When Does Not Voting Mean You've Voted For Something?

If you are a shareholder in a public company in the United States and do not cast your votes or proxy when given an opportunity, current SEC rules and interpretations of these rules are that non-votes or abstentions are counted as supporting whatever the board or management of that company has determined what is supposedly in the best interests of the company.

But I think we've seen enough examples amongst entrenched management and do-nothing or incestuous boards who've confused what they purport to be the best interests of the company with what is in their best interests and not in the best interest of the shareholders.

If the purpose of voting in any sort of election is to ascertain the mind of the majority, then any voting rule or interpretation of the voting rule that takes away one or more of the choices that a voter naturally has in an election destroys the integrity of that election. Voters are typically given at least three choices in a typical election: for, against or abstain. The current SEC rule of allowing management or the board of a company to count non-votes or abstentions as for that management's or board's favor therefore misrepresents the intention of the voter.

To put this in perspective, imagine an election in your town for mayor. Imagine that the current mayor is complete bum and should be fired by the voters from his or her job for the greater benefit of all. However, using SEC rules, those registered voters in this election who do not cast a vote would be counted as having voted for the incumbent bum!

There are many reasons not to vote: apathy, laziness, principle, forgetfulness, etc. But the choice of whether to vote or not and how to use that vote should in all cases remain the exclusive right of the voter.

Petition 4-583 is currently before the SEC requesting a change in the rules and interpretations of rules regarding the counting of shareholder votes and non-votes. The title of this post links you with the SEC webpage where you can read the petition. If you agree with my argument above, I urge you to send your comments to the SEC regarding shareholder voting rights to rule-comments@sec.gov. Be sure to mention petition 4-583.