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The Independent Steering Committee of Broadridge Newsletter

December 2018. Volume 14.

The Independent Steering Committee of Broadridge Newsletter

The matters discussed in this newsletter were addressed during a meeting of the members of the Independent Steering Committee of Broadridge (Committee) on November 5, 2018, and a meeting of the Committee with the staff of the Securities and Exchange Commission (SEC) held on November 6, 2018, in Washington D.C.

ABOUT THE INDEPENDENT STEERING COMMITTEE:

The Committee was formed in 1993 to serve as an independent oversight body charged with monitoring the performance, voting accuracy and readiness of Broadridge and its predecessor firm in conducting the U.S. street name proxy system on behalf of the nation’s banks and brokers.

The Committee, organized from within the securities industry with the encouragement of the SEC, consists exclusively of persons who are neither current nor former employees of Broadridge. The members represent the four industry groups involved in the proxy process: issuers, institutional investors, brokers and custodian banks.

The purpose of this newsletter is to share with a wider audience the developments that are shaping the U.S. proxy system and to encourage broad participation in promoting the efficiency and integrity of that system.

Stephen P. Norman
President, S.P. Norman and Co., LLC
Committee Chair and Editor

Comments or suggestions may be sent to steve@spnormanco.com

Regulatory Update

The Committee received a report from David Martin of Covington & Burling on recent developments at the SEC and in securities regulation. His report focused on the structure and budget of the SEC, the scope of their oversight, the backgrounds of individual commissioners and the current direction and priorities of the commission, noting that cybersecurity was an urgent priority. Mr. Martin also commented on corporate governance matters, including the continued increase in virtual shareholder meetings, a new California law requiring quotas for female directors of public companies and a petition by several institutional investors requesting the SEC to develop rules calling for public companies to disclose their environmental, social and governance activities.

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Technology Update

Mr. Gullotta of Broadridge described Broadridge’s management initiatives, testing and programs underway to continuously strengthen the cybersecurity and resilience of all aspects of Broadridge’s operations, including proxy. He stated that Broadridge adhered to the National Institute of Standards and Technology (NIST) security protocol, considered the U.S. government's highest level of security. He then described Broadridge’s security accomplishments in 2018 and the further security enhancements and readiness initiatives scheduled for 2019.

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November 15 SEC Proxy Roundtable

Referring to the upcoming SEC Proxy Roundtable to be held on November 15, members of the Committee expressed their view that steps to improve proxy vote tabulation should be addressed at the Roundtable. In particular, members of the Committee stated that end-to-end vote confirmation should be made available for all shareholder meetings, adding that doing so would strengthen the reliability and integrity of the shareholder voting process.

Mr. Dampeer of Broadridge commented on his testimony at the September meeting of the Institutional Advisory Committee in which he had stated that early vote entitlement reconciliation, the necessary first step in vote confirmation, was not being performed by a number of vote tabulators. He stated that complete reconciliation processes were not being followed by some tabulators, despite the fact that recent pilot programs involving transfer agents and vote tabulators had demonstrated that vote entitlement reconciliation steps if taken early in the vote solicitation period, had proven successful in every instance. Mr. Dampeer added that the greater danger of incomplete reconciliation steps was not over-voting but under-voting, as many properly executed ballots from sub-nominees were discarded due to... lack of a match with the central depositary list. Accordingly, he suggested that the time had come to consider regulatory action to require proper and complete processes by all tabulators.

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Proxy Process Enhancements

Mr. Koopman of Broadridge led a discussion of the following initiatives underway at Broadridge:

  • Vote instruction form (VIF) redesign
  • New email templates
  • Mobile/app API
  • ProxyEdge automated account setup
  • Rule 30e-3 preference management capture
  • eDelivery for proxy contests

He stated that these initiatives were designed to promote greater retail shareholder engagement, enable issuers to deliver personalized messages, provide ease of voting within brokerage applications, and simplify and automate the sign-up process in ProxyEdge. The Rule 30e-3 initiatives were designed to help mutual funds capture the distribution preferences of their investors and will be available in January 2019. The VIF redesign, undertaken to both improve retail voting and to minimize the need to abbreviate shareholder proposal language, will go live on November 30, 2019. Broadridge agreed to provide analysis on the impact of the new VIF and email templates following the conclusion of the 2019 proxy season.

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Steering Committee Members

Amy Borrus
Council of Institutional Investors
Non-voting observer
Thomas Broderick
State Street Bank
Custodial Bank
Ray Cameron
BlackRock
Institutional Investor
Lawrence Conover
National Financial Services
Broker-Dealer
Steven Dapcic
Pershing LLC.
Broker-Dealer
Michael Garland
New York City Comptrollers’ Office
Institutional Investor
Stacey Geer
Primerica, Inc.
Corporate Issuer
Rick E. Hansen
General Motors Company
Corporate Issuer
Philip Larrieu
California State Teachers’ Retirement System
Institutional Investor
Gloria Lio
Bank of New York Mellon
Custodial Bank
Mark Lyon
Synchrony Financial
Corporate Issuer
Michael Marino
Credit Suisse
Custodial Bank
Granville Martin
Society for Corporate
Governance
Non-voting observer
James Monahan
Morgan Stanley & Company,
LLC.
Broker-Dealer
William J. O’Shaughnessy
Quest Diagnostics
Corporate Issuer
Valiere Simpson
TD Ameritrade
Broker-Dealer
Joseph Swanson
Northern Trust Company
Custodial Bank

Steering Committee Members

Thomas Broderick
State Street Corporation
Custodial Bank
Lawrence Conover
National Financial Services LLC
Broker-Dealer
Steven Dapcic
Pershing LLC
Broker-Dealer
Michael Garland
The New York City Comptrollers’ Office
Institutional Investor
Stacey K. Geer
Primerica Inc.
Corporate Issuer
Philip Larrieu
California State Teachers’ Retirement System
Institutional Investor
Gloria Lio
Bank of New York Mellon
Custodial Bank
Mark S. Lyon
Synchrony Financial
Corporate Issuer
Michael Marino
Credit Suisse
Custodial Bank
James Monahan
Morgan Stanley & Co. Inc.
Broker-Dealer
Stephen Norman
S.P. Norman & Company, LLC
Committee Chair
William J. O'Shaughnessy
Quest Diagnostics Inc.
Corporate Issuer
Valiere Simpson
TD Ameritrade
Broker-Dealer
Chad Spitler
CamberView Partners
Corporate Issuer
Joseph C. Swanson
The NorthernTrust
Corporation
Custodial Bank