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Only about 30% of individual shareholders' shares in the companies that they own are voted. Many investors mistakenly believe their vote doesn't make a difference. In fact, investors do have influence over the governance and the future of the companies and funds they own.
For example, in recent years, shareholders have taken steps to promote sustainable business practices, to elevate issues related to the environment and climate change, to share their thoughts on political spending by companies and even to encourage actions to increase gender and ethnic diversity. And mutual fund shareholders have been able to create similar impact, with proposals to curb political spending, divest of assets in certain industries and to encourage transparency from companies on key environmental and social metrics.
Shareholders can also withhold their support for a particular initiative. If shareholders oppose a particular proposal they can vote no or withhold their vote on a proxy issue. In these instances, the proxy may not receive enough votes, called a quorum, and that proposal cannot be implemented.
Shareholder proposals can also lead to greater disclosure and transparency into operations, affect changes to hiring practices or executive pay and influence the composition of a company’s board.
One of the most impactful ways proxy voting has an effect is through the election of board members. Board members can serve as the shareholders’ representative to management and have significant influence on the strategic decisions and behaviors of the company or mutual fund they oversee.
| Common Corporate Shareholder Proposals | Common Mutual Fund Shareholder Proposals |
|---|---|
| • Approving mergers and large capital expenditures | • Shifts in the investment objectives or policies of a fund |
| • Mandating diversity in board membership and composition | • Mandating greater environmental or social screening of investments |
| • Approving key executive pay packages | • Changes to advisory fees charged to shareholders |
| • Adding worker protections | • Proposed fund mergers or closures |
| • Establishing targets to combat climate change | • Changes to the Investment Management Advisory Agreement or to Articles of Incorporation |
Beyond simply making your voice heard, by engaging in the proxy voting process you can have a positive effect on the companies you invest in. Voting—either in person or by proxy—encourages better corporate governance.
As a corporate shareholder, you also have the right to introduce resolutions or proposals on any topic to company management and ask that they be voted on at the next shareholder meeting. In order to do so, you must meet certain shareholder ownership requirements established by the Securities and Exchange Commission.
As a shareholder, you also have the right to introduce resolutions or proposals on any topic to company management and ask that they are voted on at the next shareholder meeting. In order to do so, you must meet certain shareholder ownership requirements established by the Securities and Exchange Commission.
For mutual funds, it is important to have a say in decisions that impact your investment in the fund. Voting your proxy can give you the opportunity to influence key issues such as changes to advisory fees, investment objectives and proposed fund mergers.
Whether you are a proxy voting expert or new to the process, you have the opportunity to vote across a range of topics. Take this interactive quiz to explore the ways voting your shares can make a difference and see how you compare to fellow investors. When you are done you’ll be ready to influence your financial future and own your vote.