in more than three companies at a time. He keeps the numbers low so that he has the time to follow each company’s development. He also keeps an eye on other options so that he can invest his money elsewhere should the need arise. Currently, Williams has shares in AT&T Wireless (NYSE: AWE) and AOL Time Warner (NYSE: AOL). He is also invested in a private placement, Advanced Bionics, a small biotech company in Sylmar, California.
DON’T RELY ON YOUR BROKER
The broker may be your advisor when it comes to buying and selling stock, but not when it comes to proxies. “They have no legal responsibility to decide what’s best for the shareholder,” says Pastor. “The broker merely serves an executorial role and usually sides with management.” If you invest in mutual funds, fund managers normally vote in your best interests since they are compensated based on the performance of the portfolio.
“If you own just one share, you should vote,” says Williams. (If you own 100 shares, you’ll be casting 100 votes.) Voting can make a difference. Pastor cites the example of Jill Barad, former Mattel CEO who received almost $50 million when she was ousted in February 2000 due to poor performance: “Why did she get five times her salary for failing? Well, shareholders must have approved that golden parachute, and a big chunk of their money went out of the value of their stock and into Jill Barad’s pocket!”
The process is as simple as mailing in a form, or you can vote by phone or online at sites such as www.proxyvote.com and www.shareholderaction.org. And, of course, you can attend shareholders meetings in person to cast your vote. What you learn through the process will help you make better decisions about your stock.