Tag Archives | ProxyDemocracy

Real Main Street Investors Endangered

Real Main Street Investors are NOT the members of a Coalition formed by the National Association of Manufacturers to buttress arguments made by the Business Roundtable and United States Chamber of Commerce. (see Main Street Investors: Battle Coming) In fact, real Main Street investors are an endangered species that may actually go away if the Coalition gets its way.

The Coalition appears to be getting traction with SEC Chairman Clayton who mentioned “Main Street Investors” 28 times in testimony to the House Committee on Financial Services. Or, perhaps he is referencing the real main street investors, not the Coalition?

The Coalition has budgeted millions of dollars on an information campaign based on paid for biased research. For example, one of their surveys found that 78% of ETF investors chose passive funds for stable, consistent returns, while only 11% select ETFs for how they influence worthy political or social causes.

However, most of the 78% investing primarily for money also may want both: earn money and have a positive influence. The survey was designed to exclude measuring the popularity of such motivations.

Real Main Street Investors Endangered

Who are the real Main Street Investors? According to Wikipedia, “Main Street” represents the interests of everyday people and small business owners, in contrast with “Wall Street.” Further, investors are those who “allocate capital with the expectation of a future financial return.”

By that definition, real Main Street investors are an endangered species. Half of American’s have no investments in equities, not even mutual funds. The top 1% holds more wealth than the bottom 95%… before the recent roll back of inheritances taxes. “Everyday people” in America do not invest in corporations. For most everyday people, their homes are their primary investments.

Studies find a direct correlation between income inequality and political polarization over the last 60 years. Unfortunately, it manifests itself daily in the erosion of norms around civility, truth telling, declining trust in our institutions and political dysfunction. 

inequality correlates to polarization

It is clear we need more real Main Street investors if we are to avoid plunging deeper into turmoil. One thing the Main Street Investors Coalition gets right is that real people have almost no ability to influence the decisions corporations make on their behalf. 

We do need to change that. However, we cannot accomplish that by suppressing shareholder proposals and proxy advisors. Instead, we need to emphasize how real Main Street Investors can invest with our values, instead of despite our values. 

Real Main Street Investors Need to be Involved in Corporate Governance

Contrary to Coalition pronouncements, there is no such thing as value-free economics or investing. When we abrogate our moral responsibilities, we tilt the rules away from citizens to entrenched insiders. 

Common values must be created through open dialogue and elections, not by unaccountable individuals hidden behind dual-class corporate structures controlling our economy. 

Although buying a mutual fund is investing, most mutual fund holders do not really identify with the companies mutual funds own. When I invest, I ask myself what the world needs and try to find public companies that fulfill that need. 

Investing is just the start of a long-term relationship. Real Main Street investors should hope to hold forever and to suggest ways our companies can improve, either through shareholder proposals or in other communications with the company.

I recently read a wonderful little book, A Nation of Small Shareholders, about an NYSE campaign to get more Americans to feel like part of the capitalist system after WWII. It was a way to convince Americans that capitalism would offer them more benefits than communism. Since they felt like shareholders, they would also be more likely to favor lowering capital gains taxes. It was a nudge campaign before behavioral economics took hold. The NYSE knew what it wanted before they started and it was not fostering dialogue with real Main Street investors.

Today, America needs a campaign to make all Americans shareholders. It should emphasize the shareholder’s voice in shaping corporate impacts, as well at potential profits. The SEC should educate real Main Street investors about resources available to them in meeting their voting responsibilities as shareholders.

The New York City Comptroller recently joined a dozen other funds in announcing their votes in advance of annual meetings. Reviewing those disclosures is very helpful in making voting decisions. Proxy Insight compiles it all for a reasonable subscriber fee. We hope to get ProxyDemocracy back up and running as a free service. Meanwhile, you can always research them one-by-one through the Shareholder Action Handbook on CorpGov.net.

If the overwhelming majority of investors simply want to earn the highest return possible, regardless of impact, we are doomed as a society unless the Universe was meant to bend toward greed. I am convinced most real Main Street investors want to live in a civilized society on a salubrious planet.

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SEC Shareholder Proposal Panel – Take Action!

The November 15 SEC Roundtable on the Proxy Process will include me on the SEC Shareholder Proposal Panel. Public announcement with instructions for submitting comments. I will only have a few minutes at the Roundtable. What should I emphasize? Where should I stay in DC?

Take Action: Readers of CorpGov.net know far more than I do. Please email your suggestions and supporting evidence. Without your help, I will ramble off topic to connected tangents, difficult to explain in a few seconds. This post is sure to be an example. Continue Reading →

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Walt Disney Company: Proxy Score 25

Walt Disney Company

Walt Disney Company: before you vote your proxy

The Walt Disney Company (NYSE:DIS), together with its subsidiaries, operates as an entertainment company worldwide.

The Walt Disney Company is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of three fund families when I checked and voted. Their annual meeting is coming up on March 8, 2017.

I voted FOR Proxy Access Amendments. See how and why I voted other items below. I voted with the Board’s recommendations only 25% of the time. View Proxy Statement via iiWisdom. Continue Reading →

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CalPERS Discloses Proxy Votes in Advance of Meetings

CalPERS Discloses Proxy VotesCalPERSInvestors and the public interested in how the California Public Employees’ Retirement System (CalPERS) casts its proxy votes on key decisions in corporate America can now find that information on the CalPERS website.

CalPERS Discloses Proxy Votes

CalPERS has expanded its online disclosure of proxy voting decisions to include those for all publicly held companies in its portfolio. Prior to this expansion, CalPERS provided proxy voting information for the 300 largest public company holdings in its portfolio. Continue Reading →

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Chipotle Mexican Grill (CMG): Proxy Score 24

Chipotle Mexican GrillChipotle Mexican Grill, Inc. (NYSE:CMG) is one of the stocks in my portfolio. Chipotle Mexican Grill develops and operates fast-casual, fresh Mexican food restaurants throughout the U.S., which serve a focused menu of healthy burritos, tacos, burrito bowls and salads. The company also has restaurants in Canada, England, France and Germany. Their annual meeting is coming up on 5/13/2015. ProxyDemocracy.org had the votes of four funds when I checked and voted on 5/6/2015. I voted with management 24% of the time and assigned Chipotle Mexican Grill a proxy score of 24. Continue Reading →

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American Express Company (AXP): Proxy Score 42

American ExpressAmerican Express Company (NYSE:AXP) is a global payments and travel company. The company, through its subsidiaries, offers products and services including charge and credit payment card products and travel-related services to consumers and businesses around the world. It is one of the stocks in my portfolio. Their annual meeting is coming up on 5/11/2015. ProxyDemocracy.org had the votes of four funds when I checked and voted on 5/4/2015. I voted with management 42% of the time and assigned American Express a proxy score of 42.

View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the American Express 2015 proxy in order to enhance corporate governance and long-term value. Continue Reading →

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NCR Corporation (NCR): Proxy Score 50

NCRNCR Corporation (NCR), which provides solutions and services that enable businesses to connect, interact, and transact with their customers worldwide, is one of the stocks in my portfolio. Their annual meeting is coming up on 4/22/2015. ProxyDemocracy.org had the vote of one fund when I checked and voted on 4/14/2015.  I voted with management 50% of the time and assigned NCR Corporation a proxy score of 50.

View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the NCR Corporation 2015 proxy in order to enhance corporate governance and long-term value. Continue Reading →

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Brocade Communications Systems (BRCD): Proxy Score 43

Brocade CommunicationsBrocade Communications Systems, Inc. (BRCD), which provides storage area networking (SAN) and Internet protocol networking solutions, is one of the stocks in my portfolio. Their annual meeting is coming up on 4/7/2015. ProxyDemocracy.org had the votes of two funds when I checked and voted on 4/2/2015.  I voted with management 43% of the time and assigned Brocade Communications a proxy score of 43. Publishers note: Elizabeth Chang, my administrative assistant, will be posting several of my votes for upcoming meetings.

View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Brocade Communications 2015 proxy in order to enhance corporate governance and long-term value. Continue Reading →

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Starbucks Corporation (SBUX): Proxy Score 81

StarbucksStarbucks Corporation $SBUX, which operates as a roaster, marketer, and retailer of specialty coffee worldwide, is one of the stocks in my portfolio. Their annual meeting is coming up on 3/18/2014. ProxyDemocracy.org had the votes of four funds (now more) when I checked and voted on 3/8/2015.  I voted with management 81% of the time and assigned Starbucks a proxy score of 81.

View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Walt Disney 2015 proxy in order to enhance corporate governance and long-term value. Continue Reading →

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Increase Retail Shareholder Participation in Proxy Process

recommendedAs I have been mentioning, I will be on a panel at the 2/19 SEC Roundtable discussing how to increase retail shareholder participation in the proxy process. It is the night before the event; so I’m trying to boil it all down, knowing I’ll probably only get a few minutes to say anything. The previous posts are all well and good about things that should be done. I tried to focus on what the SEC could do to help, since they are holding the event. Now that our panel is about to convene, I’m just going to mention what could prompt participation, whether or not it requires anything from the SEC.

From the SEC notice: This panel will focus on strategies for increasing retail shareholder participation in the proxy process. The panel will discuss how technology – by providing better access to information or easier means of voting – might affect retail participation. In addition, the 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.  Continue Reading →

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Retail Shareholder Proxy Participation: Part 2 – CDV

MoxyVote: The closest we got to open and robust CDV

Moxy Vote: The closest we got to open and robust CDV

The last set of questions for panel at the 2/19 SEC Roundtable deal with client directed voting (CDV). Below are a few thoughts with the help of readers. I welcome further comments. The SEC agenda and questions are in bold italics.  Our thoughts are in normal type. Part 1 is here.

This panel will focus on strategies for increasing retail shareholder participation in the proxy process. The panel will discuss how technology – by providing better access to information or easier means of voting – might affect retail participation. In addition, the 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 SEC raises several questions in their last group of questions for the panel on client directed voting, which I discuss below. Continue Reading →

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Cisco Systems – Proxy Vote Score 37

Cisco SystemsCisco Systems, Inc. (NASD:CSCO), which designs, manufactures, and sells Internet Protocol (IP) based networking products and services related to the communications and information technology industry worldwide, is one of the stocks in my portfolio. Their annual meeting is coming up on 11/20/2014. ProxyDemocracy.org had collected the votes of four funds when I checked on 11/18/2014. Sorry for the late post. Today is the last day to vote online. I voted with management 37% of the time and assigned them a proxy score of 37.  View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Cisco Systems 2014 proxy in order to enhance corporate governance and long-term value.

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California’s Savings Plus: Better Proxy Voting Disclosure Needed Part II

CalHR Savings Plus

This is the second of a two part series. Part I discussed proxy voting at Savings Plus, as compared with at CalPERS. 

CalHR’s Current RFP for Savings Plus

CalHR recently released a Request for Proposal (RFP 700-14-01) seeking bids for investment management services for Savings Plus. Unfortunately, the RFP fails to require Savings Plus participants be informed of proxy voting policies or decisions.   Continue Reading →

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California’s Savings Plus: Better Proxy Voting Disclosure Needed, Part I

CalHR

Most California State employees and retirees have their retirement funds invested largely through two vehicles. CalPERS is the nation’s largest public pension, with almost $300B in assets. Many employees also have smaller amounts invested in CalHR‘s Savings Plus program, with assets of $10B. Both vehicles invest a large proportion of their funds in corporate stock, which carries voting power that can not only impact the value of the companies and potentially our retirement income but also the quality of our environment and our political framework.

Over the course of several decades the Department Labor and the SEC have ruled that proxy voting rights are assets. Fiduciaries of funds, such as CalPERS and Savings Plus, must ensure the underlying shares are voted for the benefit of the employees and retires whose funds they hold in trust. Continue Reading →

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Fiduciary Duty to Announce Votes (Part 3): Take Action

PD-CkMutualVotingRecord

Take Action: Ask your mutual fund, pension fund, and/or endowment to:

  1. Send you a copy of their proxy voting policies and their proxy voting record.
  2. Report their votes in advance of annual shareholder meetings to ProxyDemocracy.org.  
  3. Make a small donation (not tax deductible) to ProxyDemocracy.org to keep that valuable service going or contact Andy Eggers to make a tax-deductible contribution through their 501(3) affiliate. I’ll match donations up to $2,000 until the end of June.

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2013 Millstein Forum: New Communication Tech – Help or Hinderance?

Communication Technology Panel

The following are cryptic notes and a few photos taken at the 2013 Millstein Forum held June 24 & 25 at Columbia Law School. Be sure to check out the Forum’s photo gallery with links to other materials as well.

For the panel on social media the moderator was John A. Seethoff, Vice President and Deputy General Counsel, Assistant Secretary, Microsoft Corporation. (Wow, check out the interviews with each board member on Microsoft’s website. I’m impressed!) Continue Reading →

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Corporate Elections: Looking in the Wrong Places

Congress$Bartlett Naylor, Financial Policy Reform Advocate, and Taylor Lincoln, Research Director, both with Public Citizen’s Congress Watch division, wrote an excellent post recently, Looking for Conflict in All the Wrong Places. They criticize the the Congressional hearing entitled “Examining the Market Power and Impact of Proxy Advisory Firms.”

Instead of proxy advisors, Congress should be looking at the JPMorgan proxy vote, where $5 million of the company’s money – shareholders’ money – was used to contest the resolution to split the CEO and chairman roles. And, of course, our money – the money of shareholders – is also being used right now to lobby Congress to weaken our rights. Continue Reading →

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In Celebration of MoxyVote.com

As co-founder Mark Schlegel announced Tuesday, MoxyVote.com will be closing down its proxy voting platform at the end of the month. See also Ross Kerber’s report for Reuters at Shareholder website closing, cites complex voting rules, 7/11/2012 and Mark Latham’s Sad News: @MoxyVote Is Closing #Corpgov. On the surface, it seems like a real tragedy. I’m sure Mark, Doug Gates, Brian Sloyer, Jeff Marshall, Alison Slezak and others on staff made many sacrifices to keep their dream alive, as did Larry Eiben and others at TFS Capital, which sponsored Moxy Vote. Continue Reading →

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Future Directions for CorpGov after Citizens United

Yes, corporate governance takes on more importance since the decision. Corporations could easily control our elections.  ExxonMobil spent $45 million lobbying at the federal level during the 2007-2008 election cycle. Jamin Raskin, Professor of Constitutional Law at American University and a Maryland State Senator, says if they spent 10% of their 2008 profits, or $8.5 billion, on electing their own candidates “that would be three times more than the Obama campaign, the McCain campaign and every candidate for House and Senate in the country spent in 2008. That’s one corporation. So think about the Fortune 500.” (In Landmark Campaign Finance Ruling, Supreme Court Removes Limits on Corporate Campaign Spending, Democracy Now!, 1/22/10)

Who controls corporations? I would argue it is still mostly CEOs. Of course, they’re supposed to report to directors but, so far, the balance of power seems to remain with the corner office and the Business Roundtable. A lot has changed since the early 1990s when Sears allocated over $5.5 million to defeat one independent board candidate, Robert A. G. Monks. Most of the S&P 500 now have a majority vote standard for elections… although directors who don’t get a majority of the vote usually only have to offer their resignation to the board. The board doesn’t have to accept it and nothing stops them from replacing tweedle dee with tweedle dum.

More corporations are moving to split the roles of CEO and chair. Many, like Whole Foods, appear to be making the change, not because they believe in good governance but because they want to avoid unnecessary distraction. In his blog (12/29/09), Mr. Mackey writes, “Was I forced to give up the Chairman’s title? Absolutely not! Both the idea and the decision to give up the title were completely my own… At no time has anyone on the Board or in management ever asked me to give up the title.” (Whole Foods: Progress But Still a Lapdog Board, CorpGov.net, 12/30/10)

We finally won repeal of broker votes, which almost always went to management. However, there is still the issue of blank votes… when a shareowner votes at least one item on their proxy but leaves others blank, the blanks magically turn into votes for management. (see SEC petition, 5/15/09)

But, all in all, shareowners have gained relative power in the last few years. CEOs may still control corporations but through organizations such as the Council of Institutional Investors, the International Corporate Governance Network and businesses like the RiskMetrics Group and Glass Lewis, institutional shareowners have gained substantial clout. In a few years, ProxyDemocracy.org, MoxyVote.com, Shareowners.org, and the Investor Suffrage Movement might similarly empower retail shareowners and that is where I will probably put most of my efforts.

Since posting Corporate Governance: More Important than Ever with Supreme Court Decision yesterday, I’ve already gotten several inquiries concerning my statement that “We either need a law like in the UK so that companies must get permission from their shareowners in advance to make political contributions in excess of some amount or we need a massive number of shareowner resolutions at each company to accomplish the same.”

I understand Senator Charles Schumer is already considering a bill that would require shareowner approval of certain political contributions. I trust the Center for Political Accountability will expand their current focus from disclosure to shareowners to permission from shareowners if they can. Our friends at Calvert, Walden Asset Management, Domini, Trillium Asset Management and elsewhere are likely to take up the charge and I will be there lending whatever support I can.

For me, the most important immediate task will remain trying to level the playing field. Investors need to move from holding poker-chip like entitlements to being actual owners. Once investors begin to think like owners, instead of gamblers, they will demand accountability from their corporations. Since most shareowners invest in a market basket of companies, rather than single companies, we should all be able to agree that it is in our best interest if none of our companies makes political contributions.

One big start in getting investors to think like owners would be to repeal section 17A, subdivision e, of the Securities Exchange Act of 1934, which requires the Securities and Commission to immobilize securities certificates. As we point out in our draft petition to the SEC, a direct registration system will facilitate shareowner-shareowner communications, reducing the cost of proxy contests and making corporate elections more democratic.

Appropriate steps should be taken to ensure communications are presented in a manner that is intelligible to and convenient for average investors. For example, shareowners have long sought integrated proxy solicitations that combine materials from all parties in a contested election. DRS would facilitate this.

An increased volume of communications would go hand-in-hand with an increase in the number of contested elections or issues. As average investors realize they were being offered opportunities to make real decisions, retail shareowner participation in corporate elections will likely rise. To further enhance this trend, technology and policies can allow shareowners to customize their participation, opting out of some types of communication, and controlling the form of media and style of presentation of others, much as users customize some news websites to deliver only the types of news that interest them… an RSS feed for shareowners.

So, my answer for now is, “let’s get control of corporations.” Institutional investors are already required to vote in order to meet their fiduciary duty. Many are conflicted. Our best hope may be to get individual investors to think like owners. First step is to make them actual owners, instead of holding security entitlements. Take a look at that draft petition, my table on how street name registration results in rights denied, and give us some feedback. You can either do that through the comment function (yes, you have to register with the site first… I don’t want to clean out a lot of spam) or you can e-mail me.

Start using ProxyDemocracy.org for proxy research, MoxyVote.com for voting, join Shareowners.org and the Investor Suffrage Movement. Years down the road, let’s hope Citizens United is overturned. Even then, getting control over corporations, which have so much influence over us, will be vitally important.

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Advice for Financial Advisors

Most affluent retirees want more than just investment management from their adviser, according to a survey released by Sallie Krawcheck’s wealth management group at Bank of America Corp. (Well-off retirees: We sought financial advice too late, Investment News, 1/14/10) According to Ms. Krawcheck, this is an opportunity for financial advisors, “what we’re learning is that our business is really becoming a business of solving problems with people.”

Financial advisors might also spend some time advising shareowners on where to find impartial information on how to vote. With voting down to 4% among retail shareowners only getting notice and access, they obviously need help. Advisors could point clients to sites like ProxyDemocracy and MoxyVote that disclose how institutional “brands” are voting or provide voting recommendations of “advisors.”

Financial advisors should also warn their clients that those who those who hold securities under “street name registration” only hold “security entitlements,” not real shares. SEC laws and regulations are written to protect shareholders, not those with security entitlements.

Therefore, Broadridge and others interpret requirements that apply to proxies as not applicable to their “voter information forms.” Counting blank votes for management, with only a microtype warning on the ProxyVote screen and summarizing resolutions so voters can’t even guess the subject are abuses that would end with a system of direct registration and the use of actual proxies.

Advisors could further gain the trust of their clients by educating them a little on their role as owners, instead of being completely focused on asset allocation, when to buy, and when to sell.

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MoxyVote.com

MoxyVote.com launched on November 20, 2009 in Beta and has already attracted considerable attention. Philly.com jumped right in with West Chester’s Moxy Vote boosts rebel shareholders on opening day. Cari Tuna did something a little more substantial with her Proxy-Voting Advocates Pool Resources on the Web (WSJ/11/23/09).

Of the systems utilizing the internet to increase retail investor participation in proxy voting by providing guidance on proxy issues from institutional investors, advocates or analysts, MoxyVote.com is the only one attempting to do so as a profit-making business, except perhaps FundVotes and CorpGov.net. The others – Investor Suffrage Movement, ProxyDemocracy.org, Shareowners.org, TransparentDemocracy.org, and VoterMedia.org – are all using some sort of non-profit form.

MoxyVote’s most direct competition at this point is ProxyDemocracy.org and TransparentDemocracy.org. All three systems provide users with information on how others are voting or advocate voting. ProxyDemocracy.org appears to be far ahead at this point with regard to actually being able to look up an individual company and finding recommendations, since they are collecting votes from some very huge funds like CalSTRS and Florida SBA, which own shares in thousands and thousands of companies.

Those reporting or advocating on MoxyVote and TransparentDemocracy.org tend to be smaller, like Calvert Investors or Investors Against Genocide. However, MoxyVote has the distinct advantage of being able to be tied in with your brokerage accounts and by allowing you to vote your shares right through the site. It is the only site that allows users to receive their proxies, obtain guidance from multiple sources and submit their votes all at one place.

Since proxy season isn’t in full swing, I don’t have any proxies to vote right now, so couldn’t test that function yet. However, when we do, another feature I like is that we will be able to see how many voters used MoxyVote to vote how many shares. That’s going to be a powerful tool in building involvement. Yes, you may only be voting 40 shares with the recommendations of Calvert or Change to Win but if you see on the site that 100, 1000, or 10000 others did the same, you begin to see that small votes do add up.

MoxyVote also employs a form of client directed voting (CDV) that allows users to set it and forget it. The CDV system advocated by the Business Roundtable has five choices: always vote for management, always vote against management, abstain, vote in proportion to shareowner vote within my broker, let my broker decide. These feel relatively meaningless to me. MoxyVote allows you to set your voting default to your list of advocates (your trusted “brands“). Right now, I’ve got mine ranked as follows:

  1. Investor Environmental Health Network
  2. Center for Political Accountability
  3. Change to Win
  4. Calvert Investments
  5. Boston Common Asset Management

Therefore, I could set up my account so that four days before the meeting, my stock is voted as recommended by IEHN. If IEHN has no recommendation by then, it is voted per the recommendation of CPA. If CPA has nothing, then it looks to CtW and on down the line until one of my advocates has a position. If none do, I can set the default position to vote with management, against them or abstain. If I elect to abstain, MoxyVote withholds my votes from director nominees.

For individual shareowners, MoxyVote provides access to various information sources, the convenience if automated voting and the ability to align your votes with those supporting like-minded organizations. For shareowner advocates, it appears to be a cost-effective way to get out their message and recruit new members with similar values. Once the site begins to attract a large following, corporate management may also see value in getting involved. They could use the site to communicate with owners and potential owners, as a listening post to get a sense of where their retail investors stand on various issues, and in helping them meet quorum requirements.

I encourage readers to try all three of these sites: MoxyVote’s, ProxyDemocracy.org and TransparentDemocracy.org. Please let me know what you think of each.

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