This follows about a week after Scudder’s Brazil Fund (BZF) also failed to receive enough votes to approve its open-ending proposal. These failures to gain approval are not the result of a lot of shareholders rising up to vote against the proposals, but rather they are the result of not enough shareholders voting. In these votes requiring affirmatives from a certain percentage of outstanding shares, not voting is equivalent to voting against the proposal.
In almost every case of a board supported open-ending proposal, if we split shareholders into groups, the largest group would be shareholders who voted for the proposal, followed by shareholders who did not vote, and the smallest group would be shareholders who voted against the proposal.
Even though the ultimate reason for the proposals’ failures was that not enough shareholders voted, the boards must take some blame for the proposals not getting the required support. It is the board’s duty to carry out the wishes of their employer, the fund’s shareholders, and since investors holding a large majority of shares in each fund support the merger and open-ending proposals, the boards’ members should earn their paychecks by finding a way to get these proposals approved as soon as possible.