Shareholder Advocacy: Speak and Be Heard!

By Harry Moran, CFP® AIF®

Few of us probably think of ourselves as part owners of huge multinational corporations but anyone who owns a few mutual funds or stocks in their retirement plan or elsewhere is exactly that. It of course takes a bit of work to influence corporate policy but all shareholders have the right to have their voices be heard in the corporate boardroom and can really be a meaningful force for accountability and policy change.

Shareholder advocacy refers to any activity which attempts to influence corporate decision-making through communication with management. In this short piece, we’re going to briefly explore the primary tools of shareholder advocates: proxy voting, dialogue and shareholder resolutions, and let you know why you should care and what steps you can take to help shape corporate behavior.

Many investors don’t find it practical to attend distant annual shareholder general meetings but can instead choose to vote on existing proposals “by proxy”, via mail, phone or the internet. Proposals can also be placed on the ballot by shareholders. While management proposals typically cover “routine” items such as electing directors and approving auditors, shareholder resolutions often address environmental, social or corporate governance issues. When we own stock shares through a mutual fund, we delegate this responsibility to that mutual fund’s board of directors, who are now required to disclose to investors how they voted each proxy. Many large institutional and mutual fund managers have historically tended to vote with management or don’t vote at all. Keep in mind that an un-cast ballot is automatically voted in favor of management.

Many investors don’t cast their votes because they feel they can’t make a difference but it’s estimated that individual shareholders account for 30% of total shares, which represents a potentially significant voting bloc. Reading and understanding proxy documents can seem a bit overwhelming, which is another reason why many individual shareholders have often not voted their shares. Fortunately, websites such as Proxy Democracy, Shareowners.org and MoxyVote now provide shareholders with access to information on how like-minded investment managers, non-profits and unions plan to vote on key issues, as well as providing opportunities for getting involved directly by teaming up with various groups.

When you’ve identified a specific issue that you want to address, the best place to start is typically to attempt to engage the corporation in dialogue. While corporations may seem unapproachable, they are of course made up of people who may be responsive to reasonable input. Since dialogue is less confrontational than shareholder resolutions, many corporations see the wisdom of working with shareholders to improve policies and procedures in this less public forum. It’s a good idea to check with groups like the Social Investment Forum, The Interfaith Center on Corporate Responsibility or CERES to see if they’ve already formed coalitions to work on specific issues.

Should dialogue or engagement on a particular issue fail, it may be time to bring concerns directly to shareholders by putting a resolution on the ballot. These resolutions can address anything which may adversely impact the long-term health of the company, its stakeholders, communities and the planet. While virtually all shareholder resolutions are non-binding, meaning that companies can choose to not act on the request, most companies recognize the potential consequences of ignoring this input, and they can serve as very powerful tools for influencing corporate behavior.

Investors are evolving from passive and uninformed owners of stock to determined, committed advocates who know their voice can make a difference. There is a growing perception that many public companies haven’t been accountable to their shareholders and recognition that a short-term, “tunnel vision” profit mentality can endanger the long-term economic viability of a company and the greater community that they do business in. This was dramatically illustrated by the severe financial problems seen in many large banks recently, which stemmed largely from lax lending policies, ineffective corporate governance and weak regulatory oversight, and of course ultimately required government intervention to prevent their collapse. The good news is that corporations are becoming much more responsive and shareholder advocates are making real headway on many critical issues and are becoming an increasingly powerful force for positive change.




Harry Moran helps socially conscious investors define and achieve their highest goals by
aligning their money with their values. A 23-year veteran of the financial services
profession, Mr. Moran has held the Certified Financial Planner® designation since
1991. He is a network member of First Affirmative Financial Network, a national
professional organization dedicated to meeting the needs of the socially conscious
investing community. Mr. Moran can be reached directly at Cornerstone Financial
Advisors at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or 518-877-8800.

Mention of specific securities, funds, or companies should not be considered an offer or a
recommendation to buy or sell the security, fund, or company. To determine the
suitability of any particular investment, please consult with your investment adviser.
Remember, past performance is no guarantee of future results and no investment strategy
can assure success. The opinions expressed are those of the author and may change
without notice. Harry Moran is a registered representative offering securities through
Cadaret, Grant & Co., Inc., member FINRA SIPC. Cadaret, Grant is not affiliated with
Cornerstone or First Affirmative.