PRESTON YADEGAR | From Shareholder Vote Exchange

Unlocking Shareholder Power: A Proxy Voting Revolution

Are you maximizing the value of your shareholder voting rights? It's a question many investors overlook, but it could be the key to unlocking additional income from your investments.

Preston Yadegar is the founder and CEO of Shareholder Vote Exchange, the world's first marketplace for shareholder voting rights. Preston has previously worked at several investment advisors and hedge funds in trading and software engineering roles. He graduated from Boston University with a bachelor's degree in computer science and philosophy in 2020.

We discuss proxy votes—what they are, how they work, and why they're often neglected by retail investors. Preston explains that while most shareholders have the right to vote, the majority don't exercise it, leading to what he terms 'rational shareholder apathy.' But should investors simply disregard these votes? Preston argues that there's value in these rights, and that selling them could benefit both the shareholder and the company.

The podcast also tackles the complexities of corporate governance, such as dual-class share structures and the role of activist investing in driving company value and policy changes. Listeners are given a front-row seat to the intricacies of proxy fights, where shareholders and boards clash over the company's direction, and how these battles can influence the price of a vote.

Preston's journey from university graduate to CEO in just a few years is as inspiring as it is informative. His creation of the world's first marketplace for shareholder voting rights is a testament to his innovative thinking and commitment to making the stock market more accessible and profitable for individual investors.

Don't let your voting rights go to waste. Tune in to this episode of Stocks for Beginners and learn how to turn your votes into a source of passive income.

TRANSCRIPT FOLLOWS AFTER THIS BRIEF MESSAGE

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Unlocking Shareholder Power: A Proxy Voting Revolution

The price of the vote is directly correlated with the share price

Chloe: Stocks for beginners. Phil Muscatello and Finpods areauthorized reps of money Sherpa. The information in this podcast is general in
nature and doesn't take into account your personal situation.

Preston: The price of the vote is directly correlated, if notcaused by the amount of opportunity for outside parties generally to unlock
value. So if the vote prices are relatively high, you can look at them as a
percent of the share price. If it's anything exceeding 0.5%, uh, that would be
considered quite high. In general, votes are worth nothing because there has
never been a market for voting rights fully functioning, efficient market until
SVE So as the vote prices rise, that indicates there's some opportunity at
hand, whether it's, um, a governance change on the board, or it's an m, a
opportunity that might be more direct.

Phil Muscatello talks to Preston Yadegar about shareholder voting rights

Phil: Hi, and welcome back to stocks for beginners. I'm PhilMuscatello. What's a proxy, and what are your rights as a shareholder? How can
you earn extra income from your voting rights? Joining me in this episode to
explain everything proxy is Preston Yadegar Hi, Preston.

Preston: Hello, Phil.

Phil: Preston is the founder and CEO, uh, of shareholder VoteExchange, the world's first marketplace for shareholder voting rights. Preston
has previously worked at several investment advisors and hedge funds in trading
and software engineering roles. He graduated from Boston University with a
bachelor's degree in computer science and philosophy in 2020. So how was the
philosophy side of things? I believe that the joke is they only teach you
enough philosophy at college to screw you up for the rest of your life.

Preston: Yeah, well, I'm glad I studied something technical to goalong with it on its own. It's not necessarily the strongest degree.

Phil: Yeah. So let's dive deeply into proxies. What is a proxy?

Preston: Well, proxy is a sort of legal authorization whichenables one shareholder to appoint someone else to vote on their behalf at a
company's annual meeting. So, companies have annual meetings and extraordinary
meetings to vote on, electing the board of directors, approving mergers and
acquisitions, other items. And so when, uh, shareholders are unable to attend
the meetings in person or on the meeting date, virtually, they can appoint a
proxy to vote on their behalf. And the proxy can either execute the
shareholders'instructions, the specific votes, or they can exercise their own
discretion on how they would like to vote.

Phil: So when you own shares in a company, you end up with therights to be able to vote in this situation. So you personally could go along
to the AGM and vote on your own behalf, can't you?

Preston: Yeah. So a lot of shareholders are legally able to, butmost of them are unable to actually attend physically in person. They're either
too busy. In the US, around 80% of retail investors don't exercise their votes
whatsoever. That's because they don't have time, or they're not interested in
voting, or they're even unaware. Someone just getting started might get their
proxy votes in the mail or by email and just disregard them. If you only own a
share or two, or 100, uh, or 1000 of some company, it might not be worth your
time, or even the company's, to some extent, for you to vote. They call it
rational shareholder apathy is the term.

Phil: I, uh, like that term, rational shareholder apathy. Wemight put that in the glossary. Why do you think investors should take these
more seriously then their voting rights and passing them on to someone else?

Preston: Well, I would argue that the rational apathy is actuallya valid theory. Some academics actually contest this. They think, no, it's not
rational. Everyone should participate. That's what makes for good corporate
governance. But I would argue that as a retail investor at least, it's really
not worth your time, especially if you own a very nominal number of shares. So
what you're better off doing is actually selling off that vote, or providing it
to another shareholder, or even to the management. Someone else who has a more
vested interest, who's done more research, who's more engaged and has more
strong views about how the votes should be exercised. And in exchange, they
could pay you. They may unlock value at the company, they may keep the company
more stable. There's a number of ways in which, uh, you can benefit directly or
indirectly by doing this. So investors should be paying attention to it,
because these votes have value, and most of them tend to be thrown away these
days.

Phil: And this is voting at the board level, isn't it? This isdirecting the board on how they should be running the company. Is that the
case?

Preston: Yes. Most votes in these agms are for selecting theboard of directors. But you also do have votes on other issues. In the US,
there's a term, ESG. You may vote on whether or not the company should engage
in a, uh, labor audit or some sort of environmental proposal to reduce
emissions. There are also votes to approve mergers and acquisitions. There are
certain thresholds that need to be met, and those votes tend to be more
difficult to approve. The threshold is a bit higher. It's not simply a 50% majority
in many cases. So these votes, in the case of a merger acquisition, the voting
outcome can directly impact your returns. Often a merger will come at a
premium. Let's say a 20% premium, which is pretty standard. And if a merger is
not approved, the shareholders stand to lose out on that premium that gets
paid. So there are many cases in which these votes have very tangible and
direct value.

Phil: You're very young.

Phil: How did you get interested in this side of things and puttogether this company? I mean, it's only been three years or so since you've
left college.

Preston: Yeah. So, not long after leaving university, I hadstarted, uh, a fund with some initial seed capital from family and friends. And
in running that fund, I had engaged in a strategy called pairs trading, where
you go long one asset and you go short another, and both the assets are
related. And the concept is that, for instance, you might buy an undervalued
asset, let's say Pepsi, and you might short Coca Cola, which might be
overvalued. And over time, that gap between the two assets may converge. That's
a typical pair trading strategy. So I've been doing this for one company, in
fact, not across two. I did across the common stock and the preferred stock,
and I was left over with these voting rights, and I thought, these must have
some value. I can't really get them by using them. It's not very direct. So I
looked into how I can sell them and whether that's possible, and I found that
it is possible, but there's no platform or marketplace for doing it. So I hired
a securities attorney. I, uh, myself was a licensed financial advisor at the
time, and we looked into the regulation. And after thorough research, I decided
that this was an idea worth exploring myself and building. So for the past
couple of years now, I've built the sort of MVP, the minimum viable product,
and now recruited some co founders, employees and users onto the platform. So
we have hundreds of retail investors on the platform, and investment advisors,
other folks in these spaces who are actively using the platform. So it's been
quite a journey. And just last week, as I was mentioning, before we started, we
were featured on Bloomberg, which was a nice way to get some exposure and
publicity.

Phil: Oh, hopefully we'll get you some exposure and publicity onthis podcast as well. Maybe not level.

Preston: No, no, certainly, certainly.

Shareholders can help drive change in companies they invest in via theirvote

Phil: On, um, this podcast, we often talk about investments beingmore than just ticker codes. I mean, a lot of people just think of the company
code and the price, and they don't even look at.

Phil: Anything else, but they're really living, breathing.

Phil: Companies, and being able to vote and being able toexercise proxies is a way of understanding them as living, breathing companies.
And what are some of the ways that investors can help to drive change in the
companies they invest in via their vote.

Preston: Well, the most direct way, as you mentioned, is proxyvoting, or simply voting directly. But in many cases, as I mentioned,
shareholders don't own enough to make a real difference. Nonetheless, they can
still have an impact. There are other platforms and associations out there for
driving change, where you can collect interests and partner with other
shareholders to advocate for certain steps that the company should take, and
that can really have an impact. So, even if you or a group of shareholders
don't get approval for a certain proposal, let's say proposal, uh, to reduce
carbon emissions, even if that proposal doesn't pass, if you can get the
threshold high enough, you raise awareness among other shareholders, and over
time you might gather more support. Or simply the management may see, if you
get 40% approval and you need 50% technically, for it to pass, that might be
close enough for the management to just say, let's take this head on
proactively, instead of being forced to by the shareholders. So there's many
ways that investors can drive, uh, value. That's in the case of environmental
proposal. There are obviously other areas relating to labor or employees
unions, as well as shareholder distributions, the company's dividend policy,
who's overseeing the company, on the board of directors, who's running the
company, and the management team being more vocal, either in these annual
meetings or outside of them, on social media or in investing forums, there's
many ways that shareholders can leverage their voice to have an impact.

Phil: It's interesting that you mentioned the ESG side of things,because there's many investors who, oh, I don't want to know about that stuff.
I don't care about climate change, I just want the company to make money. But,
uh, it's becoming more and more important, even if you don't really support the
idea of ESG, that companies actually are actively seeking to implement policies
about ESG, because they're not going to be able to get capital, they're not
going to be able to get funding from banks and so forth, because of the
regulations that are coming about in this area. That's the case, isn't it?

Preston: Yeah. I think of ESG as a sort of tug of war between theshareholders and the companies themselves. A lot of the issues in the proxy
voting in the realm of corporate governance are a tug of war between
shareholders and managers or boards. And so in the case of ESG, you see a lot
of shareholders or financial institutions advocating for ESG type products or
proposals or principles. And then on the other side, you have the managers of
the companies or the boards generally opposing that. In some cases they take it
on proactively like I mentioned earlier, but by and large they tend to advocate
against. You can look at any company's proxy statement that gets filed annually
before their AGM and look at what the board's recommendations are for
shareholder proposals. They tend to be against shareholder proposals in
general, so that's one way of evaluating. But ESG will certainly stick around
and uh, it's a trend that you can look over. Time has just grown so rapidly and
consistently, it's faced some questions over the past year or two, but I think
it's here to stay.

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Dual class share structure is one way that companies can set up their equity

Phil: Okay, well, these next set of questions I've picked up fromyour FAQ page on the SVE website. And this is really things about how corporate
governance and proxies and voting takes place. Let's start off with a dual
class share structure. What is that?

Preston: So a dual class share structure, or you might hearmulticlass share structure, is one way that companies can set up their equity.
Most companies simply have one class of common equity or shares. But in some
cases, often in the case of technology or consumer companies, you might see
more than one class. And what will happen is one class will get different
treatment or rights or privileges than the others. In the US, the typical
arrangement is for one class, let's call it class a, to be publicly traded, and
that class will get one vote per share. And then you might have another class
a, class B, which is held private, let's say, by the employees or the founders
or the management of the company, maybe even the directors. And those shares
get ten votes each. So you can get these sort of disparities between the two
classes, generally around control and voting power, but sometimes around other
economic rights. Some of them can get liquidation preference. Some of them may
be able to vote on certain policies, while others are excluded. There's a lot
of different arrangements that can be put in place, and they're really most
common in the US among technology companies now. But they've gone as far back
as company like Ford. They have dual class shares and the sort of supervoting
shares are held by the Ford family and its foundation. So they've been around
for nearly 100 years. At one point that caused Ford stock to be delisted from
the exchanges, because the exchanges didn't want tolerate this, but they've come
back into popular use and now they're sort of, uh, retrenching a little to kind
of middle ground. But they're a very interesting and controversial structure to
put in place.

Phil: And dual class share structures are often used to stop thecompany becoming a takeover target, which can have an effect on the share
price, that the price is not as high as it could be if it was open to being
taken over.

Preston: Yeah, certainly. So dual class share structures are onemethod. There are, uh, other methods as well. Poison pills, also known as
shareholder rights plans. Staggered boards can also be another way to take over
attempts, where essentially, instead of electing all the directors for a one
year term, you elect them to two or three year terms and then you put them in
tranches. Half of them will get elected in 2024 and the other half in 2025 for
two year periods, or over three year periods, you would stagger them
differently. There are different methods out there, and there are other rights
that shareholders have the right to act by written consent and other
informational rights that you have that sometimes companies can try and limit.
The hot one right now are called advanced notice bylaws, where shareholders, if
they want to take certain actions, they have to disclose who they are. And
often these are large financial institutions or hedge funds or investment
advisors. And in one case, the bylaws were requiring the shareholder to
disclose all of their lps and their address at which they live and their names.
So it was a huge kind of privacy concern as well, and that ended up being too
restrictive. The courts kind of ruled against that. So certainly a lot of these
can depress company valuations if outside parties are unable to step in and
utilize control to unlock value.

Activist investing is another form of value investing

Phil: I guess that's a good point to start talking about activistinvesting. What is activist investing?

Preston: So activist investing is really another form of valueinvesting and value investing. Investor will assess the intrinsic value of a
company, and, uh, if a company is trading in the market for less than its
intrinsic value, they'll go out and buy shares of the company. And hopefully,
over time, the market value approaches the intrinsic value, and that enables
the investor to outperform the market, or at least to generate positive
returns. Activist investing kind of takes that step further, where the shareholder
will step in and utilize their rights, namely control, to unlock or, uh, value
or bridge that gap, to close the valuation gap through manual effort. And so
there's a variety of ways they can do that. There's generally a few categories
relating to, uh, finance, governance, strategy, or operations where the
activist can unlock value. In the case of governance, they might replace the
board of directors, or the management, the CEO operations. They might try and
change how the company is organized or what it's spending its money on. Or they
might have to lay off some employees to make it more profitable in some cases.
Or they might spend more in advertising to drive sales. In the case of finance,
they may restructure the company's balance sheet, or they may reduce inventory
to free up cash. And with strategy, they may spin off a subsidiary. They might
consider a merger, uh, acquisition. All of these tools are in there, uh, to
improve or enhance the stock price. And it's generally most effective when the
company's shares have declined or stagnated in recent years, especially
relative to their peers. So if the company is operating very know, let's take
Apple, for instance. They've done so well over such a long period of time now,
there's really not much room for an activist to step in now. Also, Apple is
such a big companies that no one really could step in, uh, in a meaningful way.
Let's say, owning ten or 20% of the company, maybe Warren Buffett, if he really
went all in. That's what activist investing is all about, unlocking value.

Do you have any examples of any activist investing that you've personallywitnessed

Phil: Do you have any examples of any activist investing thatyou've personally witnessed?

Preston: So, actually, one of my first investments was inChipotle, and this was around the time that they had this, I forget the exact
disease now, but they had a, uh, food illness outbreak that they had to shut
down stores. They had to check their whole supply chain and make sure to
eradicate this virus. There's a big scare for consumers, and the company stock
took a big hit. And so I had bought some shares as a teenager. I thought
company's food was good. I went there regularly, and it turns out that over the
next year or so, fairly notable activist investor Bill Ackman stepped in and
came, sort of replaced the company's CEO at the time, brought in a very
experienced executive. He used to run, I believe, Taco Bell. The man's name is
Brian Nicholl. Taco Bell was a subsidiary of Yum Brands. So very experienced
food industry executive, and they really turned the ship around. And the
company's stock, I don't have the exact figures, but it's gone up at least a
couple hundred percent within the, uh, few years that followed. So that was a
very interesting case to witness. And it so happened to be my first investment.
Although I was not an activist by any means, I wasn't even familiar with it,
but I sort of tagged along for the ride.

Phil: And did you hold all through that ride?

Preston: Yeah, I'm still a shareholder of Chipotle. Not as muchas I would have liked to be, but it's still a good portion of my portfolio.

Phil: So then what's a proxy fight? I guess sometimes theseactivist investors have to duke it out to try and, uh, get the proxies and
fight it out for what they're after.

Preston: Yeah, exactly. So in the case of Chipotle, there was noproxy fight because the company was fairly receptive to change, and they
understood that they needed to turn things around and bring in someone who
could get things under control and maybe have more of a vision for the company.
But a proxy fight occurs when there isn't common ground amongst the shareholder
base and the management or boards of directors. So you have these two sides
that are generally fighting. Sometimes you'll have more than two, but generally
it's two. And when they cannot agree on the company's future, what will happen
is a proxy fight where the dissenting shareholder will nominate several
candidates to the company's board of directors, and the company's board will
nominate its current directors. Usually they may change up a couple of them if
they're very proactive, and it'll be put up to a vote by all the other
shareholders. So this is known as a proxy fight or proxy contest. What happens
is both sides start spending ridiculous amounts of money and time and other
resources to curry favor among the other shareholders. So they'll talk to the
big institutional investors at the company. They'll try and do marketing or pr
campaigns, sometimes smear campaigns against the other side, but generally it
stays civil. Sometimes they even do, uh, private investigations, though, so it
can get quite contentious. All in a bid to get the other side to sort of cave
in and kind of come to a settlement. So if they never go to a settlement, that
simply gets put up to a vote, and the winner is then put on the board or stays
on the board, and then they have their term to enact the changes that they
want. Even if, uh, an activist loses a proxy fight in a given year, if they
come close enough, uh, they may even be put on the board, or the company may
implement the changes that the activist was advocating for. In the case of one
of the largest proxy fights ever, if not the largest, between triangle partners
and Procter and Gamble, this was in 2017. It appeared that Trian had had
actually won the proxy fight within a week or two of the AGM. But after a sort
of recount or two, turns out that they lost by a very narrow margin. But the
margin was so small, it was like 0.1% or something, that the company said, you
know what? We'll actually bring you on the board, because they don't want to go
through this again next year. They had spent hundreds of millions on this. So
that's what a proxy fight is. And the way SVE intends to insert ourselves is
actually redirecting a lot of the capital that gets spent on this proxy fight
back to the shareholders directly. So you might imagine that you own shares of
Procter and gamble, and there's this proxy fight, and you might not care about
voting. You can tender your votes to sort of the highest bidder, whether that's
the management or the activist, and know, put your money where your mouth is.
If you really think you're going to unlock value, go ahead and pay for it, and
you can earn this as passive income on SVE So that's sort of how we step into
the picture.

The price of your vote can help you to identify investment opportunities

Phil: So, uh, is that why the price of your vote can help you toidentify investment opportunities?

Preston: Yes, precisely. So the price of the vote is directlycorrelated, if not caused by the amount of opportunity for outside parties
generally to unlock value. So if the vote prices are relatively high, you can
look at them as a percent of the share price. If it's anything exceeding 0.5%,
that would be considered quite high. In general, votes are worth nothing,
because there has never been a market for voting rights, a, uh, fully
functioning, efficient market, until SVE So, as the vote prices rise, that
indicates there's some opportunity at hand, whether it's a governance change on
the board or it's an, uh, m a opportunity that might be more direct. So those
are two examples. But when the vote prices are low. One should not interpret
that as the company is necessarily perfect and there's no reason for activists
to be involved or other parties when the vote prices are low. Think of it like
a distribution where you've got, the two ends are low and you've got a bell
curve in the middle where the vote prices are high. That indicates opportunity
on the two ends. For one side, vote prices might be low because the company has
performed very well. Take the case of Apple, for instance. There isn't really
room or opportunity for anyone to unlock value. That's one case. But then you
have the other side where the company might have a dual class share structure,
and so it's simply impossible for anyone to get enough votes. And so why would
you ever buy any votes to begin with? So there's kind of two ends of the spectrum
there.

Phil: So how is the price of your vote set?

Preston: Well, it's set in the marketplace, so we operate as theexchange, connecting buyers and sellers.

Phil: Are you setting the price or is someone else setting theprice? How does that work?

Preston: It's entirely set by the buyers and the sellers ifthey're interested in selling at the given market rate. So we take no part in
setting the price. We don't engage in the transactions ourselves. Shareholder
vote exchange simply connects the buyers and sellers through one platform. And
so buyers, the demand side, is generally a function of what's at stake in the
meeting. Uh, is this simply an AGM where there's no. It's a pretty routine,
electing the board of directors and appointing the auditor. And there's nothing
else really going on. In that case, the votes might not be worth too much.
Maybe a nominal amount, pennies on the dollar. And in the case where there is a
sort of contested situation, the votes might be worth a lot. As I mentioned
earlier, it could go up to, let's say, 5%. There's academic research that even
suggests some votes are worth, on average around 11% or ten, uh, percent. So it
can really vary quite a lot. And as we build the markets, we'll see what the
exact demand shapes up to be and the supply. But given that most investors
don't use their votes, we think there's a lot of value to be created for them
through the marketplace.

SVE allows all shareholders to purchase votes, but prevents nonshareholders from getting involved

Phil: How can you ensure that whoever's buying your proxies aregoing to be voting in your interest?

Preston: Yeah, so the main way we do it is by opening up accessto the platform. We allow all shareholders to purchase votes, but at the same
time, we prevent non shareholders from getting involved. As a shareholder, if
I'm selling to another shareholder. You would generally expect that your
interests are aligned. There can be many cases in which they aren't. But
fundamentally, you're both investors in the company. So we allow shareholders
to purchase votes, and then we also allow managements to purchase votes, or the
board of directors can step in and acquire votes. They're sort of a natural
buyer, because if the company is running into certain problems, let's say in
their AGM M, they can't achieve what's called quorum, where they need sort of a
minimum level of participation in order for the meeting to be legitimate. If
they can't meet that level, then they'll need to reschedule the meeting. It's
going to cost them time and money and distract them from the actual operations.
So you might see that there's an opportunity for them to actually purchase
these proxies and exercise them so that they can achieve quorum and move on
with things. And that's a win win for both the selling shareholders and the
company operators themselves. So both restricting and opening up access are,
uh, two levers. So we would never allow a short seller onto SVE. Kind of an
interesting case is whether unions or employee organizations should be allowed
to purchase votes. It's not an area that we are deciding. We are referring all
of these to the courts. So courts have ruled on this before, and we are sort of
deferring to what's legal in any given jurisdiction. So for now, we're only
open to companies in the United States. Investors from anywhere in the world
who own us companies can participate on SVE. Over time, we will expand to other
jurisdictions, the UK, Canada, Australia, Japan, european countries, asian
countries, over time. But we want to ensure regulatory compliance. So ensuring
that shareholders'values are protected is a matter of determining who can
participate in the marketplace and also what they can vote upon. These votes
are not sort of. Some people have this notion that you can buy votes and then
kind of take down the company. At the first step, we would ban the short seller
from participating. And second, we might have some disclosure obligations to go
along with that. And then third, there simply isn't a way to sort of take down
the company with the votes. You're voting on certain items or voting proposals,
those are approved by the regulator. In the US, it's generally the SEC. State
law also comes into play, and generally, there's no sort of proposal to, quote
unquote, take down or abolish the company. There's many different ways you can
try and do that, but, for instance, electing someone to the board and they try
and do something nefarious, but that would simply be illegal. They'd be
violating their fiduciary obligations. So there's really no clear way that that
could happen. And we take loft steps to ensure that no one even wants that to
happen in the marketplace as shareholders.

Phil: And presumably, you don't have to just give someone a blankproxy. I mean, you can direct your vote the way that you want and give your
proxy to someone else as well.

Preston: Yeah. So there are lots of platforms online for doingthat. You can do that on SVE. We even envision adding ways for you to sort of
split up the one proxy, the one vote, into several. So you might separate the
votes for the election of directors to each person. Separate votes and then,
uh, a vote for the shareholder proposals all on their own. And you might
imagine that might be even more efficient because someone might be interested
in getting the votes for the directors, but not on the shareholder proposals.
And then you might be able to facilitate more efficient market by splitting
that up. So there are a lot of interesting ways that can kind of be enhanced.
But for now, we're starting simple with just kind of one vote that represents
the proxy.

How can listeners sell their voting rights? Tell us about Sve

Phil: So how can listeners sell their voting rights? Tell usabout Sve. And I just want to say here right at the outset, that's a great
looking website, and there's a lot of really good educational material, um, on
there as well. So I'd highly recommend listeners go there. So, yeah, tell us
about what investors need to do to start thinking about selling their voting
rights.

Preston: Well, I appreciate it, Phil. You have to thank my cofounder, Rose, who really worked very hard on both, uh, the front end and the
user experience to make it look appealing and functional. So the way that
investors can participate, whether they want to sell or buy votes, is to sign
up directly. It's nothing too crazy, just takes first name, last name, email
address to make an account. And whenever you receive your proxy, if you want to
sell, you simply upload your voting information or provide us with access to
your account. That can be your email account. Eventually, we're going to add
support for brokerage accounts. We're currently working on some, uh,
integrations for investors to directly connect and have their votes on the
platform. And regardless of how you verify your voting rights, whether you own
100 shares of Apple or Computershare, I know, is an, uh, australian company,
they're quite big. Once you verify your votes, you simply can list them in the
marketplace. And once they get sold around the meeting date, then you can
withdraw your proceeds. So it's kind of a three step process. We offer both an
automated way of doing things through those email or brokerage account
connections, or you can do it manually if you want control and you want to kind
of pick and choose which votes you sell, which ones you don't sell. There's a
lot of flexibility. We have different options for folks and the typical
experience as an individual investor, because as I said, that's who I was sort
of, uh, starting out. And a financial advisor is for you to upload your
information, sell your votes, and then eventually, at some point in time,
withdraw your proceeds. Usually it takes one to three months for the meeting
date to occur. So you never really put money into the platform. You only take
money out depending on how much your votes are worth. So we think it's very
appealing from that perspective as an individual, and we've gotten a lot of
signups and kind of viral growth from that.

How are these proceeds taxed? It depends on the jurisdiction

Phil: I, uh, know you're not a tax advisor, but how are theseproceeds taxed?

Preston: So it depends on the jurisdiction. I know you probablyhate hearing it depends, but it depends on the jurisdiction. In the United
States, we are recommending that investors treat them as short term capital
gains because we view the proxies as an independent or standalone financial
asset. The way we conceive of things is that you're issued this proxy at a cost
basis of zero, and then you're selling it for some x amount of dollars. That x
is your profit. Some folks have argued that the proxies should be viewed as
actually a long term, a capital gain tax where you own the stock for enough
time and you actually have the voting rights, and the proxies are just
representing those voting rights. And so if you've held the stock for longer
than a year, then perhaps those voting rights are long term voting rights. And
when you sell the proxy, your cost basis should be considering the price at
which you acquired the stock. I think that's a bit harder of an argument to
make from a tax perspective. We will have to see sort of how that plays out.
But to be conservative, treating it as short term capital gains is the way to
go, and that's what we recommend.

Phil: So what's the website and your social handles? Where canpeople find you and get more information?

Preston: Yeah, our website is svegroup.com, stands forshareholder Vote exchange Group, and we're active on Twitter, Instagram. Even
one of my co founders is going viral on TikTok with some of his promotions on
Twitter or X. Apologies, we're, uh, at SVE markets. We do have other accounts
elsewhere, Facebook and stock twits and even seeking alpha, but we're not as
active there. Twitter or X is sort of our main platform. And then also on
medium, I post some blogs or substac. You can find it easy enough by just
searching for my name, Preston Yadagar, or for shareholder vote exchange. They
should pop up.

Phil: So I came across you on side Hustle Nation, which is agreat podcast. Are you a listener to that podcast?

Preston: Yeah, Nick's done a great job over there, and I actuallygot the chance to meet him in person a few months ago at Fincon in New Orleans.
So it was really great meeting him. And I've been listening to his podcast for
a bit. Always some interesting ideas on there. And yeah, it's a really unique
kind of community he's curated around it.

Phil: So what did you think about Sve? What was it about SVe thatyou thought listeners would like to hear about?

Preston: So I had been kind of chatting with Nick a couple weeksbefore this conference in New Orleans, and once I met him there, we basically,
you know, SVE kind of fits right into this whole appeal of side hustles and
passive income or alternative sources of income. And so the audience really
liked it. We see constant traffic coming from both our podcast appearance and
other places we appear on the site and elsewhere. So I'm super thrilled to have
given that exposure over there. And some of our best users, some of our
earliest users, in fact, came from over there. So it's been really great. And
at the end of the day, like I mentioned, a lot of investors are throwing away
their proxies. So our value proposition really fits into kind of finding value,
sort of, uh, turning going from trash to treasure, sort of.

Phil: Yeah, finding value when you didn't expect to find an extrasource of income, and it's always a good.

Preston: Yeah, yeah, exactly. That's the goal.

Phil: Preston Yadegar thanks very much for joining me today.

Preston: Awesome. Thank you very much, Phil.

Chloe: Thanks for listening to stocks for beginners. If you enjoylistening, please take a moment to rate or review in your podcast player, uh,
or tell a friend who might want to learn more about investing for their future.

Thanks for having us Phil.

Stocks for Beginners is a production of Finpods Pty Ltd. The advice shared on Stocks for Beginners is general in nature and does not consider your individual circumstances. Stocks for Beginners exists purely for educational and entertainment purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs. Philip Muscatello and Finpods Pty Ltd are authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708, AFSL - 451289.