Why your vote matters

Many individual shareholders do not vote their proxies because they feel that their vote will not have any impact on the outcome of vote totals.  We believe all shareholders should exercise their vote and tell management and the board of directors of ALL companies they own – through their vote - how they feel about their board and management’s performance. 

There are several reasons why your vote is important:

Proportional Voting

Starting in 2006, major brokerage firms began adopting a proportional voting standard for shares that are not voted by the owners. This means that for issues other than the election of directors, shares that are not voted by holders are no longer automatically voted according to the board’s recommendation. Rather, shares not voted by the holder are voted by the brokerage firms IN THE SAME PROPORTION as those shares actually voted by shareholders. This means that those shareholders who DO vote their shares will have a greater impact than just the shares they are voting. Excerpts from articles discussing proportional voting are set forth below.

A recent article (2/25/09) in the New York Times noted the following about proportional voting:

“The net result of this change is that retail investors who provide voting instructions to their brokers have an opportunity to disproportionately influence the outcome of a proxy vote — with their votes sometimes effectively counting twice as much,” Okapi said in the note.

Majority vs. Plurality Vote for Directors

In 2006, Bank of America adopted a majority standard for the election of its directors. This is a favorable provision for shareholders, and requires that any director nominee in an uncontested election shall be elected to the board of directors if the votes cast for a director candidate exceed the votes that are cast against that director. This is the more difficult standard for directors nominees to achieve, and makes each individual’s vote that much more important. This standard makes it possible for a candidate standing for election to “lose” if shareholders vote “against” that director.

This provision is discussed on Page 2 of the Preliminary Proxy filed by Bank of America on March 2, 2009.

Excerpts and Links to Articles About Proportional Voting:

In a 2007 article from the Securities and Exchange website, it states:
“Proportional voting could be desirable for issuers since brokers could vote uninstructed shares. However, proportional voting would continue to assign votes to uninstructed shares. In addition, proportional voting would increase the influence of shareholders who vote since an actual vote will affect the voting of uninstructed shares.”

A recent article (2/25/09) in the New York Times noted the following about proportional voting:
“The net result of this change is that retail investors who provide voting instructions to their brokers have an opportunity to disproportionately influence the outcome of a proxy vote — with their votes sometimes effectively counting twice as much,” Okapi said in the note.

June 3, 2008 Article from ProxyDemocracy Blog:
“Proportional voting greatly amplifies the voting power of individual investors who actually vote. If 20% of retail investors vote, as has been the case in recent years, your vote is worth 5 times as much under proportional voting as it would be otherwise. (This is assuming that turnout is not correlated with holdings among retail investors.) Proportional voting makes it even more important that retail investors cast an informed vote, which is where ProxyDemocracy is trying to help.”

New York Times – DealBook Article, February 25, 2009

Discussion on Proportional Voting From the SEC website

ProxyDemocracy Blog, June 3, 2008

FinancialWeek, April 28. 2008

Morrow & Co., LLC, Jan 2009

Links to Articles on Majority Voting for Directors

From: NASDAQ website, 2/27/09

From: Harvard Law School Corporate Governance Forum (very dense reading)

From: Directorship – Boardroom Intelligence, 12/16/08