HARSH CRITICISMS OF RULES FOR PROPONENTS AND CONDUCT OF Q&A AT VSMs: HOW TO AVOID BEING NAMED AND SHAMED

“Shareholders promoting both progressive and conservative agendas say companies are increasingly trying to limit their voices at annual shareholder meetings—the one day of the year when boards are required to hear from the people who own their companies,” a recent posting by a Barron’s reporter asserted.

“Attempts to assert that control has become easier as more companies hold online-only annual meetings” [which is true, we’d note] although the rest of the reporter’s assertions are notably lacking any factual information to back them up. “Investors who want to speak are being told they must read proposals verbatim, a departure from standard practice. If they go off-script, they are warned they’ll be muted.” [We know this is true, but instances of this are mighty rare, and the perps quickly get brought to heel in our experience.] “In some cases, companies are taking questions submitted online and summarizing them in ways investors believe distort their meanings—or not answering them at all.” Yes, this is quite a widespread perception, we’d say, but issuers do this at their own peril, with a very serious risk of being publicly named and shamed.

Readers, be sure to add this info to your list of things to address as your 2025 Meeting Agendas take shape. There are numerous suggestions on our website to be sure your company will not be named and shamed, at www.optimizeronline.com – like model rules of conduct, fair and sensible rules for the Q&A periods, and a model “run of show” to cite just a few. We DO believe that more and more shareholders will be monitoring AGMs to assure that all shareholders will have a opportunity for a fair hearing in 2025.

MUCH MYTHOLOGY, WISHFUL THINKING – and MUCH FAKE NEWS – AND BS - ABOUT RETAIL INVESTOR VOTING

A Sept 17 online post of the Reuters Sustainable Finance newsletter reported that “Only 2% of Vanguard investors opted in to a pilot program to influence their funds’ proxy votes this year” – a factoid that is not really on-the-money: The pilot program was confined to only five of the many funds that Vanguard offers, where notably, three of them were “ESG-focused funds, “a low rate” columnist Ross Kerber noted, that “I thought might suggest its clients don’t care about corporate elections.”

“Not so, said John Galloway, Vanguard’s global head of investment stewardship.” [incorrectly we’d have to say in light of the numbers, which also failed to cite the percentage of Vanguard-guarded SHARES that participated, which we bet was way smaller yet.] “The paltry rate reflected the challenges of reaching a vast customer base through intermediaries like brokerage firms, Galloway told me and a group of other business journalists on Monday”.

“We’re committed to bringing this to scale,” Galloway said on a video call. He said to expect new pilot programs in 2025 as his team works out technical solutions to communications problems. Eventually Vanguard aims to offer proxy voting options to all its equity index products, which account for $6.6 trillion of its $9.7 trillion of assets under management.

And then, both Galloway and the columnist cited a totally incorrect statistic: “Traditionally individual retail investors only vote about 30% of the shares they own. That should be the natural rate for Vanguard’s own investors as well, Galloway said. “We’re pretty bullish.”

There’s a lot of bull here for sure: While yes, about 30% of retail investor positions held in brokerage accounts get voted, more than 20 of the percentage points typically come from “broker votes” when investors fail to vote – and these votes can only be cast on “routine items” rather than on the issues that are, and should be, of real concern to investors… But clearly, they are NOT.

The bottom line here: Of the 2 million investors eligible to sign up for pre-authorized voting instructions, only about 40,000 signed up. “Moreover, of that group,” the article notes, 43% selected the option to vote as the Vanguard fund managers would have in any case. Another 30% chose an option to vote as company boards recommended - hardly a rock-the-boat message from the Main Street shareholders Vanguard services.” We’d say, an awful lot of time and money to produce a NOTHINGBURGER!

There is still a MAJOR ISSUE out there, however – a four-alarm fire, we call it – and that is, retail investor voting has been dropping precipitously since the mid-1970s, when almost 75% of individual investors voted, to less than 10% at many companies today.

And so far, NOTHING has been done by a single issuer to EDUCATE and MOTIVATE retail owners to do what’s really in their own best interest: To study up just a tiny bit – and to form a HABIT of voting. As the 2025 Meeting Season approaches, PLEASE consider if the retail vote IS important to your company. If so, please read our little primer, “Shareholder Votes Have Value” – and consider posting it on your voting sites and “pushing it” to your shareholders.