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behavioral

Governance Apathy

"Exploits retail shareholder disengagement"

Taking advantage of the fact that most shareholders (especially retail and index funds) do not vote or actively monitor management.

How It Works

  1. 1

    Management passes self-enriching compensation packages

  2. 2

    Insiders approve poison pills or defensive measures

  3. 3

    Schedule votes for off-peak times

  4. 4

    Rely on 'Broker Non-Votes' or unvoted shares counting as management support (depending on bylaws)

  5. 5

    Pass controversial measures with minimal opposition

Key Mechanics

Proxy statement complexity

Rational Ignorance (cost of researching > benefit of voting)

Plurality vs Majority voting standards

Supermajority hurdles

Regulatory Context

SEC rules govern proxy solicitation. 'Empty voting' is a concern.