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December 04, 2009
New Website Aims to Increase Proxy Voting by Retail Investors
    by Robert Kropp

Hoping to reverse a decline in proxy voting by retail shareowners, Moxy Vote assembles a group of advocates with which shareowners can choose to align their votes.


In order to enhance proxy access for retail investors, TFS Capital, an investment advisory firm, has launched Moxy Vote, which bills itself as an online "proxy voting platform for retail shareholders."

Moxy Vote invites retail investors to align themselves with advocate organizations that can recommend proxy votes in alignment with causes supported by the investors. The advocates lined up thus far by Moxy Vote include the Investor Environmental Health Network (IEHN), Calvert Investments, Investors Against Genocide, and many others.

Once registered, shareowners arrange to have their proxy ballots sent to Moxy Vote. Shareowners can choose to align their votes with the recommendations of the advocates of their choice, or choose to vote for or against management recommendations.

The decrease in proxy voting by retail investors has been a particular concern of Commissioner Luis A. Aguilar of the Securities and Exchange Commission (SEC), who in announcing the formation of an Investors Advisory committee sought to include significant representation by retail investors. Aguilar said in a January speech before the Investment Company Institute (ICI), "Estimates indicate that in the '50s individuals directly owned more than 90% of public companies, and today that number is closer to 30%."

Improved proxy access for shareowners has become an important component of efforts to reform the US financial system in the wake of the economic crisis, and the SEC under Chairman Mary Schapiro has proposed a number of regulations seeking to enhance the proxy voting process. In a November 4 speech, Schapiro said, "Regulation of the proxy process and disclosure is a core function of the SEC."

Among the reforms sought by the SEC are permitting shareowners to nominate candidates for corporate boards of directors, as well as requiring improved disclosure by companies about nominees for boards of directors, the structure of board governance, consultant fees, and executive compensation.

In general, media coverage of the proposed reforms outlined above has been adequate. A third area of potential reform, dealing with e-proxies, or the posting of proxy materials on the Internet, has received less attention. Since 2007, the SEC has allowed issuers to post their proxy materials on the Internet and inform shareowners of the location of those materials.

While "e-proxy has significantly reduced issuers' costs," Schapiro said, "there has been a reduction in retail voting participation under the notice and access model." In order to increase proxy voting by retail investors, the SEC has proposed rules to improve the notice and access model.

With an online presence designed to help retail investors vote their shares in accordance with their investment mission, Moxy Vote, along with other activist shareowner sites such as ShareOwners.org and TransparentDemocracy, may help individuals regain the ability to influence corporate behavior.

 

 
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