What is a Vote by Proxy?

A vote by proxy is a vote that is mailed in or cast in some other way while the person voting is physically absent. This is most frequently used by shareholders in a company who are unable to attend the annual shareholder's meeting but still want their vote to count.

When the notice for the annual shareholder's meeting is sent out, there is usually a form sent along with it outlining some of the decisions to be made at the meeting. These are usually posed as questions to the shareholders, and the answer chosen is based upon a tally of the votes cast for any particular answer. Sometimes, a group of shareholders will get together with the intention of getting a question on the ballot. The questions can range from new board members to board member compensation to general policy objectives for the company. The shareholders present at the annual meeting can vote in person, or they can vote by proxy before the event.

A tally is taken of the vote, both those votes cast by proxy and those cast by members present. Usually, a simple majority vote decides the issue. However, sometimes more than simple majority is required, but this is rare.

In the past, vote by proxy was completed through regular mail. Shareholders were sent a ballot with the notice of the annual meeting, which they would fill out and return by mail to the company. With the popularity of the Internet, it became possible to cast a vote electronically. This cannot be done just anywhere on the Internet; there are specific sites where one must register the vote.

Once registered, one can vote by proxy electronically. Security is in place to ensure that those registering are in fact owners of the shares, and that they cast only as many votes as each is allowed. Usually, one vote per share is allowed, though occasionally, multiple voting shares are issued.