What is a proxy vote?
A proxy vote is a ballot cast by one person or entity on behalf of a shareholder who cannot or chooses not to attend a shareholder meeting. Shareholders receive proxy materials—typically a proxy statement and a proxy card—that explain the issues to be voted on (for example, board elections, mergers and acquisitions, or executive compensation) and provide instructions for submitting a vote.
Registered investment managers may also cast proxy votes on behalf of mutual fund shareholders or clients of separately managed accounts.
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How proxy voting works
- Record date: Only investors who own voting shares as of the company’s record date are eligible to vote.
- Materials: Companies distribute proxy materials online or by mail before the annual general meeting (AGM). This packet usually includes the annual report, proxy statement, and a proxy card with voting options.
- Submission methods: Shareholders can vote by:
- Returning a completed proxy card by mail
- Phone or online voting portals
- Appointing a designated proxy to vote in person at the meeting
- Timing: Proxy votes must be submitted before the cutoff time specified in the materials (often 24 hours before the meeting).
- Vote options: Typical responses are “For,” “Against,” “Abstain,” or leaving the item “Not Voted.”
Proxy season—when many companies hold their AGMs—usually occurs in the spring for publicly traded companies.
Key factors that affect outcomes
- Voting standard for proposals: Many shareholder proposals require a majority of votes cast to pass.
- Director elections:
- Plurality voting: The candidate with the most votes wins, even if that is a small number. An unopposed director can be elected with a single vote.
- Majority voting: A director must receive more than half of the votes cast to be elected; abstentions and withheld votes can change the outcome.
- Disclosure: Companies must explain in the proxy statement how abstentions and withheld votes will be treated and whether they count toward quorum or vote thresholds.
Real-world example
Kirkland Lake Gold proposed an all-stock acquisition of Detour Gold. Both boards approved the transaction, but shareholders still voted on the acquisition using the proxy process. After shareholder approval and completion of the deal, Detour Gold shares were delisted and became part of the combined company.
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Why proxy voting matters
Proxy voting lets shareholders influence corporate decisions even when they cannot attend meetings. It is a fundamental mechanism of corporate governance, shaping outcomes on board composition, mergers, executive pay, and other significant matters.
Quick FAQs
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Who can cast a proxy vote?
Any shareholder eligible as of the company’s record date—or a designated person they appoint—can cast a proxy vote. -
How do I vote by proxy?
Follow the instructions in the proxy materials to vote by mail, phone, online, or by designating a proxy to vote in person. -
What is a proxy statement?
The proxy statement is the information booklet provided to shareholders that describes the issues to be voted on and explains voting procedures.
Bottom line
Proxy voting preserves shareholder influence over corporate decisions without requiring physical attendance at meetings. By reviewing the proxy statement and submitting votes or appointing a proxy, shareholders participate in governance decisions that affect the company’s direction and value.