Proxy

Definition

A proxy is an agent legally authorized to act on behalf of another party, particularly in the context of corporate meetings. It also refers to a format that allows shareholders to vote without being physically present at a meeting. This mechanism ensures that corporate governance is upheld while accommodating shareholders who can’t attend.

A Closer Look:

• Proxy Voting: Shareholders may choose someone else to cast votes on their behalf, which can occur in person or via mail.
• Proxy Statement: A package of documents that provides essential information, enabling shareholders to make well-informed decisions about the issues presented at corporate meetings.

Proxy vs. Power of Attorney

How Does a Proxy Work?

1. Receiving Proxy Materials: Shareholders receive proxy materials before the annual meetings, which include a proxy statement and voting instructions.
2. Appointing a Proxy: Shareholders may appoint an individual (proxy) to vote for them. This can be done by filling out a proxy card or electronically.
3. Submitting Votes: Votes can be submitted physically at the meeting, by mail, or electronically, as allowed by the company’s procedures.

Diagram: Proxy Voting Process

    flowchart TB
	    A[Shareholder] --> B[Receives Proxy Materials]
	    B --> C[Appoints Proxy]
	    C --> D[Submits Voting Instructions]
	    D --> E[Proxy Votes at Meeting]

Examples of Proxy Use

• If a shareholder cannot attend an annual meeting, they may delegate their voting rights to a trusted friend or another shareholder via the proxy process.
• Corporations send “proxy cards” allowing shareholders to cast their votes by mail for various corporate matters.

Related Terms

• Shareholder: An individual or entity that owns shares in a corporation.
• Quorum: The minimum number of members required to be present for the meeting to conduct business.
• Vote by Mail: Submitting votes without attending the meeting, often used in conjunction with proxies.

Humorous Insights & Fun Facts

• “If voting made any difference, they wouldn’t let us do it.” – Mark Twain. Well, don’t worry; when you vote by proxy, you can drink coffee at home instead of sitting in uncomfortable chairs!
• Did you know? In a survey, over 70% of shareholders prefer the comfort of their homes over boardroom chairs when voting. Who wouldn’t want to vote in pajamas?

Frequently Asked Questions

1. What is a proxy statement?

   • A proxy statement contains all the essential information needed to make informed votes at a company’s annual meeting.

2. Can I revoke my proxy?

   • Yes, shareholders can revoke their proxies in writing or by attending the meeting and voting in person.

3. Is voting by proxy secure?

   • Yes, as long as appropriate measures are in place to safeguard votes and proxy instructions.

4. Do all companies allow proxy voting?

   • Yes, most publicly-traded companies allow proxy voting to ensure shareholder participation especially when they cannot be present.

5. Can a proxy vote differently from the shareholder’s instructions?

   • No, a proxy must adhere to the voting instructions provided by the shareholder unless instructed otherwise.

Suggested Further Reading

• Corporate Governance: Principles, Policies, and Practices by Bob Tricker for insights into governance strategies.
• The Intelligent Investor by Benjamin Graham for guidance on shareholder rights.

Online Resources

• U.S. Securities and Exchange Commission - Proxy Voting
• Investopedia - Proxies

Test Your Knowledge: Proxy Voting Quiz

Thank you for engaging with us in this exploration of proxies! Remember, in finance as in life, it’s not just about who casts the votes, but how those votes shape our futures. Happy investing!