[Election-Methods] thoughts on delegatable proxy and it's application to share corporations

[greg wolfe]

Paul Kislanko wrote:
>>Regarding: "It is simply not traditional in politics. It
>>is ubiquitous in business" referring to proxy voting.
>>
>>I don't think you want to go there. The way "proxy voting" works in business
>>is you give the board your proxy or don't get a vote at all.

Abd ul-Rahman Lomax wrote:
>In any case my view is that the corporate model was not designed for
>huge numbers of shareholders, and because of that, a certain abuse
>crept in. Boards routinely send proxy solicitations to shareholders
>asking them to assign their proxies to someone they name, who will
>exercise them. Lots of clueless shareholders routinely sign those
>proxies and send them it, enough that small shareholders really don't
>get a voice.
Mutual funds introduce another important distortion to the
corporate proxy system.

When you own shares through a mutual fund you have essentially
assigned your proxies to the mutual fund's management.  You
get no say in how they are voted.  For example, if you invest in
a socially responsible index fund through a mutual fund company
such as Vanguard, your proxies WILL NOT be voted in the way that
is recommended by the producer of the socially responsible index.
Instead they are voted with the rest of the Vanguard owned shares
in whichever way Vanguard considers to be in their interests.

In some ways this distortion is a positive effect since as unorganized
uneducated-about-the-issues individual small share holders, stock
owners tend to not exercise their vote or proxy in a responsible manner.
Mutual fund companies aggregate enough power that they exercise their
proxies in an educated manner which they presumably vote in what they
perceive as their shareholder's aggregate interests.


>There is a solution, indeed, and it is FA/DP organization of the
>shareholders.... Cheap, very cheap and simple, easy, and I expect, it
>would be highly effective. But it won't happen until people, in
>general, figure out how disempowered they are by not being organized
>for collective action.
This is a very interesting idea to me.  Such an organization ought to
be aware of who shareholders are and how many shares they own in
a verifiable way.   Ideally mutual fund companies would allow indirect
shareholders to vote-through their interests.   Ideally there would be a
means for shareholders to communicate with each other and possibly
contact shareholders who were not already engaged in the company
FA/DP.

Does there already exist any systematic share holder organization
outside of the companies themselves?  I have not heard of any.
What I have heard of has always aggregated through the ownership
structure itself.  Eg. Shareholders who were interested in a particular
agenda would purchase their shares through a social index fund that
promised to engage companies along that agenda.  It would be
interesting if the intelligence about companies was organized
outside of the official structures established by the companies.

In short: A share weighted FA/DP about a company could be very useful:
* in discovering what changes owners are interested in supporting
* in leading to reforms where indirect owners can choose to
participate in company management as if they were direct owners
* in allowing more effective communication between share owners
* in helping people discover who they wish to assign their actual
share proxies to

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