Do stock shareholder votes ever go against what the board of directors want?

[Guest]

Although most of my money is in mutual funds, I do own shares in individual companies, and this seems to be a voting season. I've never heard of a shareholder proposal which either had the endorsement of the BOD, nor of one that ever passed. Nor do I ever recall a BOD proposal ever not passing or a member of the BOD being voted out. Can this really happen in practice? Does it ever happen in practice? It seems to me that the members of the BOD/executives all own controlling interest in these companies, so the voting's all for show. Or am I wrong about that?

[MarkinCT1]

The large institutions and pension funds own the overwhelmig majority of shares of Fortune 500 companies, and the Boards of Directors cater to them, so we small shareholders with hundreds of shares don't come close to the controlling interest the pension funds and mutual funds have with their millions of shares. BOD members are usually pawns of the CEOs. They rarely if ever rock the boat. It's a good gig!

[Guest]

The large institutions and pension funds own the overwhelmig majority of shares of Fortune 500 companies, and the Boards of Directors cater to them, so we small shareholders with hundreds of shares don't come close to the controlling interest the pension funds and mutual funds have with their millions of shares. BOD members are usually pawns of the CEOs. They rarely if ever rock the boat. It's a good gig!

But do the pension funds/mutual fund holders ever over-ride any requests from the BOD? Are directors ever voted out? Is there any history of any shareholder proposal every passing?

[Toddbb]

Occasionally, an activist shareholder will wage a proxy fight to get board seats and force changes at a company. They are usually hedge funds rather than mutual funds and pension funds.

[Techie]

Many shareholders fail to vote their shares, so the board’s recommendations are voted in by default.

 

Unless you own 2%+ of the company’s shares, you have no real voice. My view has always been that if you feel so strongly against a board’s recommendation you should sell your shares.

[BtmBearDad]

I don’t know of any “regular Joe” shareholder revolts. Most of the shareholder revolts I can think of involved an individual or group of individuals who already own a sizable percentage of shares gathering the proxy votes of the “regular Joe” shareholders to battle the board. The ones I can recall were the Rockefeller family v Exxon over environmental issues/policies; and, Roy Disney v Disney over creative decisions leading to Eisner leaving. As I type this I now remember a group of shareholders getting the other “regular Joe” shareholders on their side in a row over executive salaries and perks at a British cable company. They were successful in getting caps on executives as a result.

 

BBD

[Guest]

Yes, it’s not frequent but generally requires the interest of an activist shareholder to lead the charge. In addition, proxy battles occur frequently

[+ WilliamM]

I don’t know of any “regular Joe” shareholder revolts. Most of the shareholder revolts I can think of involved an individual or group of individuals who already own a sizable percentage of shares gathering the proxy votes of the “regular Joe” shareholders to battle the board. The ones I can recall were the Rockefeller family v Exxon over environmental issues/policies; and, Roy Disney v Disney over creative decisions leading to Eisner leaving. As I type this I now remember a group of shareholders getting the other “regular Joe” shareholders on their side in a row over executive salaries and perks at a British cable company. They were successful in getting caps on executives as a result.

 

BBD

 

Watch the film Solid Gold Cadillac with the great Judy Holliday

[+ sniper]

I mean, you should expect that the board is acting in the company's interest and that therefore most of the time what they recommend will pass. If their proposals DON'T pass the considerable majority of the time, then you've got a problem with either the board or the shareholders, or both.

[Guest]

I mean, you should expect that the board is acting in the company's interest and that therefore most of the time what they recommend will pass. If their proposals DON'T pass the considerable majority of the time, then you've got a problem with either the board or the shareholders, or both.

Many board members are or represent large shareholders. If not, large shareholders have access to them. The interests of large and small shareholders are generally aligned

[+ Topseed]

Most votes are prompted by direction given by the proxy advisory service: ISS and Glass-Lewis, most notably. Most of the time they side with management, with some exceptions regarding director age/tenure, and the number of management directors.

[mike carey]

Usually the boards of companies have had their way on things they put to shareholder meetings, many shareholders being passive investors. In Australia there has been a growing trend for large shareholders to become more closely involved in the management of firms they own shares in. This is largely due to the rise of what are known as 'industry superannuation funds'. These are not-for-profit retirement savings funds managed jointly by unions and employers in different industries (such as construction, retail, hospitality) that since the introduction of compulsory superannuation savings have come to manage billions of dollars of members' funds. Unlike the for-profit retail management funds (run by banks, mutual funds and the like) they take a long term view of the earnings of the money they manage, and thus are interest in the long term viability of the firms they own. For example they look at the future exposure to fossil fuel industries, which is becoming risky not just because of climate change but also because alternatives are becoming cheaper all the time. If companies aren't looking 20 years into the future on issues like that, the super funds will push them to do so by talking to the companies but if necessary by voting their stock against proposals put to shareholder meetings. Perhaps the most potent weapon they have under Australian company law it to vote against the remuneration package that has to be put to general meetings. A 25% vote against it in two consecutive years results in all board positions being declared vacant. These funds are successful because they have lower fees than retail funds and have consistently earned the best returns on members' money.

[Guest]

... Perhaps the most potent weapon they have under Australian company law it to vote against the remuneration package that has to be put to general meetings...

In the US, the votes on remuneration are simply advisory. I'm not even sure why they put it up for a vote. Maybe it's required? I think that what these assholes on the BOD get is fairly obscene and undeserved. But there doesn't seem to be any real mechanism to put the reins on these compensations.

[+ sam.fitzpatrick]

Although the proposals recommended for approval by the Board are most always accepted, there are times when a larger vote against a specific board member will result in that Board member 'retiring' the following year rather than seeking to extend his/her tenure the following year. This has been somewhat successful in making sure some boards are moving to a more diverse board. Equally effectively in having some of this movement has been individuals attending the annual meetings and asking such questions.

 

Slightly more effective have been shareholder proposals presented that the Board's recommendation to vote against. And in some cases, when a proposal gets near to passing, the next year, a Board will implement some new policies that address the topic of concern, but in a more cost-efficient manner to satisfactorily address the original proposal.