What Is Proxy Voting and Why You Should Care

You are a shareholder of the companies in your portfolio, and proxy voting is the way for you to have a say

Jim Ryan 17 June, 2020 | 9:54AM

Casting Ballot in Black and White

Would you own a business without paying attention to how it’s being run and who’s running it? No. 

When you buy a stock, you become a part-owner of that company. Proxy voting allows shareholders like yourself to influence company operations and decisions; it’s the primary way that you can have a say in how public companies around the world are governed. The issues at stake in many proxy votes typically focus on the long-term benefits to a company, making the process that much more relevant for investors and functioning of the market. 

How does Proxy Voting Work?

Publicly traded companies report to their shareholders through annual shareholder meetings and other communications. Companies send proxy statements, detailing the resolutions that shareholders will be voting on during the meeting.

These days, very few investors attend shareholder meetings in person, which means that most votes are cast as "proxy votes" either online, by phone, or by mail. If you're a fund investor, fund companies vote on behalf of you and other investors in the fund, too.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Jim Ryan  Jim Ryan is a senior analyst with Morningstar.

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