Meghan Day

Principal Solution Designer

Proxy voting: What it is, how it works & key proxy voting guidelines

Anyone with a 401k or other investments owns company shares and is, therefore, a shareholder. Proxy voting is the process, and proxy voting guidelines are the principles and rules that ensure those people and institutions still have a voice. In a recent Vanguard survey, the majority of investors expressed a desire to use that voice, with 58% saying they were more likely to invest in a fund if they could influence proxy voting decisions. In a shareholder or corporation’s absence, an individual or firm casts a proxy vote on their behalf. Because proxy voting is the single most important avenue by which publicly traded companies report to shareholders, following rigorous guidelines is essential. Here, we’ll explain what they are, including:

• What proxy voting is and how it works
• Why proxy voting matters
• Key proxy voting terms to know
• What proxy voting guidelines are
• Key components of proxy voting guidelines
• The different types of proxy votes, including plurality votes and majority votes
• Updated global proxy voting guidelines from the SEC and other regulators
• Proxy voting across industries and company sizes
• Tools to help you prepare for proxy season

What is proxy voting?

Proxy voting definition: The process by which a shareholder authorizes someone else to vote on their behalf at a shareholder meeting.

In a proxy vote, a shareholder delegates another individual or firm to vote on their behalf; the person voting for the shareholder is called the proxy. This commonly occurs when the shareholder can’t attend the annual meeting in person.

Most shareholders have a proxy but may not even know it. Whether you invested through a 401(k) or have personal investments, you hold shares. If you haven’t attended a shareholder meeting, an asset manager, institutional investor, or other proxy represented you.

The proxy vote is central to modern corporations because it:

1. Gives shareholders a voice: Many don’t attend meetings, so a proxy vote offers the power to influence key decisions from afar.
2. Ensures quorum can be met: Without a proxy vote, gathering the minimum number of votes would be difficult to make the meeting valid. This could delay or invalidate proceedings.
3. Facilitates good governance: By making shareholder votes possible, a proxy vote helps organizations implement and maintain many facets of governance, like board succession.

How does proxy voting work?

Proxy voting is a structured process dictated by the company’s bylaws. Though the mechanics of proxy voting vary depending on the voting method, most generally involve:

1. Notifying shareholders about the meeting and agenda: The board of directors must notify eligible shareholders of an upcoming meeting and its agenda through a proxy statement, often working with the corporate secretary (CoSec) to distribute information. Proxy advisory firms may also issue recommendations to institutional investors. This includes what shareholders will vote on and instructions for proxy voting. Once they receive the notification, shareholders must decide whether to attend or delegate their voting power.
2. Issuing proxy forms: The CoSec then issues proxy forms to shareholders. These forms allow shareholders to appoint a proxy and instruct the proxy on how to vote on key matters.
3. Selecting a proxy: Shareholders select a proxy, which could be a fellow shareholder, a board member, or a trusted advisor. It is essential to choose a proxy that fairly represents the shareholders’ interests.
4. Completing the proxy form: Shareholders use the proxy form to indicate their voting preferences on the agenda items. They must also identify whether their proxy must follow the shareholders’ instructions or if they can use their own discretion.
5. Submitting the proxy form: Once complete, shareholders send the form back to the CoSec by the deadline to ensure their vote will be counted.
6. Verifying proxy forms: The CoSec will then verify the forms to confirm they are valid, complete and received on time. This is crucial to maintain good governance related to voting.
7. Preparing for the meeting: The board of directors will work with the CoSec to organize all proxy votes ahead of the meeting. Summarizing the voting intentions can help the meeting run smoothly.
8. Conducting the vote: Come proxy season and the AGM, proxies cast votes on behalf of the shareholders they represent during the meeting. The board oversees voting to ensure it’s compliant.
9. Counting votes: After the vote, the board or an independent auditor will count and verify all votes, including proxy votes. This ensures that the final tally is accurate.
10. Announcing the results: The board will announce the voting results, including how proxy votes impacted the outcome. This typically occurs during the meeting and is distributed to shareholders later.
11. Keeping records: Throughout the process, the CoSec should take and store detailed records to create a paper trail of the organization’s legal and regulatory compliance.
12. Collecting feedback and reviewing: Many organizations then hold a review period to allow shareholders to provide feedback. The board of directors can use that feedback to refine proxy voting procedures.

Why proxy voting matters

Proxy voting is a critical tool for shareholder democracy. It gives investors, especially those who can’t attend annual meetings, the ability to influence a company’s direction, hold leadership accountable and align business practices. This makes it an essential tool of modern governance models, particularly those rooted in serving shareholders.

Here’s why that matters:

• Amplifies shareholder voice: Whether you own ten shares or 10,000, proxy voting allows you to weigh in on key decisions. As a result, organizations’ corporate governance represents more than just the voices of large institutions or insiders.
• Drives corporate accountability: In recent years, shareholders have scrutinized issues like executive pay, board diversity and climate risk. Shareholder pressure through proxy votes can ultimately lead to policy changes, leadership turnover or improved transparency.
• Shapes long-term impact: Thoughtful proxy voting can push companies to adopt more responsible, sustainable and equitable practices. This includes advocating for action on climate commitments, labor rights, community engagement and other environmental, social and governance (ESG) related issues.
• Protects investments: By voting on governance practices and risk oversight, shareholders help ensure the long-term health of the companies they invest in. Strong governance reduces exposure to legal, reputational and operational risks that can threaten shareholder value.

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Key terms to know in proxy voting

Understanding proxy voting fully means getting familiar with the terms that characterize the process. Here are some essentials:

• Proxy statement (Form DEF 14A): This is the official document a company files with the SEC before a shareholder meeting. It outlines what issues are up for vote, provides background on board nominees and explains executive compensation and shareholder proposals.
• Proxy card: A ballot sent to shareholders allowing them to vote on meeting agenda items without attending in person. Shareholders can vote “for,” “against” or “abstain” on each proposal and submit the card by mail, online or phone.
• Quorum: The minimum number of shares that must be represented — either in person or by proxy — for a vote to be valid. Without quorum, the company can’t officially conduct business or make decisions at the meeting.
• Shareholder proposal: A recommendation or request submitted by a shareholder for a vote at the company’s annual meeting. These can address various issues, from environmental policy to corporate governance reforms.
• Fiduciary duty: The legal and ethical responsibility to act in someone else’s best interest — in this case, on behalf of investors. Fund managers, pension funds and other fiduciaries must vote proxies that align with their clients’ long-term financial interests.

What are proxy voting guidelines?

Proxy voting guidelines are a set of rules that govern how shareholder proxy votes will be cast. Most investors vote by proxy or select someone to vote in their place. It’s also common for investors to designate a company manager to vote. However, whoever that agent is must act in the shareholders’ best interest. Ensuring they do is why guidelines exist.

Corporations should have transparent protocols for facilitating proxy voting that furthers shareholder engagement, including:

1. What shareholders vote on: Shareholders can be asked to vote on any number of things, including electing officers, approving mergers and acquisitions, approving stock compensation plans, approving the auditor report, approving resolutions, and anything else the company deems relevant.
2. How shareholders vote: Shareholders can cast their proxy votes by mail, phone or the internet as long as they do it before the cutoff time, usually 24 hours before the start of the shareholder meeting. Typically, shareholders vote by responding “for,” “against,” “abstain,” or “not voted.” Once they’ve voted, they can change their votes as long as they do it before the deadline.
3. Fiduciary duties: As stated, the proxy has a fiduciary duty, meaning they must put the shareholders’ interests first. Guidelines should be structured to hold proxies accountable to this principle.
4. Disclosures: Corporations should disclose to shareholders how proxy votes are cast. Integrating that process into guidelines upholds this mandate.

Who creates proxy voting guidelines?

Many different entities oversee proxy voting, contributing to its complex nature. While institutional investors are often the proxy voters and, therefore, develop guidelines of their own, they’re just one of many cooks in the proxy voting kitchen.

• Proxy advisory firms like Glass Lewis specialize in proxy voting recommendations. Institutional investors and corporations can adopt or adapt firms’ advice to craft their own guidelines.
• Board members: The board of directors, particularly the governance committee, should establish guidelines for the corporation. These will outline how the board engages with shareholders and proxies, including filing proxy statements; they’re also essential if the corporation itself holds shares in another entity.
• Regulatory bodies: Regulators and policymakers, like the Securities and Exchange Commission (SEC), may introduce policies that all proxy voting guidelines must follow. This creates an enforceable standard for issues like governance and shareholder rights.
• Corporate secretaries (CoSec): The CoSec manages the logistics of proxy voting and is, therefore, responsible for maintaining compliant processes and protocols. It’s up to the CoSec to notify, communicate with, and facilitate the compliant votes of shareholders and their proxies.
• ESG analysts: As ESG sweeps the boardroom, analysts have an increasingly prominent role in interpreting and applying proxy voting guidelines to ESG. They may assess how ESG influences company policies and collaborate with investors to identify ESG priorities.

Key components of proxy voting guidelines

Proxy voting guidelines spell out how proxies should vote; guidelines that are insubstantial or lack key components will cause more confusion than clarity. While priorities vary between shareholders and institutional investors, most guidelines will offer a point of view on the most urgent issues likely to arise at the annual meeting.

These often include:

1. The board of directors

Shareholders make critical decisions on board composition, independence and diversity, including appointing and replacing board members. Proxy voting guidelines should have a clear perspective on which board decisions would create greater shareholder value. The BlackRock proxy voting guidelines, for example, state, “It is our view that a majority of the directors on the board should be independent to ensure objectivity in the decision-making of the board and its ability to oversee management,” making it clear they will vote to advance that view.

2. Executive compensation

CEO pay has become a hot-button issue; shareholders increasingly believe CEOs and other executives are overpaid. As such, guidelines should instruct proxies on voting on crucial compensation structures. This includes aligning compensation with company performance, “say on pay” provisions that give shareholders a voice on bonuses, stock options and perks, and clawback provisions that recapture pay in the event of financial restatements or misconduct.

3. Shareholder rights

Shareholders have certain rights in the boardroom, and comprehensive guidelines hold proxies accountable for safeguarding them. Proxy voting guidelines include explicit language on voting rights, but they also allow institutional investors to introduce proposals to enhance or protect shareholder rights or advance shareholder proposals. For example, the ISS proxy voting guidelines for the U.S. include stipulations like voting against proposals allowing the board to amend bylaws without shareholder approval.

4. ESG issues

As of 2024, more than half of institutional investors said they plan to increase their allocations to sustainable investments over the next year. More than 70% of those investors said they believe strong ESG practices will create higher returns. Many shareholders share this sentiment, so proxy voting guidelines increasingly take a stand on ESG. The ISS proxy voting guidelines include a dedicated set of ESG recommendations, including voting for additional disclosures of climate-related costs and risks.

5. Audit matters

Guidelines are also a tool that advances accountability in financial reporting. Institutional investors will take a stance on shareholders’ behalf about how to vote regarding appointing external auditors, approving audit and non-audit fees for external auditors and the composition of the audit committee, among other matters.

6. Mergers and acquisitions

Many corporations pursue mergers and acquisitions (M&A) as a path to growth, but those decisions are subject to shareholder approval. Ahead of the annual meeting, institutional investors and proxies will formulate guidelines on whether to approve or reject M&A. Depending on the information surrounding the vote, these votes may also be on a case-by-case basis and require shareholders to trust the proxy to act in their best interest.

7. Crisis response

Many crises are, by definition, unforeseeable. However, shareholders must still determine how much power and independence boards will have in responding to them. This includes proactive guidelines like voting for policies that strengthen the risk management framework and more instructive policies like whether the board must consider the long-term impact of their decisions, such as sustainability, during a crisis.

Plurality vote vs. majority vote

Proxy voting guidelines inform shareholders how proxies will vote on key issues. However, the mechanics of proxy voting can also heavily influence the outcome of the annual meeting. There are several ways to vote, but plurality and majority votes are the two most common, each with distinct implications.

Plurality vote

A plurality vote refers to a vote where the winner only needs more votes than a competitor. This means that if an individual runs unopposed, he or she only needs one vote to secure a win. Shareholders can also withhold their vote if they’re opposed to a candidate, but doing so may not sway the outcome; a candidate can still win a plurality vote with very few votes because they only need more than any other candidate. However, shareholders can use withholding to signal dissatisfaction and influence a board’s choice of candidates.

While a relatively simple voting process, plurality lacks accountability. A director can be elected when few shareholders support them, undermining their influence. The lack of a majority requirement also makes it easier for incumbent board members to keep their seats regardless of shareholder sentiment.

A plurality vote is most common when multiple people run for a single board seat to streamline the voting process. Plurality may also make sense if a candidate runs unopposed, if the vote is highly contested and no candidate is likely to win a majority or when a board needs quick and decisive votes to move through a long annual meeting agenda.

Plurality voting with a runoff

Adding a runoff to a plurality vote can counteract the lack of accountability associated with this vote type. In this scenario, shareholders consider all candidates. If no candidates receive a majority vote (more than 50%), the top two candidates will proceed to a runoff election. Whichever candidate receives the majority of shareholder votes in the runoff wins.

Majority vote

A majority vote simply means that the winner gets the majority of the votes or more than 50%. This is generally considered a more democratic approach than plurality voting and is more reflective of shareholder sentiment.

In a majority vote, shareholders who abstain from or withhold votes have greater influence; abstaining can lower the votes needed for the majority, making it easier for a candidate to win. Likewise, withholding votes can signal shareholder dissent and influence the candidates’ boards put forward.

Majority voting is often used when shareholder accountability is a top priority; this vote ensures candidates have broad shareholder support. High-stakes or controversial decisions, like appointing a CEO, about the company’s future that require consensus or shareholder proposals or resolutions often call for a majority vote.

Other voting methods

• Cumulative vote: Sometimes called proportional voting or block voting, this voting method is typically reserved for electing boards of directors. Each shareholder receives one vote per share times the number of open director positions. They can then allocate those votes across directors and even use all of them to support a single candidate.
• Single transferrable vote (STV): This is a preferential voting method. A shareholder gets one vote but will rank the candidates in order of preference. If their first-choice candidate reaches quota — the number of votes they need to win — before their vote is counted, they will be reallocated to their next-choice candidate. This continues until all votes are counted.

Global proxy voting legal and regulatory frameworks

Bylaws aren’t the only documents governing the proxy vote. Regulatory bodies in different regions have rules to ensure proxy voting is fair and transparent and truly gives shareholders a voice.

Complying isn’t just for the good of shareholders, either. Most proxy voting regulations come with steep legal penalties for noncompliance, such as fines, sanctions and legal action. Beyond regulatory consequences, failing to run a transparent and ethical proxy voting process can lead to long-lasting reputation damage that erodes shareholder trust and impacts stock prices.

U.S. SEC proxy voting guidelines

The SEC proxy voting guidelines reach back to 2003 and have undergone several iterations since then. From the SEC roundtable of proxy voting in November 2018 to the much more stringent amendments in 2022 and 2024, the changes were driven by widespread concerns about the transparency, accountability and effectiveness of proxy voting processes.

Additional shifts in 2024 and 2025 have made further attempts to enforce the SEC’s guidelines and relevant court rulings. Over the years, SEC guidance and amendments have focused on:

1. Fiduciary duty: Investment advisors must act in the best interest of shareholders, and the SEC has worked to ensure that advisors make decisions that align with shareholders’ financial goals. This duty has come under renewed scrutiny, with debates over ESG-related proposals and beneficial ownership influence.
2. Proxy voting policies and procedures: The SEC governs the proxy voting guidelines that other entities develop. This includes dictating that institutional investors must adopt and implement written proxy voting protocols and disclose those protocols to investors, specifically in Form ADV Part 2A. These policies must be followed consistently and updated to reflect regulatory changes, such as the 2022 universal proxy card rule and new guidance on proposal exclusions.
3. Conflicts of interest: An institutional investor with conflicting interests with those of its clients may struggle to fulfill its fiduciary duty. The SEC requires that institutional investors disclose these conflicts and have processes to manage them so that proxies can still vote impartially.
4. Recordkeeping: Institutional investors must keep thorough records of proxy voting activities and store those records for at least five years. This includes recording votes cast, the rationale behind them and any related communication.
5. Reporting: Firms must then provide their clients with the records they take, demonstrating how proxies voted. Information should be provided annually or made available upon request. As of 2023, enhanced reporting rules under form N-PX require investment managers and institutional investors to disclose proxy votes using standardized forms. Beginning with the 2024 filing season, these reports must include vote-by-vote details, issue categories (e.g., climate or governance) and explanations for certain voting behaviors, including abstentions and votes on “say-on-pay” proposals.

Amendments to SEC guidelines from 2020 to 2022

Unsatisfied with how reputable the proxy voting process really was, the SEC adopted rigorous new guidelines that placed proxy advisory firms and institutional investors under pressure. The 2020 guidance:

• Made proxy voting advice a “solicitation,” which prohibits proxy advisory firms from using false or misleading statements under Exchange Act Rule 14a-9.
• Increased oversight on proxy firms, mandating that they must allow companies to review and respond to voting recommendations before they’re finalized.
• Doubled down on disclosures, so proxy advisory firms had to report on conflicts of interest that could introduce biases.
• Emphasized due diligence on the part of institutional investors when relying on the recommendations of proxy advisory firms.
• Encouraged tailored voting policies suited to shareholders’ specific needs rather than implementing proxy advisory firms’ recommendations directly.
• Reinforced documentation and reporting to ensure thorough recordkeeping of all proxy activities and enforce more detailed reporting for shareholders.

These amendments sent a shockwave through proxy advisory firms and institutional investors but left room for improvement. Investors reported to the SEC “strong concerns about the rule’s impact on their ability to receive independent proxy voting advice in a timely manner.” The SEC revisited these policies in 2022, rolling back select requirements and adding others to refresh its expectations regarding proxy voting. The updated guidance:

• Maintained the definition of proxy voting advice as “solicitation” to prevent proxy advisory firms from misleading investors.
• Relaxed what constitutes “solicitation” by deleting Note (e) to Rule 14a-9, which counted failure to disclose material information like methodology or conflicts of interest as solicitation.
• Eliminated advance notice so proxy firms no longer needed to furnish their recommendations to companies before finalizing them. This was in response to concerns that advance notice was burdensome and could delay the proxy voting process.
• Reduced conflict of interest reporting to only mandate disclosures material to the voting recommendations at hand.
• Reaffirmed fiduciary duties by extrapolating on its guidance to recommend how institutional investors can carefully consider their shareholders’ needs.
• Introduced flexibility so institutional investors could be more responsive when clients express specific preferences or provide instructions on voting.
• Maintained the focus on tailored practices to proxy voting to ensure advisors adapt to the needs of their clients while relaxing some of the more stringent requirements they introduced in 2020.

Amendments to SEC guidelines from 2022 to 2025

Following the 2022 reforms, the SEC introduced additional amendments and policy shifts to further increase transparency and refine proxy voting responsibilities, especially for institutional investors and advisors. From enhanced reporting rules to evolving definitions of shareholder influence, the landscape continues to shift.

Key changes from 2022 to 2025 include:

• Expanded proxy vote reporting (Form N-PX): Investment managers must now disclose proxy votes in a standardized, machine-readable format.
• Universal proxy card requirement: As of August 2022, contested director elections must use a single ballot listing both company and shareholder nominees. This gives shareholders greater flexibility to vote across slates rather than having to choose one side’s full list.
• Rollbacks and legal reinstatements of proxy advisor rules: The SEC initially resciended the 2020 rules, requiring proxy advisors firms to share recommendations with companies and notify investors of company rebuttals. However, a 2024 court decision reinstated those requirements. This back-and-forth has created ongoing uncertainty around the role and obligations of proxy adivsors like ISS and Glass Lewis.
• Revised interpretations on shareholder proposals: Under updated SEC staff guidance, companies are more likely to exclude ESG-focused proposals by labeling them as “micromanagement.” This shift has raised concerns among investors about diminishing shareholder influence on issues like climate risk and human rights.
• Beneficial ownership and stewardship scrutiny: New definitions around beneficial ownership and fiduciary control have led some asset managers to pause stewardship engagements temporarily. The SEC’s broadened interpretation may impact how large firms, such as BlackRock and Vanguard, manage proxy voting on behalf of clients.

European Union: Proxy voting guidelines for EU member states

The EU has several directives related to proxy voting, all aiming to unify corporate governance practices across EU member states.

1. Shareholder Rights Directive (SRD II): At its core, SRD II is a shareholder rights regulation that encourages transparency and shareholder engagement in proxy voting. Companies must disclose how shareholders cast votes to help identify shareholders, empowering them to exercise their voting power effectively.
2. EU Transparency Directive: This directive promotes more comprehensive disclosures about proxy voting to hold companies accountable for fair practices. It also makes proxy advisors responsible for disclosing conflicts of interest and how they approach voting recommendations.

APAC: Proxy voting guidelines in the Asia/Pacific region

Proxy voting practices in the APAC region vary widely across countries, shaped by differences in regulatory frameworks, corporate governance norms and investor engagement levels. While shareholder activism and transparency have increased in some markets, others still operate with limited investor influence or a formal voting process.

Key characteristics across the region:

• Japan has seen a surge in corporate governance reforms, with stronger expectations around independent boards and stewardship codes that encourage institutional investors to vote thoughtfully and disclose their proxy voting records.
• Australia is one of the region’s most developed proxy voting markets, with robust disclosure rules and active shareholder participation. Companies must provide detailed proxy statements, and two-strike rules on executive pay have empowered shareholders to push for accountability.
• Hong Kong and Singapore emphasize corporate governance codes but still lean toward management-friendly practices. Shareholder proposals are less common, though institutional investors are beginning to demand more engagement.
• Emerging markets like India, Malaysia, and Indonesia are expanding access to proxy voting, particularly through digitization and stewardship codes, but they face challenges like low retail investor participation and limited enforcement.

Proxy voting for different sectors, industries and company sizes

Proxy voting in the public and private sectors

Public companies are subject to the strict regulations detailed above. While private and nonprofit entities are not, there is some oversight for their proxy voting processes.

1. Private entities: Private and pre-IPO companies don’t face the same regulatory scrutiny as public companies. However, they risk similar reputational fallout if they don’t have transparent and fair proxy voting processes, especially if they have external investors.
2. Nonprofits: These entities may not conduct proxy votes as often, but they may utilize proxy voting if, for example, they hold investments in public companies. In that case, complying with relevant regulations is essential to maintain their tax-exempt status and uphold their fiduciary duties.

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Proxy voting guidelines

Understand what proxy voting guidelines are and the tools to help you prepare for proxy season.

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Proxy voting guidelines

Understand what proxy voting guidelines are and the tools to help you prepare for proxy season.

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Proxy voting across industries

Proxy voting trends often reflect the unique pressures and priorities of each industry. While governance issues like board composition and executive compensation are universal, shareholder proposals increasingly target sector-specific concerns, ranging from data privacy to supply chain emissions.

1. Financial services: Financial services companies face shareholder scrutiny around risk management, executive compensation and ESG integration. Proposals often address transparency in lending practices, climate-related financial disclosures and efforts to promote diversity in leadership and boardrooms.
2. Healthcare: In the healthcare sector, proxy votes often focus on drug pricing, access to care and executive compensation. Shareholders may file proposals urging transparency around lobbying activities, equitable access to medications or risks associated with opioid-related liabilities.
3. Technology: Tech companies face growing pressure from shareholders on issues like data privacy, AI ethics and workforce practices. Proposals frequently call for transparency in content moderation, oversight of AI deployment or disclosure of DEI and pay equity data.
4. Manufacturing: Proxy voting in manufacturing tends to emphasize climate risk, supply chain sustainability and worker safety. Shareholders may demand science-based emissions targets, independent audits of environmental impacts or disclosures on how the company manages material sourcing.
5. Automotive: As the industry grapples with the transition to electric vehicles, proxy votes often focus on climate strategy, labor practices and board oversight. Investors might push for accountability on carbon neutrality goals, fair treatment of autoworkers or transparency around lobbying related to emissions standards.

Proxy voting across different company sizes

Like industries, proxy voting dynamics can vary widely depending on the size and resources of the company. Shareholder engagement, regulatory requirements and voting patterns also tend to differ between small and medium-sized business (SMBs) and large publicly traded companies.

• SMBs: Smaller businesses often experience less shareholder activism and proxy contest activity due to a smaller shareholder base and less public scrutiny. Proxy voting within SMBs typically centers on foundational governance issues, such as electing directors and approving basic compensation plans, with fewer contentious or ESG-related proposals.
• Large companies: Large corporations face higher levels of shareholder engagement, with more frequent proxy contests and diverse proposal topics. Shareholders often push for detailed disclosures on climate risks, social responsibility, executive pay linked to performance and robust board diversity policies. Proxy advisory firms and institutional investors also play a significant role in influencing voting outcomes at this scale.

Recent proxy vote examples

Many proxy votes go off without a hitch and never draw substantial attention or media coverage. In recent years, however, several high-stakes proxy votes have reshaped major corporations' futures, highlighting the shareholder vote’s true power.

Disney proxy vote

In 2023, Disney shareholders voted on CEO Bob Iger's leadership and revitalization strategy. Activist investor Nelson Peltz favored an agenda at odds with Iger’s that included significant cost-cutting and restructuring; he also sought a seat on Disney’s board.

Shareholders ultimately supported the existing board and didn’t appoint Peltz to the board. While this solidified Iger’s influence, it also highlighted the growing influence of shareholder activism and the potential for shareholders to challenge board decisions.

ExxonMobil

In 2021, activist hedge fund Engine No. 1 — a proponent for renewable energy and climate change — made a daring push to shift ExxonMobil’s strategy. The fund nominated four directors to the board, three of whom were elected despite the company’s strong opposition.

This radically reshaped the board’s composition and underscored shareholders’ views on climate change. It also pushed the company to rethink its position on climate risk and sustainability and marked a significant win for ESG issues in the boardroom.

Randstad

Under rising scrutiny for their remuneration policies, Randstad wanted to begin the next proxy season with an informed perspective on compensation KPIs. They wanted to know other companies' KPIs and compare executive remuneration against their peers. However, they also wanted to assess how proxy advisors like ISS and Glass Lewis would perceive their remuneration policies.

Through Diligent Compensation & Governance Intel, part of the Diligent One Platform, Randstad has executive pay insights and peer group modeling at its disposal. It can compare its executive pay to similarly sized companies to understand which elements may catch shareholders’ attention.

These insights enabled Randstad to focus on the bigger picture of executive pay and empowered them to enter their AGM and shareholder engagements confidently.

Tesla

Executive compensation and reducing term length for board members were on Tesla’s AGM agenda in 2022. The vote garnered significant attention because of Elon Musk’s hold on the board and the company’s governance structure.

Though shareholders voted to approve the executive compensation package, they rejected the proposal to shorten board member terms. It highlighted how shareholders value consistent governance, respected board members, and their willingness to compensate executives they approve of.

Tips for carrying out an effective proxy vote

Proxy voting is a powerful tool for shareholders and organizations alike. Done well, proxy votes ensure shareholders’ voices are heard and governance practices are followed. There are certain steps shareholders and organizations can take to ensure the proxy vote is effective.

Maximizing your influence as a shareholder

To represent your voice in the boardroom:

1. Stay informed: Follow company announcements, financial reports and news closely. The more you know about the context of each proposal, the better decisions you can make.
2. Review proxy statements: Analyze the proxy statement to understand the resolutions up for vote and their implications.
3. Engage with the company: Contact the investor relations team with questions or concerns about a proposal. Building relationships within the organization can give you greater influence.
4. Coordinate with fellow shareholders: Join investor coalitions or engage with other like-minded holders via online forums or stewardship groups. A united front can amplify your impact, especially on ESG or governance issues.

Selecting a proxy

Appointing a proxy to attend meetings on your behalf is essential, but it’s also important to ensure they’ll represent your interests:

1. Choose a proxy you trust: Your proxy can be an individual or a third-party service. Either way, make sure your proxy knows the resolutions and understands your point of view.
2. Provide clear instructions: Be explicit about how the proxy votes. This can include specific votes on specific resolutions or giving them discretion in issues they know more about. This helps ensure their vote reflects your interests.
3. Customize voting guidelines to your values: Many proxy platforms let you set default voting policies, like “vote against director slates with fewer than two women.” Pre-set rules ensure your shares are always voted in line with your principles, even if you can’t review every issue.
4. Understand the proxy’s obligations: A proxy has the legal authority to vote on your behalf. Validate that they take this responsibility seriously and are prepared to vote based on your intentions.

Managing proxy solicitations effectively

Shareholders have a hand in the proxy voting process, but how organizations manage proxy solicitations can greatly influence the outcome:

1. Track solicitation periods proactively: Note key dates — mailing of proxy materials, record date and final voting deadline — in your calendar. Missing a deadline means forfeiting your vote.
2. Evaluate competing materials side by side: In contested or activist scenarios, compare management’s proxy statement against any dissident proxy mailings. This analysis can help you weigh claims, track inconsistencies and spot hidden costs.
3. Communicate clearly: Your priority should be providing shareholders with clear information about each proposal. Transparency encourages informed voting, which is better for the entire organization.
4. Engage with shareholders: Boards that engage with shareholders early and often can address concerns and rally support for key proposals.
5. Leverage technology: Using technology for proxy solicitation and voting can streamline the process and make it easier for all shareholders to participate.

Trends shaping proxy voting in the 2025 season

Proxy voting has evolved rapidly in recent years, and the new U.S. administration is poised to shift the proxy landscape once again. Rising activism, regulatory moving targets and broader societal debates over corporate responsibility have all reshaped the roles of institutional and retail investors alike.

“I would really encourage all directors to make sure that the public companies they’re at are thinking long and hard on shareholder engagement and making sure they have good shareholder engagement practices. I really think that’s table stakes for boards and public companies today. It’s not something you can ignore,” said Doug Schnell, partner at Wilson Sonsini, on a recent episode of The Corporate Director Podcast.

Understanding the trends that shape proxy season can help organizations and shareholders make informed recommendations and decisions come proxy season. Here’s what’s driving the 2025 landscape:

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Get ahead of the 2025 proxy season

Start your AGM prep early with key trends and talking points likely to shape proxy season.

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Get ahead of the 2025 proxy season

Start your AGM prep early with key trends and talking points likely to shape proxy season.

Download the guide

Future of proxy voting with technology

Digital platforms aren’t new to the proxy voting process but play an increasingly central role. Shareholders are looking for new ways to engage with companies, and likewise, companies want a more accessible, efficient and transparent proxy voting process.

Online portals, mobile apps and secure voting systems allow shareholders to vote quickly and securely. Streamlining the entire process can also increase participation rates among shareholders who couldn’t traditionally attend the AGM. Those solutions have evolved to include:

• Blockchain technology: This emerging proxy voting technology creates a ledger for all transactions, making it a secure, transparent, and defensible tool for recording and verifying votes.
• AI and data analytics: AI has already begun to reshape the boardroom and has a hand in how shareholders make decisions. With AI, shareholders can analyze vast amounts of data on voting patterns, financial performance and more. Companies can also use predictive analytics to gauge how different outcomes may impact the company.
• Increasing shareholder engagement via digital platforms: Digital platforms make it easier for investors, especially retail shareholders, to access materials, cast votes and organize around shared priorities. As a result, participation rates are rising, and investor voices are becoming more visible during proxy season and in corporate governance as a whole.

Challenges of adopting proxy voting technology

Despite the vast opportunities for integrating technology into proxy voting, it also introduces new challenges:

• Security concerns: Digital proxy voting could be vulnerable to cybersecurity threats. Robust encryption, secure authentication methods and regular security audits can help uphold the voting system’s integrity.
• Privacy issues: Companies must collect and store shareholder data according to privacy laws and regulations. This requires strict data protection measures to prevent unauthorized access to sensitive information.
• Legal and regulatory compliance: As proxy voting technology grows, so does the need to navigate complex legal and regulatory requirements. Companies must also stay abreast of jurisdictional requirements for their digital voting platforms.
• Disinformation: As more shareholders engage online, companies face increased risk of misleading narratives spreading through social media or investor forums, potentially influencing votes based on inaccurate or incomplete information.
• AI adoption and algorithmic bias: While shareholders have largely been supportive of AI proposals, AI isn’t without its challenges. AI tools can introduce bias or lack transparency in decision-making, raising concerns about fairness, accountability and alignment with shareholder intent.

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FAQs

What is the purpose of proxy voting?

Proxy voting allows shareholders to influence a company’s direction by voting on key issues, such as board elections, executive pay and shareholder proposals, even if they can’t attend the annual meeting in person. It’s a core mechanism of corporate governance and shareholder rights.

Do all shareholders get to vote?

Generally, yes, anyone who owns voting shares as of the record date is eligible to vote. However, the type of shares matters; some may be non-voting, and beneficial owners who hold shares through a broker may need to vote through their brokerage platform.

Is proxy voting legally binding?

Yes, proxy votes are legally binding and carry the same weight as votes cast in person at a shareholder meeting. Once submitted, your proxy vote is counted and included in the company’s official decision-making process.

What happens if I don’t vote my shares?

If you don’t vote your shares, your voice won’t be reflected in the outcome of the vote. In some cases, your broker may vote on your behalf — especially on routine matters — unless you’ve given specific instructions not to.

Can proxy voting influence social or environmental issues?

Absolutely. Proxy voting is a powerful tool for influencing a company’s actions on ESG issues. Shareholders can submit and support proposals related to climate risk, racial equity, human rights and more.

What is proxy voting season?

Proxy voting season typically runs from April to June and is when most U.S. public companies hold their annual shareholder meetings and solicit votes. During this period, investors review proxy statements, vote on proposals and influence major corporate decisions.

What right does a proxy give to a shareholder?

A proxy gives a shareholder the right to delegate their vote to someone else, usually company management or a designated proxy agent. This ensures shareholders can still participate in governance decisions even if they can’t attend the meeting themselves.

How does shareholder voting work?

Shareholder voting usually occurs ahead of a company’s annual meeting, either online, by mail or by phone. Shareholders review the proxy statement (Form DEF 14A), consider voting recommendations and cast their votes on key proposals ranging from board appointments to ESG issues.

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