Proxy voting gives stockholders a voice in a company's direction by allowing them to influence company decision-making.
What is proxy voting?
Stockholders can submit shareholder resolutions, or proposals to improve a company’s processes or operations. Many resolutions often deal with environmental, social, or governance (ESG) risks, which can include issues like climate change, racial and gender diversity, and executive compensation.
When resolutions are submitted to the proxy ballot, stockholders can vote to support or reject the proposals. For investors who own stock through a mutual fund or exchange-traded fund (ETF), the asset manager, or company that runs the fund, votes on behalf of fundholders. It’s important for shareholders to know what’s on the proxy ballot, so they can use their voice to affect the change they’d like to see. It’s important for fundholders to know what stocks they own through the fund and how the asset manager is voting on the proxy ballots.