Advocacy & Public Policy: Proxy Voting

What is Proxy Voting?

Shareholders, as owners of a publicly traded company, have the right to weigh in on important issues by participating in proxy voting. Shareholders affect change in management’s policies and procedures through participation in the company's annual general meeting either in person, or more commonly, by proxy voting remotely, via mail, phone, or online. Proxy voting is the primary means by which shareholders are able to direct company management to act in a socially responsible manner.

Prior to the annual meeting, every shareholder in a company receives proxy resolutions (or proxy statements) and voting materials, via mail or email. These materials inform investors of issues for consideration at the annual meeting each year. It is important to review all materials, read the resolutions presented by other shareholders, and vote your proxy ballots in accordance with your values and what you believe will improve the company's bottom line.

Services to Assist with Proxy Voting Decisions

Sometimes, the issues presented to shareholders to vote on are unfamiliar or numerous. There are many institutions and organizations from which investors can seek guidance. Social Investment Forum is committed to providing shareholders with accurate information and resources to make proxy decisions easier. You can find many of these on our Tools and Resources page.

ProxyDemocracy.org allows users to sign up for free email alerts on which investors voting, and how they are voting before annual meetings. This is often helpful in deciding how to vote, for example, it allows shareholders to see how Domini, CalPERS, and others are voting. ProxyDemocracy users can also compare voting records of funds. 

Other organizations and institutions also exist to assist shareowners with their proxy decisions. These organizations promote the corporate democracy environment, perform proxy research and analysis, and publish articles and reports on recent developments in corporate governance reform. Several examples of such organizations are below.

Abstaining from the Vote

If you do not vote your proxies or leave your proxy items unmarked, your ballot is automatically cast with management's viewpoint. If you are unsure of an issue, it is better to abstain, as your vote is withheld from the voting pool for or against a proposal. Abstentions are not cast in management's favor.

Voting Your Proxies Online

There are many online services that allow shareholders to quickly and easily cast their proxy votes online. Below are several examples that illustrate the efficiency of such services.

Proxy Votes with Mutual Funds or Financial Advisors

If you are an investor in a mutual fund or other investment vehicle that does not allow you to vote your proxies directly, it's critical to find out how the fund's proxies will be voted on your behalf. Institutions with voting guidelines help investors discern the fund's position on key issues of corporate governance and social responsibility. If your mutual fund or institution does not have proxy guidelines, contact their investor relations department and encourage them to disclose their position on issues up for vote. Since an SEC legal enactment in 2004, mutual funds are required to disclose to investors the way they voted on proxy issues. It is key to find out their voting patterns, and request that your mutual fund or financial advisor vote in a socially responsible way.

Often, mutual funds side with company management on proxy issues or do not vote, which allows their votes to be counted in management’s favor. It is uncommon for company management to consider socially responsible perspectives. If you are interested in learning more about the proxy voting patterns of mutual funds, we recommend the following SIF Report: "Mutual Fund Proxy Voting Guidelines: New Opportunities to Promote Socially Responsible Proxy Voting." (pdf)

Mutual Funds and Institutions that Post Their Proxy Votes

By law, mutual funds and other money managers must disclose their proxy votes to investors. A growing number do this by posting their votes online, which makes it easy for shareowners to access critical information and analyze their fund’s performance in areas of social responsibility. Below are a few examples of such sites

Proxy Voting Guidelines for Mutual Funds and Institutions

Since a mutual fund or other investment institution makes proxy decisions on behalf of shareowners, many create guidelines in order to ensure their clients that they will vote in a certain manner. This is an excellent vehicle for investors who are interested in issues of social responsibility to have their voice heard, through ensuring that an institution’s voting guidelines match their own values and ethics.

The below institutions are examples of model proxy voting guidelines.

Other institutions with proxy voting guidelines:

Tips for creating your own proxy voting guidelines:

More Information on Proxy Voting and Shareholder Advocacy

If you would like to read more about the basics of proxy voting and shareholder advocacy, the following resources may be of interest to you.

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