TLDR:
In corporate governance, a proxy is the authorization given by a shareholder to another person or entity to vote on their behalf at shareholder meetings, or the document granting such authorization.
Proxy Voting in Shareholder Meetings
In private startups, proxy mechanics differ significantly from public company proxy voting. Shareholder meetings in private companies are typically smaller and more intimate, with major shareholders often attending directly. However, founders and investors who cannot attend important votes — approval of option pool increases, authorization of new share classes, approval of M&A transactions — can execute proxies granting their voting rights to a designated representative.
Understanding voting thresholds is critical for navigating proxy votes in private companies. Different shareholder actions require different approval thresholds: simple majority (>50%), supermajority (66.7% or 75%), or unanimous consent. Venture capital preferred stock may have separate class voting rights that require approval from preferred holders as a class. Founders contemplating significant corporate actions should model their voting position across all share classes and proxy scenarios before formally initiating the approval process.