What Is a Proxy Vote?
The period of time proxy vote refers to a ballot cast by way of a single particular person or corporate on behalf of a company’s shareholder who may not be able to attend a shareholder meeting, or who may not select to vote on a selected issue. Shareholders download a proxy ballot inside the mail along side a knowledge booklet referred to as a proxy statement, which describes the issues to be voted on far and wide the meeting. Shareholders vote on a lot of issues along with the election of board people, merger or acquisition approvals, or approving a stock compensation plan.
Registered investment keep watch over corporations may additionally cast proxy votes on behalf of mutual fund shareholders or top internet price patrons in separately managed accounts.
Key Takeaways
- A proxy vote is a ballot cast by way of one particular person or corporate for a company’s shareholder who cannot attend a meeting, or who does no longer want to vote on a subject.
- Prior to a company’s annual meeting, eligible shareholders would most likely download voting and proxy wisdom previous to a shareholder vote.
- Rather than physically attending the shareholder meeting, patrons would most likely elect somebody else to vote in their place.
- A person designated as a proxy will cast a proxy vote in step with the shareholder’s directions as written on their proxy card.
How a Proxy Vote Works
Publicly-traded corporations document their movements to shareholders by way of their annual meetings. Previous to those meetings, shareholders download wisdom on topics to be voted on at the meeting, an identical to proportion ownership, the development of the board of directors (BOD), and executive salary and benefits. Consumers who private appropriate voting shares inside the company as of the company’s record date could also be eligible to vote on the ones issues.
The company would most likely make proxy materials available online, which in most cases comprises an annual document, a proxy statement describing the issues to be voted on, and a proxy card with voting instructions. Materials can also be sent inside the mail to patrons who are eligible to vote at the annual elementary meeting (AGM).
Rather than physically attending the shareholder meeting, patrons would most likely elect somebody else, an identical to a member of the company’s keep watch over workforce, to vote in their place. This particular person is designated as a proxy and will cast a proxy vote in step with the shareholder’s directions as written on their proxy card. Proxy votes could also be cast by way of mail, phone, or online previous to the cutoff time. This is in most cases 24 hours previous to the shareholder meeting. Responses would most likely include “For,” “In opposition to,” “Abstain,” or “Not Voted.”
For issues involving topics as a substitute of electing directors, an identical to voting on shareholder proposals, a majority of the votes is what in most cases results in approval of the issue.
Specific Considerations
Once in a while a plurality vote applies when a company elects its board of directors. The a success candidate simply needs further votes than their competitor in a plurality vote. Due to this fact, an unopposed director best needs one vote to be elected. If shareholders are opposed to the candidate, they’re going to withhold their voting rights.
In some circumstances, the decision is made in line with a majority voting system. When a majority vote applies, directors wish to download a majority of the votes as a way to be elected. On account of abstaining from voting can impact whether or not or no longer or not a director is elected, the company’s proxy statement must component how abstained or withheld votes will affect the voting results.
Example of a Proxy Vote
On Nov. 25, 2019, Kirkland Lake Gold (KL) offered that it supposed to acquire Detour Gold in an all-stock deal. The two corporations would transform one company, with Kirkland Lake Gold shareholders proudly proudly owning roughly 73% of the following company, leaving 27% for shareholders of Detour Gold.
Even supposing the board people of each company unanimously approved the deal, shareholders were however eligible to vote on the acquisition. All eligible shareholders won voting and proxy wisdom, and in keeping with the instructions, shareholders were an expert that they may cast their own ballot or appoint somebody else to do it for them. The deal was completed in January 2020.
Because of the deal, Detour Gold shares delisted in February 2020 as the company turned into a subsidiary of Kirkland Gold.
