Broadridge Fees – “Not Guilty”
Like any big company having the appearance of a utility, Broadridge has stood accused of charging monopolistic prices bearing little association to its costs. No matter that its charges – for distributing and tabulating proxies to beneficial shareholders – were closely reviewed and essentially blessed in both 1997 and 2002. The latest auditor, the NYSE/Euronext’s Proxy Fee Advisory Committee (“PFAC”), has now completed a 2012 review of Broadridge’s charges, and the verdict is in and clearly “Not Guilty” yet again. Indeed, the NYSE has just proposed to the SEC that PFAC’s updated fee recommendations be largely accepted, keeping the Broadridge methodology in place at a projected annual savings to the average company of some 4%.
The changes, in a nutshell, will be…
- Adjusting the nominee (broker/bank) fee upward a little, and adding a small volume variable, to better reflect Broadridge’s actual work
- Expanding the number of “tiers” in Broadridge’s processing and intermediary unit fee, from two to five, to again better align Broadridge’s charges with individual companies’ volume profiles
- Re-naming “incentive” fee to “preference management” fee, Broadridge’s charge to suppress a physical proxy mailing, to reflect the work Broadridge continuously does to keep that shareholder election accurate
- Lowering this preference management fee, including an additional reduction for (broker) managed accounts – and having there be no fee for managed accounts with less than five shares
- Lowering fees for reminder mailings, to hopefully elicit more retail shareholder voting
- Raising fees a little for special and contested meetings, where Broadridge’s work – and the value of this work in corporate outcomes – is greater
Again, an initial evaluation of these changes shows a “blended” reduction in Broadridge’s fees – across all companies – of 4%, which Broadridge can absorb. The changes also better align Broadridge’s work and fees per issuer. It would therefore appear that some close approximation of these amended charges will be approved by the SEC, and go into effect in 2013.
We applaud PFAC’s work in 2012, and Broadridge’s critical cooperation during the process, and will be among the first to welcome the exoneration – yet again – of Broadridge’s essential fee structure.