Hearing Voices at Proxy Time

The Walt Disney Co.’s annual shareholder meeting this past March made headlines for the unprecedented rebellion of large investors that led Michael Eisner to step down as chairman. But smaller investors had already been debating this topic for weeks, thanks to a new Web site for shareholder activists.

ProxyMatters.com, which launched in January, features multiple message boards, organized by company, where shareholders and other interested parties can express their opinions for or against director candidates or other proxy initiatives. Brian Heil, the site’s founder, says many individual investors don’t vote their proxies—38 percent of those who remember ever receiving ballots fail to cast them, according to a Harris Interactive poll—in part because the fine-print documents are too dense and difficult to read. He thinks the structured forum will give investors more involved.

It will also offer large shareholders a way to reach smaller investors, as people who post messages can pay to have them displayed more prominently. Heil hopes that by giving top placement to paid messages, the site will enable investors to find valuable information quickly without having to weed through the kind of less-useful rants that can dominate other sites. (The pay-per-post model is also his attempt to create a sustainable business.)

Heil expects that individuals or organizations with strong opinions on certain issues will pay to get their messages heard. Paid messages have no set price but appear in order by the amount paid’ posters can spend as little as a penny per day. Free messages are also accepted, and are placed below paid messages.

The site does have its detractors. Prof. Charles Elson, a governance expert at the University of Delaware, fears that posters’ lack of accountability could lead to abuse. “How do you know that the people participating are not just short sellers trying to affect the price of the stock?” he asks. Elson also warns that shareholders can run afoul of Securities and Exchange Commission regulations that require investors acting together to identify themselves to the agency.

ProxyMatters likely won’t be able to eliminate all junk postings, but Heil says it will help facilitate serious discussion. “This isn’t foolproof,” he says, “but it’s a giant improvement.”