(1/27/2015) The Securities and Exchange Commission announced that it will host a roundtable on February 19 to explore ways to improve the proxy voting process. The roundtable, which will be held at the SEC’s Washington, D.C. headquarters, will focus on universal proxy ballots and retail participation in the proxy process. I will be a member of the second panel. I invite readers to help me by sharing your ideas.
Proxy voting is important to both investors and companies. The ability to vote allows investors to make their views known to the company’s management and to participate effectively at annual or special meetings. Thus, the proxy voting process should be robust, effective and workable.
The roundtable will be divided into two panels:
- The first panel will focus on the state of contested director elections and whether changes should be made to the federal proxy rules to facilitate the use of universal proxy ballots by management and proxy contestants. This panel also will discuss the state law, logistical, and disclosure issues presented by a possible universal proxy ballot process.
- The second panel will focus on strategies for increasing retail shareholder participation in the proxy process. This panel will discuss how technology – by providing better access to information or easier means of voting – might affect retail participation. In addition, this panel will discuss whether the format of disclosure could be improved to increase the engagement of shareholders and how the mechanics of voting could be improved to affect retail shareholder participation.
The roundtable will be open to the public and webcast live on the SEC’s website. Additional information regarding the agenda and participants will be forthcoming.
With regard to panel one of the roundtable: universal proxy ballots are much needed to facilitate the ability to split ticket vote without attending the meeting.
I have been invited to participate on panel two of the roundtable, so that I can provide some ideas to get more retail shareholders voting. Key to getting more people to vote their proxies is to make voting both more meaningful and easier. Very few are going to read the proxy. They need to be able to rely on following the advice of others who have done that analysis but how do we encourage I have a great number of ideas on this one, most of which have been previously discussed on this blog including:
- Afford voter information forms (VIFs) the same regulatory safeguards extended to actual proxies. We don’t vote when we think our votes won’t make a difference because elections are rigged.
- More XBRL coding, especially for all proxy items to be voted. We need to make it easy to sort through the data.
- Encourage open-ended client directed voting platforms such as the defunct MoxyVote by better distributing funds. The current system acts like a Jim Crow poll tax because it financially discriminates against independent voting platforms, especially those processing small batches of votes. Issuers should pay for proxy and VIF distribution to whatever voting platform the individual investor specifies.
- Encourage more funds to announce their votes in advance (including rationale) especially where issues are significant and the might sway others… if not making this a fiduciary duty, it should at least be a best practice.
- Meaningful voting can be made very easy by encouraging the development of phone apps that would deliver pre-filled proxy recommendations based on individual profiles and responses to questions on values. Once they get used to voting, investors might want to dig a little deeper in special areas of interest.
- The SEC should run a VoterMedia campaign with small prizes to kickstart the best get out the vote ideas. Awards would be made based on which ideas get the most votes from retail investors themselves.
I hope these will help get the discussion going among readers. Why don’t retail shareholders vote? What can encourage them to do so? Please add your ideas as comments to this post or e-mail me. I’d like to go to the roundtable representing retail shareholders as well as I possibly can. I can only do that with your help.