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Broadridge CEO Tim Gokey appeared on CNBC's Mad Money with Jim Cramer.
Jim Cramer: This is one of the most important times of the year, not because it's gardening season, although that's a big deal in my household - I will be building my boxes this weekend - but because it's proxy season, where investors can vote on critical corporate decisions via proxy ballots when companies hold their annual meetings. Thanks to new technologies, it's easier than ever for smaller investors to make their voices heard. That's how Exxon got its board hijacked by a band of environmentalists last year. Exxon. Firms like BlackRock are even allowing their ETF investors to participate via pass-through voting. In the past, if you owned the stock via an ETF, you had no voice at the annual meeting. Behind the scenes, all of this is facilitated by companies like Broadridge Financial Solutions, which helps banks and brokers operate more efficiently and communicate more directly with their clients. On top of its day-to-day settlement and corporate governance services, Broadridge processes the proxy voting for some of the largest companies in North America. It's nice little business, which is why the stock has been a consistent long-term outperformer. That said, the stock's pulled back from its highs in recent months because it's a fintech play. And fintech is very much out of style in the Wall Street fashion show, even if it may not be described by themselves as fintech. The business is still strong, though, and they've got their finger on the pulse of the rising tide of shareholder democratization. So, let's check in with Tim Gokey, he's the CEO of Broadridge Financial Solutions, to get a better sense of this year's proxy season. Mr. Gokey, welcome back to "Mad Money."
Tim Gokey: Thanks, Jim. Great to be here. Great to see you again.
Jim Cramer: Well, Tim, I need you to maybe take the pulse of something. I am a believer, as I told my partner, Scott Wapner, just now, that there are individuals who once again are searching to make money in individual stocks, hence some of the big stock splits we see, hence some of the ESG like Exxon that we saw. But most people feel, no, Jim. They want passive, passive, passive and they're not interested in voting. Where are we?
Tim Gokey: Well, Jim, it's a great question. I think it is. First of all, let's just recognize behind that is the fact that there are a lot more retail investors now than there were even 18 months ago.
Jim Cramer: Right.
Tim Gokey: You look at the number of individual positions last year is up 26%. This year, it's up in the teens. And so, there are a lot more investors. I think the other thing is that the interest in ESG is way up - environmental, social, governance. If you look at the number of environmental and social proposals, so far this year is up 25% over last year. And if you look over the last five years, the level of support for those proposals, it was 5% in 2015. Last year it was 40%. In terms of the aggregate votes, it's an eight times increase. And win or lose, management cares about those votes, and they look at them, even if they don't win, they take actions. So, people really if they have something like that, they really should vote because win or lose, management cares and it's easy. You can do it right on the app. I have it right here, and 80% of people get notified digitally and they're only a couple of clicks away from doing it. And we've made it easier than ever with our Improved Proxy Vote app, which this year allows you to sign up for things to be notified about if you care about those issues. So, it's a great time.
Jim Cramer: I have to tell you, I don't know if people understand that's a staggering, staggering change in what people are doing in terms of voting. And you're right, people do care. What's incredible is I'll tell you, Tim, for 30 years I threw them right in the wastebasket because I mean it doesn't matter. You know, whatever I sign, no one else is looking. What changed in terms of... Is it younger people? Consciousness? Why do people now really want to try to change a company when before people just said, there's nothing I can do?
Tim Gokey: You know, I think, first of all, the investing base is changing. We do an investor study every year. when you look at a lot of the new investing that has come in, it's a lot of younger people who are used to a more social kind of environment and used to having a voice and making a difference. So, they feel like they should. And then I think things like Engine No. 1's win last year, which you commented on in your opening, it makes people realize like, yes, they can make a difference.
Jim Cramer: And they sure do there.
Tim Gokey: And it's a great time.
Jim Cramer: Well, okay. So, this brings me to something that I really like. Some of the largest companies are doing splits. Now, we know that splits don't create value. But I have been advocating for people who want to own a piece of Amazon, they should own a fraction. What's the difference between owning a fraction of a share and then if a company splits, being able to vote on ten shares?
Tim Gokey: Well, I think that it's interesting between fractional shares and splits, I mean, traditionally, companies split sort of as a sign of what they think the future is, but also to lower the overall price to be able to bring in more investors and make it more accessible. Because when a single share gets to be more than $1,000, then that can be problematic for people to do. I do think that fractional shares, which are still sort of new and are not necessarily available on every investing platform, is a way to substitute for that. And I think the voting implications are probably about the same between the two.
Jim Cramer: All right. Now, I find what's interesting, the process you're talking about, in many cases, is as intriguing to younger people as stock price appreciation. I'm an appreciation guy. You know, look, I'm trying very hard to be like my kids. One of my daughters was furious about what happened at Disney. She just said, listen, I can't own this. This company is just, it is a travesty of what I thought. I never even I said, well, if it goes up, then go take the money and support your cause. I think your technology has changed things. What you held up is rather remarkable, Tim, and that is what's driving a lot of the ease with which people are being able to voice their concerns.
Tim Gokey: I think that's right. I think, particularly in the future as people sign up for what are the topics that they're interested in so that if there is a proposal, there is something on the ballot, they'll be notified about it and be able to take action, I think that takes that ease right to the next level. So, I don't have to sort through if it's a routine proxy, maybe I don't care as much about it, but if it's one where there is a topic, then I do care about it. And I think you mentioned earlier on in your open about pass through voting so this year, as you know, but for your listeners really interesting point, the passive side is getting to be so big but some of the biggest passive players like BlackRock, they announced this year that they are going to pass down the vote to now their shareholders. Now, they're doing it right now just on the institutional side to institutional shareholders. But in the future, that could evolve to be retail voters. And then to make that practical, it would have to be for an issue that you're interested in because no one wants to get 500 proxy.
Jim Cramer: But I got to tell you, this is a revolution. The website. How do we get on? I want to get on this thing. It's Broadridge for what you held up.
Tim Gokey: So, what I held up is I go to the Apple store or the Google store and download ProxyVote, just to search for proxy vote. You can download the app or proxyvote.com is the website and great one stop shopping. Also, if you do get something in the mail, which hopefully you'll sign up for digital, but if you get it in the mail, there's a QR code. Just point your phone right at the QR code and it'll bring it right up and you can vote with two clicks.
Jim Cramer: Well, Tim, I got to tell you, this is revolutionary. It's very exciting. You're going to have to come back. We're going to talk a lot. I also want to hear from you about what the issues people want. I've been trying to change. You know, we've got old folks trying to get it right. You are very helpful in this. And I love what Broadridge is doing. Thank you so much to Tim Gokey, CEO at Broadridge. Really good to have you on the show, sir. Thank you. Wow. I don't know about you, but I mean, I have a lot of issues I care about. I didn't think anybody else would ever vote, their vote, you hear that, that 5 to 40%, this is exciting stuff, younger people and everyone should download the app. Just download the app. But younger people, I know you're passionate. This is how you show your passion. "Mad Money" is back after the break.
During Tim Gokey's interview with Jim Cramer, he discussed Proxy Season and how the mega-trends of technology and ESG are driving rapid change in investing and corporate governance. The ProxyVote™ App, is facilitating the democratization of investing - making it easier than ever for investors to be engaged and vote.
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