Proxy

DEFINITION of 'Proxy'

1. An agent legally authorized to act on behalf of another party. Shareholders not attending a company's annual meeting may choose to vote their shares by proxy by allowing someone else to cast votes on their behalf.

2. A formal power of attorney document that may be signed by a shareholder to authorize another shareholder, a representative of the shareholder or the company's management, to vote on behalf of the shareholder at the annual meeting. Proxy statements must be filed with regulatory authorities (the Securities and Exchange Commission in the U.S.) on an annual basis prior to the company's annual meeting. Proxy documents are meant to provide shareholders with the information necessary to make informed votes on issues important to the company's performance. A proxy is known to offer shareholders and prospective investors tremendous insight into a company's governance as well as a glance at the way that a company's management operates.

BREAKING DOWN 'Proxy'

1. Management often encourages shareholders to vote by proxy so that ownership interests are fully represented even if shareholders are unable to attend the company's annual meetings in person.

2. The proxy discloses important information about issues to be discussed at an annual meeting, lists the qualifications of management and board members, serves as a ballot for elections to the board of directors, lists the largest shareholders of a company's stock and provides detailed information about executive compensation.

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