In a recent article in The New York Times headlined "Small Investors Support Boards, But Few Vote" clearly that is a concern and we believe the problem is worsening.
When the retail vote is required it's critical and important when significant issues are on the table. As mentioned last week, the Procter & Gamble vs. Trian Fund Management fight over a board seat for Mr. Peltz clearly exemplifies the value of the retail vote.
In the case of Procter & Gamble forty percent of the outstanding shares are held by retail shareholders. If they all voted and cast their shares in management's favor, then we could have confidently predicted that Trian would lose and the estimated $25 million cost to Trian will have been to no avail. With the upcoming legal challenges to the voting result, that cost will rise significantly.
It is not by any means a given that the retail holder will cast their vote considering the gradual erosion of the retail voting response over the last several years. It has become a real problem with no easy solution.
Management and their outside advisors (legal, shareholder communication) need to come together and lay out a sustainable program for continuing with their retail shareholder base.
Ref: The New York Times – Sunday, October 8, 2017