Shareholder Votes Have Value – Please Do Not Let Your Votes Go To Waste!

©2023 by Carl T. Hagberg and Associates. All rights reserved. This publication may not be copied or made available to readers over the Internet without the express permission of the copyright holder.

(The letter below can be generic - or personalized with issuers’ names and logos – and enclosed with mailed proxy materials and posted on your company’s Investor Page, subject to the agreement of the copyright holder.)

Dear Shareholders,

A survey of individual investors conducted by Broadridge Investor Solutions in 2019, showed that 75% of them believe that voting on issues associated with their investments contributes to their financial well-being.

But a 2023 Broadridge survey of individual investor voting revealed a disturbing drop in retail investor voting: Only 17.6 % of the shares owned by individual investors were voted by them through September, 2023 - down from 20% in 2022.

Your votes DO have value – both to you as investors and to the companies you own, who spend thousands and thousands of dollars each year to prepare voting materials, mail, and tabulate shareholder votes.

Please, we urge you, invest a few moments of your time to review this short booklet. It is designed to explain, in simple terms…

• EXACTLY HOW YOUR VOTES HAVE VALUE, and WHY IT IS SO IMPORTANT FOR YOU TO EXERCISE YOUR RIGHTS TO VOTE
• SOME SIMPLE STEPS TO HELP YOU MAKE UP YOUR MIND ON COMMONLY ENCOUNTERED PROXY PROPOSALS
• HOW TO CAST YOUR VOTES QUICKLY - AND EASILY - IN A WAY THAT IS EASIEST FOR YOU - AND, IDEALLY, TO BE ALL DONE IN TEN MINUTES OR LESS

PLEASE BE SURE TO EXERCISE YOUR VALUABLE RIGHTS TO VOTE YOUR SHARES AT OUR 2024 ANNUAL MEETING OF SHAREHOLDERS. VOTE YOUR SHARE OF AMERICA!

(Optional, but highly recommended as a way to increase your quorum by several percentage points): Because your vote does count with us, XYZ Company will donate $1 to (Designated Charity) for every shareholder account that votes in time for our Annual Shareholder Meeting.

VOTE YOUR SHARE OF AMERICA!

HERE ARE TEN FACTS ABOUT THE VALUE OF YOUR VOTES YOU MAY NOT BE AWARE OF:

1. Shares of stock that come with full voting rights are almost always worth more in the stock markets than non-voting shares or shares with lesser voting rights. So yes, votes clearly do have economic value.
2. In 1988 the U.S. Department of Labor ruled that trustees of all federally insured pension funds have a legal obligation to cast their votes at shareholder meetings on all the shares they control. Why? Because the kinds of actions that require a shareholder vote can and often do have a significant impact on share value. If the vote is about a merger, corporate takeover or going-private transaction for example, the future of the entire company is literally on the line.
3. A vote to authorize the issuance of additional shares can have a major impact on the future value of your stock: New stock can be used to make acquisitions, to provide for stock options or other stock-based incentives to officers and employees, or for “general corporate purposes.” Smart investors will want to have a good level of comfort that any corporate plans to issue new stock - which essentially dilutes their ownership stake in the company - will pay off for them in the long run.
4. Almost any matter that must be put to a shareholder vote can have a significant effect on the way a company goes about its business, and thus, can have significant effects on long-term shareholder value. Many shareholders believe that votes on environmental, social and governance proposals can have very significant economic effects on the company - along with added “social” or “societal value.” Other shareholders may feel that some of these proposals are not proper areas for shareholder or corporate action - or are not worth what it would cost to take the action that is up for a vote. Either way, it is our own money that is at stake. And it IS up to the stockholders to decide. Thus, it is “economically smart” for shareholders to consider such proposals, and to cast their votes - whether they are for or against them. If you can’t decide, or if you are ‘indifferent’ about a given proposal you can simply check the Abstain box, which sends a message of its own.
5. Stockholders should be aware that it typically costs a publicly traded company between $6 and $15 per stockholder to prepare and deliver required voting materials and to receive and tabulate votes. Failing to take a few minutes to review the materials and to cast your votes is like throwing $6 to $15 of your own money straight into the trash.
6. When shareholders fail to vote in timely fashion, it can cost the company many thousands of dollars extra in order to round up the votes needed to hold the meeting. If the meeting needs to be postponed for lack of a quorum it can easily cost your company tens of thousands of dollars more: Very good reasons not to let our votes go to waste. And do remember, the money that is being spent on shareholder meetings is our own money.
7. Shareholders should also know that virtually all of the largest shareholders - like pension funds, hedge funds and professional money managers ALWAYS cast their votes - even while individual investors have been voting less often every year. But sometimes, what a “professional investor” or an “activist investor” may think is best for the company may not be what an individual investor, or an employee, retiree or a loyal customer would think is best: The only way to assure that our own best interests are represented is to vote our proxies.
8. Many individual shareholders believe that their votes are “too small to matter.” This is simply not true: Each year, more and more votes are being decided by razor-thin margins, where the votes of ordinary investors - or their failures to vote their shares on time - are often the deciding factor.
9. Especially important to know, your votes can make a meaningful difference even if a position you favor falls way short of a majority: Today, any proposal that gets even 15% of the vote tends to get the attention of corporate directors and corporate managers.
10. Most important, perhaps, is to take note of the huge amount of value that we as shareholders can preserve - just by spending a bit of time reviewing our stockholdings at least once a year: Huge amounts of our own money can often be saved by bailing out early if too many red flags seem to be flying. And even bigger amounts of money can be made - by keeping, and maybe adding to our investments in companies that are among the “best in class.”

TIPS TO MAKE THE VOTING PROCESS AS QUICK AND EASY AS POSSIBLE:

• Resolve to spend some “quality time” to promptly review the Annual Report and Proxy Statement - and to cast your vote as soon as you are done. This will let you handle the paperwork only once - and will assure that your votes will be cast on time.
• Develop a system for reviewing proxy materials and deciding on your votes: Many of the same issues crop up at many companies in a given year, so you’ll quickly be able to recognize the kinds of things you feel strongly about, pro or con, the kind of proposals you may want to study with extra care and the kinds of items where you may be happy to “go with the management recommendation.” If you have no particular opinion about a given proposal, you can simply check the Abstain option.
• Decide on the easiest way for YOU to cast your votes:
  • Many of us still find it quickest and easiest to fill out, sign and mail back the proxy card. (Checking the boxes on the card also helps to speed things up if you are voting by phone or Internet.) It’s worth noting however, that voting by mail costs the company the most money compared to other methods, because of the return-postage and ‘paper-processing’ that’s necessary.
  • Calling the toll-free number that’s on the card - with your choices ticked off ahead of time - can be a very quick and easy way to vote if there are relatively few matters to vote on – and especially if you wish to vote entirely with the management positions.
  • These days, the majority of investors receive their proxy materials over the Internet - where they can review them and then cast their votes online. Note well: This method generates very significant savings for companies and their shareholders by eliminating paper, postage and handling costs. And ‘going paperless’ is good for the environment.
  • Please remember that even if you receive your proxy materials on paper, you can still use the Internet to cast your votes.
  • Many companies are now printing “Q-R [Quick Response] Codes” on the proxy materials which you can scan, using a mobile device. This will automatically bring up the proxy materials and take you directly to the voting site, where you can cast your votes - even while you are traveling or otherwise on the go.
  • If you hold your shares with a bank or broker, many of them have free apps that will remind you of upcoming votes, allow you to access the information you need - and to VOTE online - from your desktop or from your mobile device.

HERE ARE SOME TIPS FOR REVIEWING PROXY MATERIALS… WITH A VIEW TOWARD DECIDING ON HOW YOU WISH TO VOTE - AND FOR BEING ALL DONE, MOST TIMES, IN TEN MINUTES OR LESS:

• Start with a review of the company’s financial performance over the past five years: A comparison of the company’s sales, earnings, earnings per-share and shareholder equity over a five-year period can be found - usually right up front - in the “Financial Section” of the Annual Report. The key numbers are usually summarized - often with a series of helpful charts - in the first few pages of the report.
• Next, look for the summary of five-year stock price performance vs. the stock market as a whole and vs. peer companies. Ask yourself: “How well has this investment performed vs. the market as a whole - and for me?”
• Next, read the “Chairman’s Letter” and the “Management Discussion and Analysis” sections of the Annual Report: Does the management seem to have a good handle on the things that are important to you as an investor? Have these sections adequately addressed and explained “the numbers”? If there have been problems - which every business encounters from time to time - do the management’s plans to address them seem sound, and well developed? Does the company appear to be a good corporate citizen? Are there any issues - whether positive or negative - that might prompt you, as a diligent investor whose money is at stake, to review some sections of the Report with extra care?
• Once you have informed yourself on the financial points - and on the way the company is being governed from a “big-picture perspective” - go to the Notice of Meeting and Proxy Statement. A summary of the specific issues that are up for a vote, and what it takes to pass them, is usually provided right up-front.
• Be sure to pay special attention to any items that require an affirmative vote of more than 50% of the shares outstanding in order to pass. Such proposals are the most likely ones to have a financial impact on your investment over time.
• Next, move on to the text of the proposals themselves:
• The first item up for a vote is usually the Election of Directors. Currently, investors are paying more attention to this than ever before - and to the diversity, skill-sets and experiences of the Board of Directors when viewed as a whole.
• Review the biographies of all Directors, since some of them may not be up for election in any given year. Is there a broad diversity of the kinds of experiences and skills and people that you think this company needs to have in order to excel going forward?
• At some companies you will have a choice to vote “For all Directors,” or to “Withhold” your votes from all Directors - or to vote “For” or “Withhold” your votes from specific Directors. (This is known as a “plurality voting standard.”)
• At other companies - those that have a “majority voting standard” - you will have the choice to vote For, Against, or to Abstain from voting on any or all Director candidates. Here, candidates need to win more yes votes than no votes - and at some companies they must receive 50% of the outstanding shares in their favor, plus one vote, to be elected.
• Next, read the text of each additional proposal - along with the management’s response if it is a proposal they are opposing. Take a few moments to decide what you really think about each such item - and how your vote will represent your own best interests as an investor, all things considered.
• For each such proposal you have a choice to vote For or Against the proposal, or to Abstain from voting on it if you can’t decide, based on the arguments put forth, or if you are simply “indifferent” - which sends a message to management in itself.
  Please be sure to cast your votes early, even if you plan to attend the meeting in person, so they will arrive before the meeting begins and count toward the required quorum.
• If you change your mind on any matters, you can change your votes at any time by re-voting on the web, over the phone, via a mobile device or by filling out a ballot at the meeting, until the polls are officially closed at the meeting itself.

ABOVE ALL, REMEMBER THAT YOUR VOTES DO HAVE VALUE: DO NOT LET THEM GO TO WASTE!

VOTE YOUR SHARE OF AMERICA!

About the author: Carl Hagberg, a former Bank and Trust Company executive, is the Chairman of Carl T. Hagberg and Associates, a shareholder services consulting and publishing company that he founded in 1992. His mission: “Helping publicly traded companies - and their suppliers - to deliver better, and more cost-effective services to investors.”

He is also the founder and Managing Partner of CT Hagberg LLC, a team of Independent Inspectors of Elections whose members oversee and certify the voting at over 600 shareholder meetings a year.

Mr. Hagberg has over 50 years of experience in the securities industry. He has held senior level positions in operations, marketing and general management assignments and has served as a director at two highly successful financial service companies - a California-chartered trust company and an Equity Mutual Fund.

He is considered one of the country’s leading experts on individual stock ownership programs and on the proxy voting process. He is the author of numerous articles on proxy voting and related corporate governance issues. His 1994 publication, “What Every Stockholder Needs to Know about ‘Registered’ and ‘Street-Name’ Ownership” has been sent by U.S. companies to nearly three million investors.

Please reach out to Carl Hagberg (cthagberg@aol.com – 732-778-5971) or Peder Hagberg (phagberg@cthagbergllc.com – 917-848-6772)

©2023 by Carl T. Hagberg and Associates. All rights reserved. This publication may not be copied or made available to readers over the Internet without the express permission of the copyright holder.