Proxy Voting Persists in the World of Corporate Governance

Proxy Voting Persists in the World of Corporate Governance

In a political system that prides itself on the privacy of the vote, such as ours in the United States, it might seem unethical to assign your vote to another person because you can’t be present to cast it yourself.

And in most situations, it has been for the duration of the United States’ existence. However, when what is now the U.S. was little more than a collection of colonies with sparsely populated settlements, this process was tolerated – and sometimes encouraged – purely out of necessity.

What is Proxy Voting

Called proxy voting, it’s the practice of an individual or group assigning another with the power to cast a vote on the first party’s behalf.
In colonial times, pulling all the eligible voters (men) from a New England settlement to vote at a distant location involved long distance travel, and would deprive those left behind of valuable labor and potentially expose them to attack.
To solve the problem, the voters could vote by proxy, assigning their votes those who would be present when the vote was cast.

Proxy Voting System
Electronic Proxy Voting System

Proxy Voting Before and Today

In modern times, proxy voting was allowed in committees of the United States House of Representatives, whereby members could assign their vote to the ranking member of their party on that committee. The practice was discontinued with the Republican legislative reforms of 1995.
Today, the practice continues primarily within the structure of corporate governance. Because company shareholders are often individual investors or those who own stock as part of a mutual fund, they are in many cases unable to personally attend shareholder meetings to cast votes. To solve this problem, the company will mail proxy forms to shareholders with which the individual can assign a proxy to vote on their behalf.
To manage such a vote, where an individual represents the votes of many shareholders, electronic voting software like TownVOTE can be helpful in tracking and recording votes, then providing clear and concise reports to maintain corporate transparency.

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