can only be used for everyday things, which leaves a lot of room for confusion that is quickly being cleared up and fixed.
Shareholders have to vote on issues that don't come up very often, like equity compensation plans. Soon, Election Contest Rules may be put in place that would make shareholders, not brokers, vote in director elections that are controversial or when there is a recommendation for an Election Contest.
Companies have a lot of trouble when individual proxies aren't returned and the Ten-Day Rule doesn't work. Individual investors and brokers tend to vote in favour of the company management, but institutional investors don't always have the management's best interests in mind. They always give back their proxies, though. This can give them too much power in voting and give them too much control over the companies.
Why do individual investors care so little about voting?
There are a lot of possible reasons why individual investors aren't sending back as many proxies as they used to. It's possible that these investors don't realise how important their votes are. They might be too busy with paperwork or short on time to care. They might be worried that their votes could hurt their standing in the company, or they might be concerned about their privacy in other ways.
Many people might find it hard to understand what the ballots say because they are written in jargon. Some people might think that someone else would do the work for them. There are as many different reasons for not sending in proxies as there are shareholders.
How to Make Proxy Returns Better
What can be done to get individual investors to have someone else vote for them? Communication and education campaigns that are well thought out and designed to get shareholders to act can help.
Plans need to be made to teach company shareholders how important and valuable their votes are. Companies need to get this message across to individual investors in a way that is inviting and uses language that is clear and to the point.
The key to getting individual investors involved in the voting process is to get them to want to read and learn about the value of their vote.
Finding Help
There are resources available to help educate and inform individual investors about what's going on in a company. Both shareholder services agents and transfer agent companies, like First American Stock, help shareholders and the public companies they invest in to talk to each other and understand each other better.
After all, in order for proxy solicitations to work, both shareholders and companies need to be able to talk to each other in a clear way. This is where a good transfer agent can be very helpful. When transfer agents listen to a company's unique problems and concerns, they are more likely to be able to explain them to investors better and get a better response from them.
That's why it's so important to choose a transfer agent who will pay close attention to the details of a company's requests and make sure they are handled quickly and professionally. This kind of friendly and personalised service is good for the business, and it will also be good for the shareholders.
Transfer agents will be hired by companies to keep track of who owns shares and help with their annual proxy solicitations. Making sure that shareholders know and understand ballot issues, upcoming management elections, and other issues will increase the value of their votes.
This is a very important issue for the future of businesses, since when individual investors don't vote, their voices are lost and others are heard instead.
