When you buy a company’s stock, or invest in a fund that includes lots of stocks, your top goal is probably to make money when the share price (hopefully) rises. But earning good returns isn’t the only perk of owning stocks.
When you become a shareholder, you become a part owner in the company in which you’re investing. That means you get a say in what that company is doing and can influence it to act in a way that meshes with your values, whether that’s profitability, sustainability or both.
How much of a say do I have?
Generally, one share equals one vote—meaning big, institutional investors with the most dollars invested have the most sway. But speaking up when it counts can mean a lot.
Can I really have an impact?
Activist investors have made an impact in plenty of cases. For example, at ExxonMobil, 62.3 percent of shareholders last May went against company management and voted to increase transparency about climate-change issues and how they affect the company. Of course, the big bosses don’t have to do what shareholders want, but they do want to keep the money happy—and that’s exactly what Exxon did. In February, the company released its 2018 Energy Outlook and Energy and Carbon Summary.
Keeping it real: Those investors included financial firms BlackRock, Vanguard and State Street—i.e., folks with deeper pockets than you alone. But even relatively small-time investors have the right to submit a proposal seeking to change company policy.
Take Jing Zhao, a regular investor who owns just 12 shares of Tesla stock and recently submitted a detailed proposal to remove the board’s chairman, Elon Musk. He probably won’t get his way, but he did capture board members’ attention (and the media’s) and received an official response, showing that companies do listen, at least.
So how do I voice my own opinion?
The standard process is a little antiquated—for now. Any investor who owns $2,000 worth of stock, or at least 1 percent of shares, for a year or more through at least the next annual shareholders meeting is permitted to submit a proposal related to “ordinary business,” such as executive compensation, social policy or another reasonable subject.
The company can reject a proposal, of course. In one study, researchers found that about 40 percent of proposals were contested by management. The firm must file a letter with the Securities and Exchange Commission, stating why they intend to bar it from making it to a vote. You and the company can go back and forth, along with the SEC, for a while. (For a deeper look at all that red tape, you can check the SEC’s summary.)
Voting on a proposal is easier. You can do so in person at the annual shareholders meeting or via proxy. Proxy forms are sent to all shareholders, along with an invite to the big meeting. You know, they’re those cards you probably let collect dust before finally tossing them into the recycling bin.
But a new standard is working its way into the field and should help make it easier to exercise your voice and voting rights. A new platform called SAY (from Acorns’ co-founder, Jeff Cruttenden) is digitizing the shareholder voting process, making the whole thing more accessible for individual investors like us.
“We’re focused on the shareholders and giving them the information they need to understand their voting rights and also to provide access to those voting rights,” Cruttenden says. “We’re helping verified shareholders connect with one another and with the issues that they care about. We want to give investors their say.”
However you choose to wield that superpower, don’t throw away your chance.
May 9, 2018