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May 07, 2008
Proxy Voting Made Painless
by Anne Moore Odell
A new website helps individual investors better understand proxy voting.
SocialFunds.com --
For many people who own mutual funds and stocks, the proxy voting season seems like a party they
were politely invited to, held on the moon and conducted in the Klingon language. In other words,
proxy voting can seem confusing, hard to understand, and not worth the drive. The newly launched
website www.ProxyDemocracy.org was
created to let people quickly and easily learn about proposals and people in front of companies
they own shares in so they cast their proxy votes.
 Large institutional investors have the resources to pay
for proxy voting services and/or have staff members to research the proposals and directors to be
voted on at annual shareholder meetings. However, most individual investors don't have the time or
money to learn about all the proposals at the companies they own stocks in.
ProxyDemocracy
creator and president Andy Eggers-a current PhD candidate in political science at Harvard
University-saw a way shareholders could benefit from the research done for institutional investors.
Some of these institutional investors like the California Public Employees' Retirement System (CalPERS) publish online how they plan to vote
before the annual meetings, in a move to increase their own transparency and accountability.
"ProxyDemocracy helps individual shareowners see how to vote their shares in ways consistent
with their goals, and which mutual funds and pension funds vote in ways consistent with the goals
of the individuals who invest through them," said Mark Latham, founder of VoterMedia.org and on the board of directors at
ProxyDemocracy.
Latham continued, "The ProxyDemocracy.org website's new Focus List
capability lets you compare funds' voting records on any chosen proxy issue (environmental, social,
governance, etc.). You can then choose to receive (by email before the voting deadline) future
voting decisions of funds you respect, and use that as a guide to voting your own shares."
"Over 50 million households in the US own stocks or mutual funds, and in the great majority the
proxy statements go straight to the trash (or recycling, let's hope)," said Eggers. "Our tools are
designed to make it easy as possible for people to be represented in this process, whether it's by
quickly figuring out whether there's anything worth paying attention to at an upcoming meeting or
by buying a mutual fund that has a voting record they can get behind."
Beyond individual
investors, Eggers also sees the site as destination for money managers, particularly those catering
to SRI-inclined clients, and for some small institutions without a big budget for proxy voting
analysis.
The site uses the agendas and votes found on the websites of CalPERS, Christian
Brothers Investment Services (CBIS), Domini Social Investments, and Calvert Socially Responsible Mutual Funds for
all meetings after July 1, 2007. The agendas and votes for all meetings before July 1, 2007 were
collected from SEC filings submitted by mutual funds. Since 2004, the SEC has required investment
companies to report all of their proxy votes in an annual filing.
Eggers wrote the
computer programs to extract the votes from the SEC filings and from the institutions' websites,
and created a single unified database on which ProxyDemocracy.com is built.
A 2006 survey
released by Automatic Data Processing (ADP)
found that fewer than half of investors reported voting their proxies some or most of the time, and
actual voting results suggest that less than half shareholders vote.
Eggers told
SocialFunds.com, "I see the site helping investors navigate this process with minimal hassle. It is
not worth your time to read the proxy materials or look up mutual fund voting records on the SEC
website. We're trying to spare individuals the trouble of going through that, with the hope that
broader and more informed participation will not only help investors safeguard their own
investments, but also bring about economically and socially beneficial change."
Investors
in mutual funds will also find the new site useful to examine how mutual funds vote on the
companies they own in their portfolios. Because of the relative ease that some people can change
their 401(k) funds, Eggers believes that there is no reason for people to have their money with a
fund that doesn't vote the way they want.
"Many funds have very similar portfolios and
risk profiles but very different voting records," said Eggers. "For example, Vanguard and Schwab
both offer low-cost S&P 500 Index Funds (i.e., their portfolio and investment strategy is
identical), but Schwab's fund is much more active on both social and corporate governance issues."
Although most proposals and shareholder annual meetings support a status quo at companies,
shareholder activists are finding that proposals-even when they don't receive a majority vote-can
be vehicles for change:
Eggers added, "In recent years, shareholder revolts at Disney,
Home Depot, and Yahoo were immediately followed by changes in corporate management. Proxy campaigns
in the last few years have brought about increased disclosure of corporate political donations at
dozens of firms. And behind the scenes, shareholder activists rely on the threat of an embarrassing
vote result to extract concessions from recalcitrant executives on a variety of environmental,
social, and governance issues."
©
SRI World Group, Inc. All Rights Reserved.
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