Moxy Vote Blog

Two weeks ago, we highlighted individuals and organizations that have made important contributions to the field of corporate governance and shareholder advocacy. Today we post a continuation of that discussion.

Glyn Holton

Glyn Holton at Investor Suffrage Movement - Having limited contact with Glyn, we mainly admire his work from afar. His primary effort is fighting for shareholder rights through the newly created U.S. Proxy Exchange. He just scored a victory for the “little guy” when the Exchange was able to help convince Intel from staging an online-only annual meeting – something that is NOT conducive to shareholder advocacy. Glyn also created the Field Agent Program, which organizes volunteers to attend shareholder meetings on behalf of large and small shareholders to ensure their agenda is heard by the board.

Lisa Woll & Meg Voorhes

Social Investment Forum - The Social Investment Forum (SIF) is a group that promotes the practice and growth of socially responsible investing (SRI) in the U.S. Forum members, including Moxy Vote, support SRI through investment management techniques, shareholder advocacy and community investing. Members are offered programs from SIF that help expand SRI and its impact. The Forum is led by Lisa Woll and Meg Voorhes. Their expertise and experience are helping push SIF to new heights. We encourage you to check out their website to help you on your journey to becoming a better stock owner.

Nell Minow

Nell Minow at the Corporate Library - Not much more can be said that has not already been spoken or written about Nell. She is a already well-known as a true pioneer and a successful entrepreneur. She has battled poor corporate governance practices (e.g., bad directors, outsized compensation plans, and golden parachutes) for most of her career, and she has testified to Congress on such issues. Her celebrity is multi-faceted, as she also finds time to run a very well-known movie review site called MovieMom.

In the coming weeks, we will finish up this current round of “Pioneers” with two remaining individuals – Rich Ferlauto and Simon Billenness. Stay tuned!

There’s a really good article in today’s New York Times about the practices, politics and potential of retail proxy voting.

Tara Siegel Bernard did her homework on this one, interviewing Mark Latham of the SEC’s Investor Advisory Committee, Nell Minow of The Corporate Library, Stephen Davis of Yale, Michael Passoff of As You Sow, and some guy from Moxy Vote.

Our animation team will be ecstatic, as our quirky artwork was used to illustrate the article.  There’s a little You on page B1 of the print edition, and B4 is covered with our scribbly drawings. Fun stuff.

But rather than read what I’m writing about what she wrote, you should just read what she wrote.

Should you too Tweet, track us on Twitter.

Bugs and Daffy had it all wrong. It’s not duck season. It’s not wabbit season.  It’s proxy season. To demonstrate this point, we spent a few hours beating Excel and Photoshop into submission to come up with this chart.

Proxy season is Marchish through Junish.

Today marks an exciting end to a busy week!  Since Monday, we have added five new Advocates on our site - Green America, Parents and Friends of Ex-Gays and Gays, ProxyAnalyst, Trillium Asset Management and Walden Asset Management. We hope this diverse group will contribute plenty of guidance and opinions in the coming weeks and months.

Also this week, several advocates provided opinions on multiple ballots displayed on our site. The highlights include:

• Change to Win supported the resolution at Toll Brothers which calls for the Board’s Chairman to be an independent director who has not previously served as an executive officer in the company.
• Change to Win also supported the resolution at Whole Foods for the Board to develop a succession plan for the position of CEO.
• Parents and Friends of Ex-Gays supported the resolution on the Disney ballot to explicitly prohibit discrimination based on ex-gay status in its sexual orientation employment policy and diversity training for employees.  In doing so, they sided with the Corporate Morality Action Center on this ballot item.

With the momentum from our advocates picking up, this should be an exciting spring proxy season at Moxy Vote.

Moxy Vote has been working on our exciting business for almost three years.  Although it seems like a long time, we realize it is nothing compared to the long journey the many pioneers of the corporate governance and shareholder advocacy community have traveled.  These individuals and organizations have been trailblazing long before we came on the scene.  They made it easier for Moxy Vote to help push the industry to new heights.

With that in mind, we thought it would be a perfect time to shout out to those who brought shareholder rights to the forefront of the investment scene.  These folks continue to lead this charge even today.  We have worked closely with some, and others we have just admired from afar.

Due to the number of individuals and groups Moxy Vote would like to profile, we will make three separate posts.  We just don’t want to overwhelm you with too much good stuff all at once!  So here we go, our first edition of our very own “wall of fame.”

Jim McRitchie

Jim McRitchie at CorpGov.net – Jim has been a true independent voice in the industry for years and has run his corporate governance site since 1995.  He brings to light important issues and information on the industry and leads many discussions about pushing reform and best practices forward.  Many shareholder advocates have his site bookmarked as a “must see” to get their regular dose of corporate governance information.  Jim tirelessly keeps individual and institutional shareholders more informed and more engaged in the corporate governance process.

Mark Latham

Mark Latham and Andy Eggers at ProxyDemocracy – ProxyDemocracy began as a collaborative project between Andy and Mark, and it has grown into a useful resource for investors. Focusing on the mutual fund industry which owns about 25% of corporate equities,  the site encourages funds to disclose their proxy votes ahead of meetings and analyzes how those funds voted.  With a proprietary method for scoring these funds according to ESG (Environment, Social and Governance) criteria, it allows investors to see which mutual funds share their views and values.

Andy Eggers

Now the torch has been passed to the new Executive Director Matt Keenan who is leading ProxyDemocracy into the next phase of its evolution, which will no doubt be impressive.   As Matt leads the charge, Mark is focusing his efforts on VoterMedia.org, which has some cutting edge ideas on how to promote good governance in both companies and governments.  Mark was named to the SEC Investor Advisory Committee, where he continues to make sure that individual investors have a voice with the SEC.  Andy serves on the board of ProxyDemocracy.

That is it for this week.  Next time, I will highlight Glyn Holton, Nell Minow, and the Social Investment Forum.

If you are still not sure how Moxy Vote can help you, check out this article at BusinessWeek.  Our very own Doug Gates eloquently describes who we are and how we help shareholders have a voice.  In addition to Doug, the article quotes three important folks:

• An advocate on our site - Eric Cohen from Investors Against Genocide
• A retail shareholder who wants to be heard  - John Marcoux
• A pioneer in shareholder advocacy - Nell Minow from The Corporate Library

You could be an expert in the industry, a shareholder advocate, or just an average investor – Moxy Vote can help you be heard.

You may not follow Supreme Court rulings, but you may have seen the video clip of Justice Alito shaking his head during President Obama’s State of the Union address a few weeks ago. Or you may know that the controversial ruling to lift spending limits on corporate campaign donations has caused a political firestorm. It has dramatically changed the landscape on donations.

But why should you, as a shareholder, care? Transparency, or lack thereof, just became more important.

Now that corporations have no ceiling on political donations, shareholders’ ability to have transparency on those donations becomes critical. However, most corporations do not offer any transparency to their owners on this issue. One of the Advocates participating on Moxy Vote, the Center for Political Accountability, fights to change this. They ask corporations to simply disclose all of their political spending. Not stop – just disclose.

As a result of this ruling, my guess is that Bruce Freed and Maureen O’Brien at the CPA are going to be very busy this year!

The Problem – Retail Voter Apathy

The biggest challenge that all shareholders face in collectively achieving better corporate governance is the lack of participation by “retail” (i.e., non-institutional) voters.  Approximately 25-35% of shares of public companies are held by individual retail shareholders.  This segment of the shareholder base is notoriously apathetic toward the completion and submission of proxy ballots.

Many reasons are offered to help explain retail voter apathy including the following:

• inefficient voting methods (e.g., paper or telephone)
• no sense of empowerment (i.e., a feeling of “what good will it do?”)
• little available information to allow a thoughtful voting decision
• little knowledge about the process and the right to vote

The Solution: Electronic Voting Platforms

Many institutional shareholders, like mutual funds, vote their clients’ proxies electronically through one of several online voting platforms.  The process is very efficient.  The ballots are delivered electronically to a Web-based application, and the votes are often submitted from within the same application.  Moreover, voters may create “default” proxy voting policies, or standing instructions, so that they do not need to return to the site to vote each ballot individually.  This method ensures that all votes are cast based upon pre-defined user-controlled preferences.

The development of electronic voting platforms for retail investors is the solution to the problems presented above.  Specifically, electronic platforms can provide information to allow investors to make informed voting decisions at the time that they are voting.  Group participation with other like-minded retail voters through these electronic platforms will strengthen the “voice” of the retail voter and empower the voter.  Electronic voting platforms that are seeking a profit will allocate resources to educating the investing public regarding the overall process and its importance in an effort to attract users.  Finally, electronic voting platforms are significantly more efficient than the currently available voting methods and would increase retail participation.

How do we create more and better electronic voting platforms?
There are numerous reasons for why proxy voting platforms for retail investors have failed to develop.  Recently my colleagues submitted a letter to the SEC that details these reasons.  Quickly, though, structural issues present in the industry inhibit the proliferation and effectiveness of the electronic voting platforms.

In our opinion, there is a simple solution, a silver bullet, to most of these issues.  The powers-that-be need to do two things:

1. Require firms that disseminate and collect proxy votes to be capable of delivery to all electronic platforms.
2. Require that all firms comply with the delivery instructions of the voter. Brokers and transfer agents must deliver to the platform chosen by the shareholder, just as they would deliver to a chosen physical address.

While these requirements may seem obvious, they do not reflect the current capabilities of the industry.  Regulators should work to implement these rules in order to force the industry to address its infrastructure issues and open things up.

Requiring firms to “plug in” to all electronic platforms would enable voting for a large block of shares that presently cannot be voted through the existing platforms (i.e., shares that are held “directly” and not through a broker).  Included in this group of shareholders are many participants in company 401(k) plans which are generally treated (for voting purposes) as directly-held shares despite being custodied at a broker.  Without this requirement, electronic platforms are rendered useless for this group of voters, and the apathy problem will persist.

It is of even greater importance for regulators to ensure that a shareholder has full control over the delivery of his/her proxy ballot because there are conflicts of interest among industry participants that could derail the development of electronic voting platforms.  The distribution agents in the industry work for the issuers (either directly or, indirectly, as is the case with broker-held shares).  As such, the agents have the incentive to satisfy these paying customers rather than do what is best for corporate governance.  By giving delivery control to the shareholder, we’d create a proper check and balance on the proxy distribution agents that otherwise may not have incentive to engage with all retail-friendly electronic platforms.