6

I sometimes get proxy solicitations for stock that I have.

If I do not return the form and do not vote, what happens to my voting rights? Does somebody else get them?

For example, lets say a company has 1 million shares and 400,000 give a proxy vote to the management for election of directors, and 100,000 stockholders vote their shares for somebody else. Now nobody has an explicit majority. Does management win because they have a plurality of votes, or does management get to vote the 500,000 abstaining shares?

5

In formal meetings, the notion of ‘quorum’ is usually distinct from ‘all members’. The quorum includes those who show up and those who submitted valid proxies.

There are some motions in some contexts that require unanimous resolutions or resolutions without dissent, where everyone has to agree or at least not disagree, whether represented or not on the day.

However, it is more common for votes to be decided based on just those represented in the quorum. In your example, if the quorum was 500,000 and there were 500,000 shares represented, then on a 400,000 to 100,000 vote, you’d have the 400,000 constitute a simple majority. The other 500,000 who didn’t turn up and didn’t submit a proxy just don’t get to vote and nobody else gets to use those votes.

1

Others have mentioned the concept of a quorum, but it's actually worse than that at some companies. Sometimes, to pass a shareholder resolution, it's required to get a majority (or even a super majority) of the whole number of shares issued. In those cases, not sending in your vote is the effective equivalent of voting no.

Companies deliberately structure their rules like this to make it more difficult for shareholders to overturn the decisions of the executives or the board.

In some states or countries, bylaws like this may be illegal. Votes may be required to operate on a quorum basis, where just a majority of the votes submitted is required. But in other states, this is allowable.

0

If you don't exercise your voting rights and you don't assign a proxy to vote for you, then there will be no votes.

So in a way, yes, that's kind of like "someone else gets them", in the sense that you have abstained and left all of the voting to others. But no, nobody votes your shares without your having assigned a proxy or voted yourself.

See what Forbes had to say earlier this year on the matter of votes not being exercised: https://skytopstrategies.com/retail-shareholders-theyre-not-voting-issue/

  • 1
    I don't have one in front of me to confirm, but I seem to remember from various UK voting documents I've had that at least some say something along the lines of if you don't vote or appoint a proxy of your own, the chairman will act as your proxy and cast your vote as they see fit. Perhaps that is to avoid the problems of simple vs. overall majorities. – TripeHound Sep 6 '18 at 6:58

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