Everyone has heard of the four seasons of the year, but what about proxy season? From April through June, public companies seek the votes of their shareholders to approve (or disapprove) of decisions made by their boards of directors. Proxy voting is an important right reserved for investors to keep corporate boards of directors and management accountable to those who are the true owners of a company – the shareholders.
Proxy voting gives investors the opportunity to weigh in on important corporate matters and to express their approval, or disapproval, of the performance of those serving on the board of a given corporation. Just as members of Congress represent their constituents who elect them, directors of the boards of corporations represent the interests of a corporation’s shareholders. As owners of shares of companies, investors rely on corporate management teams to run the day-to-day operations of these companies and set their strategic plans. Investors also depend on members of company boards to exercise reasonable oversight of management including management’s performance and ability to achieve expected results as well as to make sound business investment decisions.
One of the benefits of being a shareholder in a public company is voting at the company’s annual and special meetings. Since most shareholders cannot physically attend the meetings to cast their votes, the company will allow its shareholders to cast their votes by proxy. The company will mail a proxy ballot and a proxy statement to all shareholders. The proxy statement will have information regarding the proposals on the proxy ballot. The shareholder can mail the proxy ballot prior to the meeting date to cast their vote by proxy.
Colorado PERA manages investments on a global basis in 7,000 to 8,000 companies, acting as the shareholder of investments made on behalf of its members and retirees and casting votes by proxy. PERA exercises its investor rights solely for the benefit of its members and retirees as their fiduciary and as a long-term investor in U.S. and international equity markets.
In 2013, PERA participated in over 5,310 annual and special meetings and reviewed over 53,000 proposals. The proxies for these companies involve the election of numerous directors, approval of compensation and acquisitions, shareholder initiatives submitted for shareholder approval, and any number of additional matters.
A committee of PERA’s Board of Trustees, called the Shareholder Responsibility Committee, oversees the proxy voting efforts of the staff. The Proxy Voting Policy adopted by the PERA Board of Trustees provides guidance to the staff on PERA’s positions on various common issues that are the subject of proxy voting. The primary issues that are raised in these proposals are the membership of the Board of Directors, the retention of an audit firm, and executive compensation. PERA’s policy addresses these issues as well as more unique issues such as how PERA should consider shareholder proposals for more transparency on a variety of topics.
Voting more than 50,000 proxies in a few short months is no small task for PERA staff. PERA uses a secure Internet-based system to cast its votes. The system alerts PERA of upcoming annual company meetings. PERA consults with a proxy advisor to provide a recommendation based on the advisor’s research. This assists PERA staff in evaluating each proposal along with the guidelines established by the Board of Trustees in the Proxy Voting Policy.
PERA reports each proxy vote cast using a system available on the website. This system can be searched by company name or meeting date and indicates how PERA voted its shares.
Other resources:
Shareholder Responsibility Committee Policy
Shareholder Responsibility Committee Charter