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Proxy Voting – My Mailbox is full of these things! What do I do with them????

Chris Saccente
April 12, 2016

It’s Primary/Caucus Season – but it’s also Proxy Season! Is your mailbox bulging with proxy ballots and annual reports? Do you toss them in a pile to sort through later? Do you throw them out because you’ve missed the deadlines? You’re not alone!

But as a shareholder (and citizen), your vote is your voice! If you think CEO’s are over-compensated, this is the time to say something about it and let the Board of Directors know that you are watching them.

It all comes down to good governance and your values, something we talk about a lot here at Maxwell Noll. The larger picture here is, in the words of David Fuller, “Governance is everything.” Corporations, like countries, are unlikely to be successful without good governance.

The first thing to do is open that Proxy Statement, or go to and enter the number in the box just above your address. That will take you to your e-ballot and a copy of the proxy statement (look at the list in the upper right corner). Skim through the index for information on the ballot. (Note: you will have to re-enter your registration number to go back to your ballot).

The Board of Directors always offers their recommendations to shareholders. Are their recommendations good? Maybe, maybe not. That depends on what you value.

There is no set format for how Proxy Statements are presented. Some are very clear and make information easy to find and understand. Others follow a text-heavy format that requires more consideration. Once you have looked at a few Proxy Statements (and by all means, start with the easy ones!) you will learn what to look for and the whole process becomes pretty simple. You learn a lot!

So how do you know how to vote? Let’s start with the easy stuff – Shareholder Proposals. The most common shareholder proposals this year are for policies that separate the CEO from Chairman of the Board and lobbying transparency.

“Independent Chairman” for small companies, like us, is not really a good idea. However, in large multi-national corporations, it is. It all comes down to conflicts of interest. Independence is always a good thing to see in the proxy.

The other shareholder proposal you will find on most proxies asks corporations to report to their shareholders on lobbying policies and practices, and political contributions. In my opinion, this is also a good idea. Transparency in politics is never a bad thing. We’re not saying lobbying is always bad – it is a necessary part of the process. But as a taxpayer, voter and shareholder, you have to reconcile what is important to you, and again, let the Board of Directors hear your voice. You should know the level of influence your company has (or doesn’t have) in crafting legislation.

You may also find proposals regarding climate change, global trade, boycotts, and discrimination. These issues tend to be a bit more personal. Often these proposals do little more than send a message to the Board, but if you feel strongly about certain issues one way or the other, let your Board know!

Boards of Directors do not like Shareholder Proposals, and almost always recommend a vote AGAINST. So I’ll say it again – vote your own values!

Now for the harder stuff – CEO Compensation Policies and Appointment of the company’s independent public accounting firm. These are not quite shoo-ins.

There is a non-profit organization called As You Sow ( that researches CEO compensation and compiles an annual list of The 100 Most Overpaid CEO’s. This is an eye-opening list. Most corporations have adopted “pay for performance” policies, which is a big step in the right direction. But I use this list to help me decide if the senior or C-level executives of my corporations are really worth what they are being paid, and then I decide how to vote on Executive Compensation, which is an “advisory” vote. It might not change policy, but your vote for or against is a barometer of how you and other shareholders feel, and that sends a message to the Board of Directors. If you cruise through the Proxy Statement, and read the Executive Compensation policy, it should also tell you how shareholders voted the previous year. NOTE: There should be a statement which bars relatives of executives and board members from serving on the Executive Compensation Committee. If this statement is not there, I recommend a NO vote on this policy.

Public Accounting appointments should be approved or abstained – I have not come up with a solid way to determine how to vote on this issue. As You Sow does give some guidelines, but I found them to be complicated and many proxies I have read do not disclose the information needed to follow their guidelines. However, lest you think this is not an important issue, please remember that Peter Madoff was the CPA for Bernard L. Madoff Investment Securities, LLC, and we all know how well that worked out! Make sure the word “independent” shows up in the accounting firm description (usually right on the ballot). That is always a good start.

Now for the tough part: Board Members. This is more than a personality contest. Make sure your Board nominees have a broad level of corporate governance experience, and are not over-weighted with the company’s employees. They should not be serving on more than three other boards, though my personal limit is three directorships in total. Board members should have good attendance records. Most companies require a 75% attendance as a requirement for sitting on the Board of Directors. Look at how long they have been serving. Does the company have term limits? Have most of the board members served over 10 years? Is there diversity of experience, gender, education? Are they all in the same age range? Pay attention to board members who are very elderly – especially if the slate is heavily weighted with members in their 80’s who have served a very long time. Are these directors unwilling or unable to cede control? Is there a solid succession plan? Think of what is going on right now with Disney and CBS/Viacom. Even if you vote them all in anyway, it’s good to know the cast of characters – they are, after all, making decisions on your behalf.

If you are on the fence on any nomination or proposition, you can ABSTAIN, a neutral vote, which still sends a message.

If you really want to take a deep dive, attend Shareholder Meetings! We have had many clients make a habit of attending shareholder meetings, usually the ones nearby, like Disney or Avery. I’m showing my age here, but Santa Anita Realty was a popular shareholder meeting for its Southern California shareholders.

Believe it or not, this is interesting stuff! I posted this year’s As You Sow publications on the “News, Views & Distractions” section. I’ll also be happy to email them to you (

Have I piqued your interest in becoming an informed shareholder? I know we all get the same 24-hour day, but take a moment to have a look at that annual report and proxy statement. It never hurts to know what you own and let your voice be heard.

Good luck!


The 100 Most Overpaid CEOs: Executive Summary
The 100 Most Overpaid CEOs: Full Report