Too often as shareholders, we passively invest a portion of our earnings and trust an advisor to purchase shares in companies that will yield a high return. We might go as far as checking our account every couple of months, but we are just patiently awaiting the day we get to reap what we’ve sown. Out of sight, out of mind.
But what some shareholders don’t realize is that by owning just one share in a company, you have a voice. You have the right to vote, ask questions and hold those companies accountable. But unfortunately 30% of shares go unvoted.
Retail shareholders, individuals who purchase shares for personal accounts such as a 401(k) or an IRA, own 30% of the total shares of a publicly traded company. And a majority of those shares go unrepresented. In fact, less than a third of retail shareholders voted their proxy in 2019. Institutional shareholders (i.e., banks, organizations or individual investors of large quantities of shares) own the other 70% and 90% of those votes were cast in 2019.
This under-representation at annual meetings is no fault of the business. Every year before the annual meeting, companies are required to send a proxy statement to each shareholder. This proxy statement provides shareholders with all of the information that they need to make informed decisions at the annual meeting.
During these meetings, shareholders are reviewing, debating and voting on a myriad of issues, ranging from environmental impact, support for non-profits (political and non-political), social justice and human rights initiatives, and board member eligibility requirements, as well as, routine business such as Director elections, and conducting general shareholder business.
In the past 10 years, thousands of shareholder resolutions voted on at annual corporate meetings have increased costs to consumers and decreased returns for shareholders.
While it might not seem like a single shareholder’s vote could make much of a wave, even a marginal increase in retail shareholder participation will yield significant results in shaping higher quality, pro-shareholder company policy. The decisions voted upon in annual meetings can greatly impact the near- and long-term success of the company and, in turn, the future success of your savings, retirement and overall quality of life.
The next time you receive your proxy statement in the mail be sure to review it and vote to ensure that the level-headed investor perspective is present in every annual meeting. Participating as an engaged, informed investor is a relatively small task that will yield big returns for both your future and the long-term success of companies and their employees. Your one vote could have the potential to impact positive change within even the largest and most powerful corporations.
Take a stand and vote your proxy.