reporting and analysis for corporate-finance executives.
Individual Investors Voting Their Shares
investors have grown a bit more passive than they used to be. Collectively
they voted just 28% of their shares at corporate annual meetings this
spring, down slightly from 29% last year, 30% in 2013 and 31% in 2012,
according to a new report from Broadridge
Financial Solutions Inc. and the corporate-governance arm of
mutual funds, pensions, hedge funds and other large investors voted more
than nine out of their 10 shares this year.
each share entitles the holder to one vote in board elections and on any
other questions raised on a company’s proxy ballot.
Chuck Callan, a
senior vice president at Broadridge, says the voting rate among individual
investors has declined because of a rule passed by the Securities and
Exchange Commission in 2005. The rule gives companies the option of simply
notifying shareholders by mail that annual meeting materials are posted on
the Internet, instead of mailing them a package that includes a ballot. “It
requires the retail investors to take additional steps to vote,” he said.
“As a consequence, many don’t.”
meanwhile, are amassing a greater proportion of stocks. The percentage of
company shares owned by such funds rose to 68% this year from 65% in 2012,
according to the report. That’s because more individuals are investing in
stocks via mutual funds, in part through retirement plans.
the big funds are flexing their muscles. Eighty companies held votes this
spring on “proxy access” proposals, mostly under pressure from these
institutional investors. The proposals seek to allow certain groups of
shareholders to nominate their own candidates for board seats. Last year,
only 10 companies held such votes.
such as Citigroup Inc. embraced proxy access this year, but Wal-Mart Stores
Inc.’s shareholders voted down a similar proposal.
trying to avoid granting proxy access to shareholders may be suffering from
the retail voters’ passivity. The Broadridge report found that 61% of votes
cast by institutional investors were in favor of proxy access, compared with
15% of those cast by retail investors.