You Can Correct an Outrage

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Let me see if I can get you steaming mad, and then proceed to tell you how you might improve the situation. Think back to the last time you checked your mail and found an annual report and proxy statement, soliciting your vote on some important matters. As you know, you can vote for or against most items -- things like approving auditors, endorsing board-of-director candidates, or supporting various management and shareholder proposals -- or you can abstain.

You've also probably noticed that management will include an explanation of the various proposals, including those suggested by shareholders, along with their own view on the matter and their recommendation. So if there's a proposal for shareholders to have a say on executive pay, you might find management's strenuous explanation of why it's unnecessary, followed by a recommendation that you vote against it.

Here's the crazy part, though: If you send in your ballot without voting on a particular proposal, and without even formally abstaining, you might reasonably assume that your vote will be taken as an abstention. But no -- with such ballots, a vote left blank is generally cast with management. So you'll end up voting against the shareholder proposal, when you never meant to do that.

Change in the air
There has been movement recently to try and change this. One change is a petition to the Securities and Exchange Commission (SEC) to amend the related rule so that blank votes are counted as abstentions. The SEC is collecting comments on this suggestion, so I invite you to let your voice be heard. Read about the petition here (click on May 15th's File 4-583) and email your comments (being sure to include "File 4-583" in the subject field) to rule-comments@sec.gov.

It's just the latest in recent news from annual meetings that shows how shareholders are taking a more active role in the companies they own. Shareholders at Apple (Nasdaq: AAPL) and Pfizer (NYSE: PFE) recently passed say-on-pay proposals, while Verizon (NYSE: VZ) shareholders exercised the right they earned two years ago to approve the company's executive compensation.

Nevertheless, there's still work to do. Similar say-on-pay proposals failed to pass at Comcast (Nasdaq: CMCSA), Johnson & Johnson (NYSE: JNJ), Windstream (NYSE: WIN), and Qwest Communications (NYSE: Q). You can expect to see many rejected proposals reappear in future years.

Learn more about shareholder activism:

• Voting: Not Just for November Anymore
• Does a Good Consumer Make a Good Citizen?
• Are You a Real Shareholder?

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