Tesla gets SEC backing for automatic proxy voting program

Investing.com -- The Securities and Exchange Commission approved a plan from Tesla that allows companies to let investors automatically cast proxy votes in line with management recommendations, according to a letter dated September 29.

The program expands on a similar arrangement created by Exxon Mobil last year. Both initiatives aim to boost retail investor participation in corporate annual meeting elections from the current rate of around 30% to levels closer to the 77% participation rate seen among institutional investors.

Tesla described the initiative as an "issuer voluntary retail voting program" in its letter to the SEC, which followed extensive discussions with commission staff. The company said the program would reduce costs that companies currently spend on soliciting retail votes. Tesla spent more than $2 million gathering support from individual investors at its two most recent annual meetings, including one seeking approval for CEO Elon Musk's compensation package.

The current system allows investors to cast ballots through websites, mail or phone. Tesla said its program would supplement these existing methods. "Without a user-friendly way to vote, the proxy voting system disproportionately affects the vote and voice of retail investors," Tesla stated in its letter.

Tiffany Posil, an official in the SEC's Division of Corporation Finance, approved Tesla's plan on the same day and indicated the approval applies to any other company seeking to implement a similar program.

Shareholder activists expressed concern that the program would reduce their influence. Retail investors typically vote in favor of management but show what has been termed "rational apathy" toward casting ballots, as they individually own small portions of company equity.

Original Article

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