Imagine if every four years the Federal Elections Commission rounded up all the ballots, counted all the votes, and then just assumed that everyone who didn't vote wanted the incumbent to win -- and counted those non-votes as though they were votes for the party currently in power.
Unbeknownst to the vast majority of investors, this is exactly the way it basically works in corporate America. Since 1937, brokers have been able to vote their clients shares on their behalf when they don't cast their own proxy ballots. Wall Street being a chummy place, this has usually meant that shareholders who didn't vote had their votes cast in favor of the current management team.
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Voter turnout falls during proxy season -- shareholders, unite!
With pretty much everyone -- including most CEOs -- agreeing that executive compensation is out of control and corporate governance in America is pretty much a joke, you'd hope that shareholders would take one opportunity they have each year -- proxy season -- to let their voices be heard.
Sadly, the New York Times DealBook reports that individual investor participation in proxy voting has plunged: "Of 92 firms that have held their annual meetings this season, the average participation among "retail" shareholders - individuals, as opposed to institutions - dropped more than 75 percent from the previous year, according to statistics from Broadridge Financial cited on RiskMetrics' Risk & Governance Blog."
The drop is probably largely attributable to a recent SEC rule change that allows companies to use "e-proxies," forcing shareholders online to cast their vote.
There's no question that, in time, proxy voting will be conducted online exclusively. But obviously that time has not yet come.
In the meantime, there's still no excuse for not voting your shares each year -- if only so you have the right to complain about what a mess the shareholder democracy is.
Sadly, the New York Times DealBook reports that individual investor participation in proxy voting has plunged: "Of 92 firms that have held their annual meetings this season, the average participation among "retail" shareholders - individuals, as opposed to institutions - dropped more than 75 percent from the previous year, according to statistics from Broadridge Financial cited on RiskMetrics' Risk & Governance Blog."
The drop is probably largely attributable to a recent SEC rule change that allows companies to use "e-proxies," forcing shareholders online to cast their vote.
There's no question that, in time, proxy voting will be conducted online exclusively. But obviously that time has not yet come.
In the meantime, there's still no excuse for not voting your shares each year -- if only so you have the right to complain about what a mess the shareholder democracy is.
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