Proxy voting – some education

An interesting study by Sabinet investigated the nature of institutional shareholder activism in South Africa with a particular focus on proxy voting as a public form of shareholder discontent.

What is Proxy Voting?

Owning shares in a company carries voting rights. Shareholders often vote their shares by proxy instead of attending company meetings. There are a variety of matters that shareholders vote on each year. The most common are the election of directors, appointment of auditors and approval of executive compensation.

What is a proxy?

A proxy is a written authorisation that one person gives to another person to act on the other person’s behalf. In the context of company elections, when a shareholder votes “by proxy,” he or she is instructing someone (often members of the company’s management) to vote his or her shares in accordance with his or her instructions, as reflected on the proxy form, at the meeting. This way, the shareholder can vote without physically attending the meeting.

Why should I vote my shares/exercise my voting right?

Voting is an essential part of an investor’s fiduciary and responsible ownership duty. Voting at companies’ shareholder meetings is one of the key means by which investors can exert influence on companies they are invested in and safeguard shareholder value from poor and bad corporate governance practices. Through voting shareholders can hold management to account on key business drivers and corporate behaviour.

How do I vote my shares?

Typically, a company will allow you to vote in one or more of the following ways:

  • In person: you may attend the annual shareholder meeting and vote at the meeting. The materials you receive will describe what you must do to attend and vote, as well as the time, location, and date of the meeting.
  • By mail: you may vote by filling out a paper proxy card if you are a registered owner or, if you are a beneficial owner, a voting instruction form.
  • Over the Internet: this might be as simple as e-mailing a scanned completed proxy form, or as complex as using an online voting platform, if the company has provided
    that option. The details will be clear from the notice of the meeting.

How can I attend the annual meeting and vote in person?

Shareholders who are registered on the share register of the company on the record date are entitled to attend a shareholder meeting and will receive materials permitting attendance. These investors are generally referred to as registered or record owners.

If you hold shares through a stockbroker or bank as a beneficial owner, your stockbroker will generally have a process to give you the right to attend the meeting and participate in it on request.

How to complete  the proxy form?

Depending on what you are voting on, the proxy card or voting instruction form gives you a choice of voting “for,” “against,” or “abstain,” or “for” or “withhold.” Here is an illustration on how to complete the proxy form:

Proxy View - Education