Online proxy voting services handle the shareholder voting process for publicly traded companies. Prior to the election, the company distributes proxy materials to each eligible shareholder. Proxy materials typically include the annual meeting date and time, the executive compensation structure, information about the board of directors and a list of proposals included in the current vote.
Some companies choose to reduce printing and mailing costs by emailing their proxy information or posting it online. If the proxy materials are only available online, the company must send a notice of access instructing the shareholder how to log in and view the information.
Each shareholder receives an individual control number that is only valid for the current vote. This keeps the shareholder votes anonymous but still identifiable for counting purposes. A shareholder must hold stock on the record date to be eligible for the vote. The company sets the record date for each vote and lists it in the proxy materials.
Votes for the board of directors are legally binding. Certain other types of proxy votes are only advisory, such as votes on executive pay levels or shareholder proposals. The company is not legally obligated to follow the decision of the voters on an advisory issue.