Individual investors are increasingly losing their voices (via proxy or in person) in crucial shareholder voting matters. The reason for this under-representation has nothing to do with anything as exciting as deceptive business practices or secret votes. Its just that fewer individual shareholders are choosing to return their proxies.
This lack of return creates many dilemmas for companies that wish to proceed with the voting process. After all, for voting to take place it is necessary to reach a quorum, which is the number of shareholder and/or proxy votes that are required to conduct business (typically a majority of the shareholders). If a quorum cannot be reached due to lack of votes then many times the Ten-Day Rule can be utilized.
The Ten-Day Rule allows brokers to vote proxies for shareholders who have not turned in their votes ten days prior to a meeting at which voting will take place. This rule can only be applied to routine matters, which provides an ambiguity that is quickly being defined and amended.
Non-routine issues such as equity compensation plans must be voted on by shareholders. Soon there may be Election Contest Rules enacted that...
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