Dialing for Proxy Votes

Is this anyone to curry favor with shareholders? Forbes reports an increase in telemarketing-style calls reminding investors to vote their proxy, compliments of the Securities and Exchange Commission.

When the SEC decided last year that instead of sending paper proxies, companies could mail postcards alerting shareholders they could vote either online or by paper ballot.

The problem, David Drake, president of Georgeson, a proxy solicitation firm, is that under the new system only 10 percent of retail investors are completing the proxy online. Another 3 percent are asking for paperwork in the mail.

Under the old system, 35 percent voted. So phone calls urging votes have increased this proxy season.

“For companies where 30 or 40 percent of the stock is in the hand of retail investors who wouldn’t vote if not contacted, you can move the needle by calling,” Drake says.

Next year, under a proposal new before the SEC, phone calls could increase. Under the proposal, even the election of directors might be considered non-routine, meaning more companies need individual shareholders to vote.

Also driving the automatic dialers is an increase in shareholder activism especially around issues such as say on pay. Those promoting say on pay call asking for support of their proposal, while the company may call to urge a vote against such a proposal.

"We're seeing a lot more campaigns by companies trying to get shareholders to support them on key initiatives,'' notes Drake.