Routine Vs Non-routine Proxy Proposals

Running a company involving many aspects of corporate decision-making requires keeping accurate records and imposing a certain degree of regularity in the process. Proxies are one such way to ensure there is an established protocol for voting on various matters that come up within the company. Proxy proposals can be either routine or non-routine depending on their nature.

What is a Proxy Proposal?

First and foremost, it’s important to understand what a proxy proposal is. A proxy proposal is a document that states the details of an upcoming vote within a company and gives shareholders the ability to grant their voting rights to a third party or “proxy” if they cannot attend the meeting in person. This type of document may also be used by management to seek authorization from shareholders on specific matters, such as paying dividends, changing terms of the company’s bylaws, or authorizing a corporate merger.

In the governance of any organization, there must be a means to address issues, make changes, and set needed regulations. Public companies in the United States make major decisions about business and future strategies via proposals made at annual shareholder meetings. These proposals are akin to bills in the legislature of the United States government. Proxy proposals are created by the company’s management or owners, and like bills they are debated and voted on at a set date. Of course, like US bills, not all proposals are alike. First, proposals within public companies can be put forward by:

  • Company management including company officers and board of directors, who can make Management Proposals.
  • Shareholders, who can make Shareholders Proposals.

In accordance with United States Securities and Exchange Commission regulations (rule 14a-8) shareholder proposals can be made by an owner or owners of at a minimum of $2000 worth of market value company stock, or 1% of the business outstanding stock, and must have owned this stock for over a minimum of one year. The shareholder or shareholders must also keep ownership of the stock through the proposal process.

Both shareholder and management proposals can be of two types, which we will discuss in further sections:

  • Routine Proposals, which deal with matters that will not affect the privileges and rights associated with ownership of stock in the business. Examples of this type are proposals for the ratification of auditors.
  • Non-routine Proposals, effect the issuing of new stock, election of directors, a merger with another company, or any other proposal stockholders could have concerns with, and would affect their ownership.

Routine Proxy Proposals

Routine proxy proposals are typically used to grant shareholders the right to vote on items such as electing directors, approving audited financial reports, and other relatively minor decisions that don’t require drastic changes or adjustments within the company. These types of proposals are generally straightforward and often require a simple majority to pass. Some examples include:

Company Name Change Routine Proxy Proposals

Company name changes are a bit of a special case because they aren’t as commonly seen in most companies, however, some routine proxy proposals may be used to authorize this type of change. Companies tend to only go through a name change if the current brand no longer accurately reflects their mission or if it has been associated with any negative events. For instance, Pepsi Co. and Quaker Oats recently had a name change, rebranding Aunt Jemima as the Pearl Milling Company.

Appointment of Auditors

Auditors are responsible for providing an independent assessment of a company’s financial statements, ensuring that all information is accurate and up to date. A routine proxy proposal may be used to appoint auditors or authorize the termination of existing ones. This type of proposal is usually quite minor as it only requires shareholders to agree on who should be appointed or removed from the role.

Stock Splits

Stock splits occur when a company decides to increase the amount of shares outstanding in order to make them more accessible and therefore, easier to buy and sell. This type of proposal is usually seen as routine in nature as it does not change the company’s financials or cost shareholders anything directly. Stock splits also don’t change the value of a company, but can be a good sign for investors. Dynatronics Corp. recently made news for its 1 for 5 reverse stock split.

Proxy Proposal Description Example
Routine Proxy Proposals Proposals involving minor decisions that require a simple majority to pass. Examples: Electing directors, approving financial reports, authorizing company name changes. Company Name Change
Appointment of Auditors
Stock Splits
Non-Routine Proxy Proposals Proposals involving complex decisions with long-term ramifications, requiring a supermajority of shareholders to pass. Examples: Issuing new shares, mergers, changes in bylaws. Election of Directors
Changes in Bylaws

Non-Routine Proxy Proposals

Non-routine proxy proposals, on the other hand, involve more complex decisions that may have long-term ramifications for the company or its shareholders. Examples of non-routine proxy proposals include issuing new shares, changing the company’s capital structure, and entering into large mergers or acquisitions. These types of proposals usually require a supermajority of shareholders to pass in order to be approved.

Election of Directors

Election of directors are a common example of non-routine proxy proposals as it involves selecting individuals for high-level positions within the company. The process requires considering different candidates’ backgrounds and qualifications before electing them to the board. In order for this type of proposal to pass, shareholders must agree on who should be appointed and then vote accordingly. For instance, J.P. Morgan Chase’s 2022 non-routine proxy includes an election of directors and also highlights the importanace of voting for the right candidate.


By far, one of the biggest non-routine proxy proposals is the authorization of a merger. Mergers bring together two different companies and can have significant repercussions, both positive and negative. It’s important to consider all aspects of a potential merger before allowing it to go through, which is why non-routine proxy proposals are used to evaluate the situation more thoroughly. Recent mergers you might have heard of include Microsoft’s recent acquisition of Activision Blizzard, the creators of popular video games such as World of Warcraft and Call of Duty, for $95 a share.

Changes in Bylaws

Bylaws are an important part of any company as they lay out the rules and regulations that govern a corporation’s operations. A non-routine proxy proposal may be used to make changes to existing bylaws or introduce new ones, which can have far-reaching implications for shareholders and other stakeholders. However, there might be instances where bylaws do greater harm than good. For instance, Masimo, a medical technology company, recently had to change its bylaws that required hedge funds to detail top-secret information. Unfortunately, this bylaw caused some shareholders to be weary of investing in the company.

Why Are Proxy Proposals Necessary?

These types of proposals can be complex and require careful consideration by shareholders before any action is taken. It’s important to understand when routine or non-routine proxy proposals are necessary in order to ensure that the best decision is made for the company and its shareholders. Proxy proposals are also important in providing a transparent and democratic process for making decisions, allowing shareholders to have a say in the direction of the company and to be aware of any potential risks or rewards that may result from an action taken by the board.

In the United States, under the New York Stock Exchange Rules, a broker can vote on behalf of a shareholder. This will be done if you have not given your broker instructions about voting ten days before the shareholders meeting is scheduled, and you are considered a beneficial owner with your stocks held in Street Name. However, the broker can only vote on routine proposals, and is also not allowed to vote on non-routine or contested-proposals where the shareholders disagree with management.

How Colonial Stock Transfer Can Help

At Colonial, we can help you vote on both routine and non-routine proxy proposals through our shareholder meeting services. Under the new SEC rules, companies are required to post all proxy and annual meeting materials online. This is because having this information available to shareholders ensures that they can make informed decisions about their investments. Our online platform makes it easy to display and view shareholder proxy material. In addition, shareholders can submit their votes online with a simple click. Whether you’re a large institutional investor or an individual shareholder, our team at Colonial Stock is here to help make sure your voice is heard. We can help you vote on routine or non-routine proxy proposals for your stocks. Just check proxy voting instructions on our website, or contact us to learn more.


Michael Segura
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