What does proxy power involve?

Proxy power involves the practice where shareholders delegate their voting authority to an agent, often for the purpose of participating in corporate decisions without being physically present at a shareholder meeting. This allows shareholders to appoint someone else, known as a proxy, to cast their votes on their behalf regarding various corporate matters, such as board elections or proposed changes to corporate policy.

This mechanism is particularly significant in corporate governance because it enables more shareholders to engage in the decision-making process, even if they cannot attend meetings. Proxy power is critical for ensuring that the voice of the shareholders is represented and that their interests are considered in corporate governance.

The other options do not accurately capture the essence of proxy power. Expanding corporate liability, manipulating corporate votes, and distributing dividends do not directly relate to the delegation of voting authority, which is the core aspect of proxy power. Thus, the focus on the agent appointing stock on behalf of shareholders clearly aligns with the fundamental principle of proxy power in corporate governance.