If you're a shareholder in a company, how do you make your voice heard when it comes to operations, corporate governance, executive pay, leadership selection and other important issues? You vote your shares, that's how. It's one of your key rights as a shareholder, in fact. And it's one every shareholder should exercise because the outcome of such votes can affect the value of shares. (For more, see: Executive Pay: How Much Do Shareholders Really Care?)

Investors are not required to vote, but exercising your voting rights is a key tool for making yourself heard by the company’s directors and management. If you're unhappy about something, participating in the proxy vote is a way to try to affect change—and it's much less drastic than selling off your stake in the company and investing the money elsewhere. According to the Securities and Exchange Commission, many corporations encourage shareholders to participate through the proxy process as part of good corporate governance and investor relationship-building. (For more, see: How Your Vote Can Change Corporate Policy.)

How it Works

Prior to the company's annual meeting, shareholders will receive a notice that a proxy card, proxy statement and the annual report are available electronically. The proxy materials will include information on the important issues and director elections on which shareholders are being asked to vote, and it's important to carefully study the documents provided before taking action. Shareholders will cast their votes on these matters at the meeting or, if the shareholder is unable to attend in person, by means of the proxy ballot (voting often can be done by phone or online). Typically, a shareholder has the right to cast one vote per share owned. (For more, see: Knowing Your Rights as a Shareholder.)

Many institutional investors—who have a big say on proxy issues because of the size of the positions they own — have developed proxy voting guidelines that are posted on their websites, so it's fairly easy to get a feel for the stance they will take on particular issues. These institutional investors can urge a company to alter or even sometimes withdraw some of the proposals. And when they vote on a specific issue, they'll often post their decision online with an explanation. This gives smaller, retail investors insight to how the big guys are thinking and voting and is a great resource when you're researching an issue and trying to decide how to vote your own shares. (For related reading, see: What Does Your Mutual Fund Say About You?)

Low Participation

Despite the importance of making their voices heard, however, shareholders are not participating in proxy voting enough. Less than 30% of shareholders voted their shares in 2014, according to voting administrator Broadridge Financial Solutions Inc. (BR). That means more than two-thirds of shareholders gave up their vote. Many of those own their shares in broker-managed accounts, and either the broker did not vote at all or voted the shares on behalf of the shareholder in line with the status quo (per the firm's party line). (For more, see: Pay Attention to the Proxy Statement.)

Do you care about climate change and want companies to disclose more information about the environmental impact of their operations? Do you want to see companies disclose their lobbying activity and political spending? Should companies do a better job outlining anti-discrimination policies based on sexual orientation? In all of these cases, it's likely the broker would vote "against" rather than "for." That means your voice is not being heard and, in fact, your vote is being used to defeat the very things you believe in. If these issues—and/or others—matter to you, contact your broker and let him or her know that you want to vote your own shares in your managed account going forward. (For related reading, see: Investment Risks Created by Global Warming.)

The Bottom Line

Voting your shares, which most often will take place via proxy ballot, is a right of shareholders and one every shareholder should exercise. We all hold our beliefs dear, and we should bring those beliefs into our investing lives. It's important that each and every shareholder's voice is raised and heard, and it's not difficult to make that happen. Look for your notice, research the issues, and vote your proxy. (For more, see: Proxy Voting Gives Fund Shareholders a Say.)

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.