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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.
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
Committee Chair and Editor
Comments or suggestions may be sent to steve@spnormanco.com
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.
Mr. Gullotta of Broadridge described Broadridge’s management initiatives, testing
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.
Mr. Koopman of Broadridge led a discussion of the following initiatives underway at Broadridge:
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.
