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Only about 30% of individual shareholders' shares 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.
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.
For large, publicly traded companies, 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 they oversee. 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 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.