Proxy Vote

What Is a Proxy Vote?

A proxy vote lets a shareholder of a company take part in corporate decisions without attending a meeting in person. The shareholder appoints someone else, called a proxy, to cast their votes according to the shareholder's instructions. The word "proxy" refers both to the person who votes and to the written authorization that gives them that power.

How It Works

Public companies usually hold an annual shareholder meeting where owners elect directors, approve auditors, and vote on other proposals. Before the meeting, the company sends shareholders a proxy statement that describes the proposals and includes a form for casting votes. Shareholders can mark their choices and return the form by mail, or vote online or by phone. Many people who hold shares through a broker receive their voting materials through that firm.

If a shareholder returns a form without specific instructions on an item, the vote is often cast in line with the company's board of directors recommendation. Shareholders can usually change their vote before the meeting by submitting a later-dated form or voting again.

Why It Matters to Investors

Most individual investors vote by proxy rather than in person, so this process is how most ownership votes are actually cast. Proxies can also be contested. When a group wants to replace directors or change company policy, it may run a proxy contest to win support from other shareholders. Large institutions often rely on research from a proxy advisory firm when deciding how to vote. Investors who want to influence a company without buying more shares may also use the proxy process to submit their own proposals, though rules govern which proposals can be included.