VOTES “IN PERSON” vs. “VOTES BY PROXY”

With the rise of Virtual and Hybrid Annual Meetings, differing views have emerged among issuers, service providers, and counsel to the various parties involved regarding what constitutes a “Vote in Person” versus a “Vote by Proxy,” and how those votes should be reported.

By way of background, there was a time when activists such as the Gilbert brothers solicited large numbers of proxies from individual voters and insisted on separate reporting of votes running to them. That practice has largely disappeared, and generally, no purpose is served by breaking out those categories, since “a vote is a vote” and votes in person vs. votes by proxy will have no effect whatsoever on the reported outcomes.

That said, however, an important legal distinction between the two forms of voting remains and should be observed, we think, since in a formal proxy challenge there may be grounds to toss out some of the votes, as happened in the. Stilwell Group case.

HOW TO FILL OUT THE BALLOT(s) of the APPOINTED PROXIES

• The Ballots themselves do not need to include any numbers at all in order to be valid. They should simply instruct the Inspector of Elections to “cast the votes that run to the Proxy Committee in accordance with the instructions thereon.”

• They are valid when properly executed by any authorized member of the Proxy Committee. Only one signature is needed.

• Ideally, the Ballot that runs to the company’s Proxy Committee will be filed with the Inspector before the Annual Meeting begins – and sometimes – in the case of a proxy fight, the opposing side’s proxies, and it’s ballot too – may need to be on file to establish that there is a quorum present – which is one of the top duties of the Inspector.

• The best practice here is to attach the Day of Meeting Report from the issuer’s tabulating agent to the issuer’s ballot – and to attach a comparable report from an insurgent group if needed to establish that there IS a quorum present.

• Note well that at this point, all of the votes at a Virtual Meeting are “Votes by Proxy.”

• If there is in-person voting at the meeting, once the master file has been updated, the differences between the tabulator’s “Day of Meeting Report” and the “Final Report” are the “Votes in Person.”  

• Lastly, as the Stilwell Group case illustrates, all of the Ballots of Appointed Proxies must be signed and in the Inspectors’ hands before the polls officially close, in order for them to count as votes.