Proxy Issues — A Lot on the Table
We certainly are in the midst of interesting times on the proxy voting front. Look at these recent and still unfolding events:
- ADP-ICS, handling over 80% of U.S. shareholder proxy material distribution and tabulation, recently went public within a new company called Broadridge Financial Solutions, Inc. It is, as a result, poised to exert even more influence on the proxy voting process, convincing more and more companies every month it seems to have Broadridge handle both “street” and registered shareholder vote processing.
- The SEC held three roundtables in May, inviting gurus of all stripes to discuss matters ranging as follows…
- Making uncontested director elections non-routine and therefore “non-discretionary” (so brokers can not vote “uninstructed” shares), which appears destined to happen as of January 1, 2008 pending SEC approval this year
- Excusing mutual funds from this treatment, given their already clear difficulty achieving quorum at their annual meetings
- In the absence of the “broker vote” cited above, considering either “proportional voting” (where the broker would vote, uninstructed, how all other instructed votes were coming in); or “client-directed voting” (where the broker would vote, uninstructed, according to the shareholder’s pre-set policy objectives when the brokerage account was set up
- Having companies announce not only annual meeting record dates but also meeting agenda items 20 (or more) days earlier, so institutional investors would know to recall shares they might have “lent out” when there are particular agenda items they need to vote on
- Permitting “proxy access” to shareholders, or shareholder groups, wanting to offer their own directors, or slate of directors, for election at an annual meeting as long as those shareholders own a minimum level of shares and have owned them for a minimum amount of time – which also appears destined to happen this year
- The “Notice & Access” rule went into effect July 1, 2007 on a voluntary basis, applying to meetings on August 10, 2007 or later, allowing corporations that so choose to mail single-page notifications to shareholders at least 40 days prior to the meeting to the effect that the shareholder can access proxy material via the web, instead of the corporation just mailing out the materials in paper form and having 90+% of it thrown in shareholders’ garbage cans. This will likely become a mandatory approach in 2008.
So, a lot is happening, which is either facilitating the proxy voting process, or empowering shareholders, or saving Corporate America money – or all three together. It is challenging but extremely important work, which we and you should watch unfold with keen interest.