Proxy Voting Explained: How It Works in 2025 and What It Costs

Ariel Courage is a seasoned editor, researcher, and former fact-checker who has contributed to top financial publications such as The Motley Fool and Passport to Wall Street.

What Is Proxy Voting in 2024?

Proxy voting is a process allowing shareholders to delegate their voting rights to another person or entity when they cannot or prefer not to attend a shareholder meeting. Typically, shareholders receive a proxy ballot along with a detailed proxy statement outlining the issues up for a vote, such as board elections, mergers, or compensation plans.

Investment firms managing mutual funds or high-net-worth clients often cast proxy votes on their behalf, ensuring their interests are represented.

Key Insights

• Proxy voting enables shareholders to vote without physical attendance.
• Shareholders get access to proxy materials before meetings to make informed decisions.
• Designated proxies must follow the instructions provided by the shareholder.
• Votes can be submitted via mail, phone, or online before the cut-off, usually 24 hours prior to the meeting.

How Proxy Voting Operates in Modern Markets

Public companies hold annual meetings to update shareholders and solicit votes on key corporate matters. Shareholders of record on a specified date are eligible to vote. Proxy materials, including annual reports and voting instructions, are often accessible online or mailed directly.

Shareholders can appoint proxies to vote according to their wishes, ensuring participation even from afar. Votes cast may support, oppose, abstain, or be left uncast, impacting decisions on proposals and elections.

Submitting Your Proxy Vote

Proxy votes can be delivered in person by a proxy, or remotely via mail, telephone, or internet platforms prior to the voting deadline.

Special Voting Rules to Note

Some elections use plurality voting, where the candidate with the most votes wins, even without a majority. In other cases, majority voting is required, making abstentions influential. Proxy statements clarify how non-votes affect outcomes.

Real-World Proxy Vote Example from 2019

In November 2019, Kirkland Lake Gold announced an all-stock acquisition of Detour Gold. Shareholders received proxy materials allowing them to vote or assign a proxy for the merger, which was finalized in January 2020. Following the deal, Detour Gold shares were delisted as it became a Kirkland Lake Gold subsidiary.

Why Use a Proxy Vote?

Proxy voting offers shareholders flexibility to participate in important corporate decisions without attending meetings physically, making it easier to stay engaged.

Understanding the Proxy Statement

The proxy statement provides comprehensive details about the issues on the ballot, helping shareholders make informed choices or direct their proxies accordingly.

Final Thoughts

Proxy voting remains a cornerstone of shareholder democracy in 2024, enabling investors to influence corporate policies and governance efficiently. With digital access and clear instructions, shareholders can confidently exercise their rights from anywhere, ensuring their voices are heard in key company decisions.

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