Groundbreaking “Retail Voting Program” Could Be a Game Changer

A business-friendly SEC has greenlighted a new and innovative company program to engage retail voters – and all of us should pay attention.

Why it matters: The program, proposed by ExxonMobil, allows retail shareholders to authorize a standing voting instruction to vote their shares in accord with the Board’s recommendations.

The Retail Voting Program is available to all retail investors on an opt-in basis, and shareholders can choose whether to apply their standing vote instruction to all matters or exclude contested director elections and M&A.

• The company believes the policy will promote voting by retail investors, who often don’t vote, while removing time and other burdens from the voting process.
• Shareholders can still override the standing vote instruction if desired.

SEC’s response – go ahead: The staff agreed that the proposal does not violate SEC policy or Delaware corporate law. This is not only a good thing for the company, but could change the game for many public companies who will choose to implement a similar policy.

• Companies with a large retail shareholder base may find it particularly attractive, especially insofar as the retail vote serves as a balance to institutional shareholders that vote in line with proxy advisors.

Bottom line: This is a fascinating development that could benefit any company with a significant retail investor base. Now is the time to consider discussing with management, the board and outside investors whether a similar program might be right for your company.