Right to Nominate and Right to Vote

[Tom Vail]

The distinction between the right to nominate and the right to vote is often not well understood. Voting rights get all the attention and nominating rights are often overlooked. The right to nominate resides with every shareholder and is independent of the amount of shares owned, it’s a basic right that all shareholders have, regardless of the quantity of shares owned. In that regard, all shareholders are precisely equal, which is fair. Whereas, the right to vote is dependent on the amount of shares owned, the more shares you own, the more votes you have, which is also fair.

Director nominations and elections represent some of the most fundamental ownership rights of MRI shareholders – namely the right to nominate followed by the right to vote in an election of directors. This representative process ensures alignment between each respective shareholder and the stewardship of MRI. These nomination rights are the standard in Connecticut law. However, this ‘right to nominate’ can be taken from shareholders by board action (which often happens in bigger companies). It is important to understand that this fundamental right exists as the standard in CT law – e.g. a definitive action has to be taken to remove or limit this right. The common practice of taking this ‘right’ from shareholders in bigger companies shouldn’t normalize it as acceptable in our small company. It is not acceptable. Stay alert to any actions or bylaw changes seeking to limit your nominating rights.

It is important that MRI shareholders become and remain involved in selecting nominees that are well-suited to guide MRI stewardship. A fair, open and transparent nominating process is fundamentally critical to board effectiveness and shareholders should cherish their role in finding suitable candidates. Even if they do not want to get involved, shareholders should at least have the option to play an active role and should protect their rights from being usurped.

[Anne Williams]

Tom,
I appreciate your support for our representative nomination process. With all due respect, the vividly imagined scenario you describe, of some nefarious Board of Directors trying to pull a fast one over MRI’s intelligent, aware and committed shareholders is theoretical and –given the engagement of MRI shareholders – highly unlikely. I’m sure you didn’t intend for your educational message about voting and nomination processes to sow distrust or imply that THEY – our friends, neighbors and relatives who are willing to serve as MRI Directors and Officers and who are elected by the shareholders – are secretly en route to normalizing bad corporate behavior. It is, as you say, important for MRI shareholders to become and remain involved, and for shareholders to nominate and vote. That positive message encouraging shareholder engagement contributes to a strong, trusting, community fabric. A strong community fabric will help us protect this place we all love.

[Author]

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