SEC Staff Permits Groundbreaking Retail Shareholder Voting Program To Implement Standing Voting Instructions

Client Alert  |  September 16, 2025

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The Retail Voting Program might be supplied to each shareholders of file and useful shareholders who personal firm shares by banks and brokerage corporations.

In a major no-action letter issued on September 15, 2025 to Exxon Mobil Corporation, out there here, the employees of the SEC’s Division of Corporation Finance (the SEC Staff) concurred that the corporate can implement a groundbreaking “Retail Voting Program” permitting retail shareholders to offer a standing instruction beneath which in future annual conferences their shares might be voted on an on-going foundation as beneficial by the corporate’s board of administrators. Although the no-action request was issued to Exxon Mobil, different firms ought to be capable to implement comparable applications in reliance on the SEC Staff’s concurrence.

The Retail Voting Program might be supplied to each shareholders of file and useful shareholders who personal firm shares by banks and brokerage corporations. Under this system:

• Shareholders might be offered the flexibility, upfront of the corporate submitting its proxy assertion, to enter right into a standing voting instruction settlement pursuant to which their shares might be voted as beneficial by the corporate’s board of administrators on all issues being voted on. Alternatively, shareholders can elect to vote as beneficial by the board on all issues besides on contested elections of administrators and acquisition, merger, or divestiture transactions that require shareholder approval.
• Shareholders who choose into the corporate’s program will proceed to obtain the corporate’s proxy supplies within the regular course, and can obtain reminder notices of their opt-in standing and their skill to choose out.
• Once a shareholder has opted into this system, their shares might be voted as beneficial by the board on the day that the corporate information its definitive proxy assertion. However, shareholders can have the flexibility to override that vote by going by the common proxy voting course of for the assembly. The firm’s proxy supplies can even focus on this system and embrace directions on the best way to override the standing voting instruction by voting utilizing the present assembly’s proxy supplies and the best way to choose out of this system for future shareholder conferences.
• The program might be supplied to all retail shareholders on the identical phrases, for free of charge to the shareholder. However, registered funding advisors who train voting authority with respect to their shoppers’ shares is not going to be eligible to choose into this system.

In its no-action request, Exxon Mobil argued that, given the flexibility for shareholders to override their standing voting instruction by voting by the common proxy voting course of, the Retail Voting Program ought to be considered as not violating SEC proxy guidelines that restrict the period of proxies to a single annual assembly. Indeed, many retail buyers are supportive of their firms however have problem voting all of their shares throughout the comparatively compressed proxy season. As Exxon Mobil defined in its request, “enrollment in the program is a safeguard for those who want to ensure that their vote is actually cast in alignment with the Board’s recommendations in an efficient manner, but it does not interfere with their rights and ability to vote at shareholder meetings.” The SEC Staff concurred that it will not suggest enforcement motion if the Retail Voting Program is applied as described within the no-action request. The Retail Voting Program must also be considered as in line with Delaware company legislation, since (no matter whether or not the standing voting instruction is considered as a proxy) Section 212(b) of the Delaware General Corporation Law permits a proxy to have a time period of greater than 3 years “if the proxy provides for a longer period.”

We count on many public firms will discover it engaging to implement standing voting instruction applications akin to Exxon Mobil’s Retail Voting Program, and that variations in such applications could emerge as further SEC interpretive and no-action steerage is issued. Companies with a big and steady retail shareholder base which have a excessive share of unvoted shares could effectively discover the extra communications entailed in a standing voting instruction program definitely worth the effort and expense. Among different advantages, standing voting directions might be able to assist firms acquire quorum, counterbalance the impression of institutionally held shares which are voted in keeping with a proxy advisory agency’s suggestions, and mitigate the impression of the dearth of brokers’ discretionary voting on many gadgets.

The Exxon Mobil no-action letter additionally is important in exhibiting the extent to which the SEC Staff, beneath Chairman Atkins, is prepared to rethink whether or not the SEC’s guidelines are selling or impairing buyers’ rights, notably when expertise and customary practices have developed. In this case, the no-action letter displays an affordable and acceptable lodging to empower retail buyers’ train of their franchise and promote shareholder democracy whereas sustaining investor protections by disclosures and voting processes.

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The following Gibson Dunn legal professionals ready this replace: Ronald Mueller, Brian Lane, Lori Zyskowski, Geoffrey Walter, Michael Titera, and Aaron Briggs.

Gibson Dunn’s legal professionals can be found to help with any questions you might have relating to these developments. To be taught extra about these points, please contact the Gibson Dunn lawyer with whom you often work, or any of the next legal professionals within the agency’s Securities Regulation and Corporate Governance apply group:

Aaron Briggs – San Francisco (+1 415.393.8297, abriggs@gibsondunn.com)
Mellissa Campbell Duru – Washington, D.C. (+1 202.955.8204, mduru@gibsondunn.com)
Elizabeth Ising – Washington, D.C. (+1 202.955.8287, eising@gibsondunn.com)
Thomas J. Kim – Washington, D.C. (+1 202.887.3550, tkim@gibsondunn.com)
Brian J. Lane – Washington, D.C. (+1 202.887.3646, blane@gibsondunn.com)
Julia Lapitskaya – New York (+1 212.351.2354, jlapitskaya@gibsondunn.com)
James J. Moloney – Orange County (+1 949.451.4343, jmoloney@gibsondunn.com)
Ronald O. Mueller – Washington, D.C. (+1 202.955.8671, rmueller@gibsondunn.com)
Michael A. Titera – Orange County (+1 949.451.4365, mtitera@gibsondunn.com)
Geoffrey E. Walter – Washington, D.C. (+1 202-887-3749, gwalter@gibsondunn.com)
Lori Zyskowski – New York (+1 212.351.2309, lzyskowski@gibsondunn.com)

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