# Understanding Proxy Voting: How It Works and Real-Life Examples

![Proxy Vote](https://www.investopedia.com/thmb/-MMGmEZvFOBYpNtFs1RIz1TYoLE=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/proxy-vote.asp-final-960c32ce68e84f6581c35a6f603271b8.png)

*— Investopedia / Zoe Hansen*

## What Is a Proxy Vote?

The term proxy vote refers to a ballot cast by a single person or firm on behalf of a corporation's shareholder who may not be able to attend a [shareholder meeting](https://www.investopedia.com/articles/investing/062413/peek-shareholder-meetings.asp), or who may not choose to vote on a particular issue. Shareholders receive a proxy ballot in the mail along with an information booklet called a [proxy statement](https://www.investopedia.com/terms/p/proxystatement.asp), which describes the issues to be voted on during the meeting. Shareholders vote on a variety of issues including the election of board members, [merger](https://www.investopedia.com/terms/m/merger.asp) or acquisition approvals, or approving a stock compensation plan.

Registered [investment management](https://www.investopedia.com/terms/i/investment-management.asp) companies may also cast proxy votes on behalf of mutual fund shareholders or high net worth investors in [separately managed accounts](https://www.investopedia.com/articles/mutualfund/08/managed-separate-account.asp).

### Key Takeaways

*   Proxy voting allows shareholders to have a person or firm vote on their behalf, especially if they cannot attend the meeting or choose not to vote on particular issues.
*   Shareholders receive proxy materials, including a proxy statement and voting instructions, before a company meeting, and can submit their proxy vote by mail, phone, or online.
*   Proxy votes play a key role in corporate governance, impacting decisions on board elections, mergers, acquisitions, and more.
*   The outcome of proxy votes can rely on various voting systems like plurality or majority, affecting how directors are elected or company proposals are approved.
*   Proxy voting empowers shareholders by maintaining their influence in corporate decisions, even when they are not physically present at the meetings.

## Understanding the Process of Proxy Voting

[Publicly-traded companies](https://www.investopedia.com/terms/p/publiccompany.asp) report their activities to shareholders through their annual meetings. Before those meetings, shareholders receive information on topics to be voted on at the meeting, such as share ownership, the structure of the [board of directors](https://www.investopedia.com/terms/b/boardofdirectors.asp) (BOD), and executive salary and benefits. Investors who own applicable voting shares in the company as of the company’s [record date](https://www.investopedia.com/terms/r/recorddate.asp) may be eligible to vote on these issues.

The company might provide proxy materials online, including the [annual report](https://www.investopedia.com/terms/a/annualreport.asp), a proxy statement on voting issues, and a proxy card with voting directions. Eligible investors may also receive these materials by mail for the [annual general meeting](https://www.investopedia.com/terms/a/agm.asp) (AGM). Often, these AGMs are held in the spring during [proxy season](https://www.investopedia.com/proxy-season-7370612).

Instead of attending the shareholder meeting, investors can choose someone, like a management team member, to vote for them. This person, called a [proxy](https://www.investopedia.com/terms/p/proxy.asp), votes according to the shareholder's directions on the proxy card. Proxy votes may be cast by mail, phone, or online before the cutoff time. This is typically 24 hours before the shareholder meeting. Responses may include "For," "Against," "Abstain," or "Not Voted."

For issues like shareholder proposals, a majority of votes usually leads to approval.

### Methods for Casting a Proxy Vote

Proxy votes may be cast in person by a designated proxy, or by mail, phone, or online before the cutoff time.

## Key Factors to Consider in Proxy Voting

A plurality vote is sometimes used to elect a company's board of directors. In a plurality vote, the winner just needs more votes than the rival candidate. An unopposed director can be elected with just one vote. If [shareholders](https://www.investopedia.com/terms/s/shareholder.asp) are opposed to the candidate, they may withhold their voting rights.

In some instances, the decision is made based on a majority voting system. When a majority vote applies, directors need to receive a majority of the votes in order to be elected. Because abstaining from voting can impact whether or not a director is elected, the company’s proxy statement must detail how abstained or withheld votes will affect the voting results.

## Real-World Example of Proxy Voting

On Nov. 25, 2019, Kirkland Lake Gold ([KL](https://www.investopedia.com/markets/quote?tvwidgetsymbol=KL)) announced that it intended to acquire Detour Gold in an [all-stock deal](https://www.investopedia.com/ask/answers/06/stockforstockmergerdetails.asp).﻿﻿ The two companies would become one company, with Kirkland Lake Gold shareholders owning roughly 73% of the resulting company, leaving 27% for shareholders of Detour Gold.

Although the board members of each company unanimously approved the deal, shareholders were still eligible to vote on the [acquisition](https://www.investopedia.com/terms/a/acquisition.asp). All eligible shareholders received voting and proxy information, and per the instructions, shareholders were informed that they could cast their own ballot or appoint someone else to do it for them. The deal was completed in January 2020.﻿﻿

As a result of the deal, Detour Gold shares delisted in February 2020 as the company became a [subsidiary](https://www.investopedia.com/terms/s/subsidiary.asp) of Kirkland Gold.﻿﻿

## Why Would You Cast a Proxy Vote?

A proxy vote may be cast by a company shareholder if they can't attend a meeting, or if they do not want to vote on a certain issue.

## How Does a Proxy Vote Work?

Rather than attending a shareholder meeting, an investor may vote by proxy, or elect a proxy to vote in their place. This can either mean designating another person to vote on their behalf, or voting by mail, phone, or online before a certain cutoff time.

## What Is a Proxy Statement?

A proxy statement may be given to someone who is voting by proxy. It describes the issues to be voted on during a given meeting.

## The Bottom Line

Proxy voting empowers shareholders to participate in corporate decision-making without attending meetings. Shareholders can designate a proxy to vote on their behalf using materials provided before the meeting, which outline issues like board elections, mergers, acquisitions, and executive compensation. Proxy voting is a key component of corporate governance, ensuring shareholders' voices are heard on critical company matters.

> **Article Sources**
>
> 1.  Business Wire. "[Kirkland Lake Gold to Add New Cornerstone Asset Through Acquisition of Detour Gold, Grows Free Cash Flow, Mineral Reserves and Production](https://www.businesswire.com/news/home/20191125005355/en/Kirkland-Lake-Gold-to-Add-New-Cornerstone-Asset-Through-Acquisition-of-Detour-Gold-Grows-Free-Cash-Flow-Mineral-Reserves-and-Production)." Accessed Nov. 24, 2020.
>     
> 2.  Kirkland Lake. "[Kirkland Lake Gold Completes Acquisition of Detour Gold](https://www.kl.gold/news-and-media/press-release-details/2020/Kirkland-Lake-Gold-Completes-Acquisition-of-Detour-Gold/default.aspx)." Accessed Nov. 24, 2020.