For a host of public companies, springtime is when shareholders start speaking of "say on pay," CEOs are forced to face angry investors and so-called corporate gadflies make their rounds.
It's called proxy season, and everyday investors probably don't give it a second thought.
But the decisions that are made then affect millions of Americans. Even if you don't follow the daily ups and downs of General Electric or Disney, there's a good chance you own a piece through your 401(k) or pension.
Here's a primer on corporate proxies and annual meetings, and what they mean to you.
Q: What is an annual meeting?
A: Public companies are owned by the people who buy their stock. If you have, say, 100 shares of Wells Fargo bank, then you are the proud owner of about 0.0000005 percent of the company.
Corporate executives are required to face shareholders _ technically their bosses _ once a year. These annual meetings typically take place in spring, often at company headquarters. Any shareholder is allowed to question top executives.
Q: Who goes to these events?
A: Public pension funds, religious organizations, consumer activist groups and other institutional shareholders usually attend. Most individual shareholders can't go to a meeting in the middle of a workday in what might be a faraway city.
Among the individual shareholders, though, perhaps no one matches the chutzpah of Evelyn Y. Davis.
Davis has made a career of traveling to annual meetings, both hectoring and flirting with CEOs. She once told Bank of America CEO Brian Moynihan that he reminded her of her first ex-husband. (She has four.)
This year, she is scheduled to present proposals to Goldman Sachs, Bank of America and JPMorgan Chase, among others.
Q: What is a proxy statement?
A: It's usually a thin, unadorned booklet that companies mail to their shareholders before the annual meeting. The proxy can cause a stir because it's where companies disclose how much they are paying top executives. It also tells shareholders where and when the annual meeting will be and what proposals they'll be asked to vote on.
It's called a proxy because shareholders don't have to attend the meeting to vote. They can usually ask their broker, investment manager or some other representative to vote for them.
Shareholders or their representatives can wait until the meeting to vote, or they can usually vote online, by phone or by mail.
Q: What do shareholders vote on?
A: Both companies and shareholders can put proposals on the ballot. Companies will ask shareholders to vote in favor of all the people the company wants on the board of directors. Companies might also ask for votes on housekeeping items, like permission to keep using the same accounting company.
The shareholder proposals are where things get interesting.
A shareholder proposal can focus on a social issue, like requiring a company to recycle more of its materials or to stop animal testing. A shareholder proposal might also focus on corporate governance, the standards that determine how the company is run.
For example, if a company has the same person as CEO and board chairman, a shareholder might propose that the company split those jobs. The board is supposed to make sure the CEO is doing his or her job, and shareholder activists sometimes argue that it's difficult if the board is run by the CEO.
The Securities and Exchange Commission requires that a shareholder who wants to get a proposal in the proxy own either 1 percent or $2,000 worth of the stock.
Q: Who are the people on the board?
A: Board members keep tabs on the company as a part-time job. The majority of them must be independent, which means they can't work at the company or do substantial business with it.
If the CEO wants to make a major decision, like buying another company, he or she is supposed to consult the board. If the CEO is doing a lousy job, the board is supposed to fire him or her and find a replacement.
Board members are supposed to serve as shareholder representatives and encourage the company to do what's best for shareholders, sort of like Congress is supposed to be the people's representatives in the government.
Q: So since they're the shareholders' representatives, do shareholders get to see them and give them suggestions?
A: For most individual shareholders, no. Unless you're a major shareholder with millions of dollars invested, you'll probably never interact with the board of a big company. Many companies will tell shareholders that if they want to contact board members, they need to write a letter and send it through the company, and companies often reserve the right to refrain from passing along the letters. Of course, a determined shareholder could probably circumvent the rules and track down board members' individual contact information on their own.
Q: Does the board get paid for this?
A: Almost always, and often a lot. At Goldman Sachs, board members were paid at least $358,000 if they served on the board for all of 2011, though the payment was entirely in restricted stock. The board held 15 meetings; the bank says that directors also "meet informally from time to time" and receive weekly informational packages about the bank.
Q: What are shareholders asking for this season?
A: Political requests are at the top of the list. Institutional Shareholder Services, which advises big shareholders how to vote, estimates that there are political proposals at about 100 companies this season.
Shareholders at Allstate, Caterpillar, Sprint and others are asking the companies to release more information about their political contributions, and Goldman Sachs, Kraft Foods, Verizon and others are being asked to release more information about their lobbying. A wealth management company in Boston is asking Google, Home Depot, Intel and others to let shareholders vote on whether they approve of the company's political contributions. Proposals at 3M and Bank of America go further, asking the companies to abstain from political spending.
Q: Does my vote count?
A: Sort of. Shareholder activists are constantly complaining that the odds are tilted in favor of the companies.
ISS calculates that 21 percent of shareholder proposals last year received a majority of votes cast. But that doesn't automatically mean they passed. Some proposals require a majority of all shareholders, not just those who vote. That's a standard that's far harder to obtain, because many shareholders don't vote.
Some may assume a proxy statement is junk mail and toss it. Others may never see their proxy because they have it sent to the banker who manages their investments, and they never pick it up. Companies can exercise tremendous muscle in the voting process if they choose, hiring "proxy solicitors" to call the big investors to try to influence how they vote their shares. Shareholders are also free to mount their own campaigns.
Most shareholder proposals are non-binding anyway. Citigroup shareholders just voted their disapproval for a $15 million pay package given last year to CEO Vikram Pandit, plus $10 million in retention pay. But Citigroup's board is free to disregard the shareholders' wishes.