Shareholders Want More Say
Sunday, June 14, 2009
Count on it: This proxy season, investors will not be shy about giving company management a piece of their mind.
Shareholders are expected to file more than 1,000 requests, called resolutions, asking companies for the chance to have a say about such hot topics as executive compensation, political contributions and how management addresses climate change, to name a few. Some of the petitions will make it onto proxy ballots, to be put to a vote at annual meetings.
Although they're nonbinding, these so-called advisory votes send a powerful message -- which executives ignore at their peril.
So far this season, investors have filed more than 100 executive-pay proposals. You don't have to be a big shot to file a resolution; you simply have to hold $2,000 worth of stock for one year. Resolutions must be crafted carefully because companies can ask the Securities and Exchange Commission for permission to exclude them on a number of grounds. Proponents must attend the company's annual meeting. To make that easier, a new group called the Investor Suffrage Movement puts investors in touch with representatives who live near annual-meeting locations and are willing to submit proposals on behalf of shareholders.
Also, institutional investors with which you're affiliated -- say, your alma mater, a religious organization or a pension fund -- may already be working on your issue or may be willing to take it up. Don't underestimate the power of simply voting your proxy.
You can hold your mutual fund accountable, too. Funds must disclose on their Web sites how they vote proxies. Or you can check sites such as ProxyDemocracy.org, which tracks votes by institutional shareholders and most major fund families. Don't like what you see? Call your fund company and say so.