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The Independent Steering Committee of Broadridge

January 2021. Volume 16.


The newsletter discusses the various developments that are re-shaping the U.S. proxy system. The Steering Committee encourages broad participation in promoting the efficiency and integrity of that system. This newsletter reflects items and discussions from the October 29, 2020 virtual meeting of the Independent Steering Committee of Broadridge (“Committee”) and the October 30, 2020 virtual meeting of the Committee with senior staff members of the Securities and Exchange Commission (“SEC”).

The Committee

The Independent Steering Committee of Broadridge was formed in 1993 to serve as an independent oversight body charged with monitoring the performance, voting accuracy and readiness of Broadridge Financial Solutions, in conducting the U.S. street name proxy system on behalf of the nation’s banks and brokers. The Committee is organized from within the securities industry with the encouragement of the Securities and Exchange Commission (SEC) and is constituted exclusively of persons who are neither current nor former employees of Broadridge. Committee members are representative of the four industry groups involved in the proxy process, namely issuers, institutional investors, broker dealers and custodian banks.

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2020 VSM Updates

Discussions included developments from the significant increase in virtual shareholder meetings during the 2020 proxy season, and the impact of the Coronavirus Disease 2019 (“COVID-19”) on shareholders, market participants, as well as the work of Broadridge Financial Solutions. Key takeaways from discussions include:

  • VSM and Proxy Season Statistics: The COVID-19 pandemic had a profound impact on the US 2020 proxy season. Most companies were forced to shift from in-person annual meetings to virtual-only or hybrid meetings. Overall voting was the highest in 14 seasons. The number of virtual shareholder meetings (VSMs) increased from 248 in 2019 to 1,494 in 2020 (through June 30, 2020) and accounted for 39% of all meetings held during the season. 1,301 of the VSMs were "routine;" they did not include shareholder proposals. The 193 VSMs that had a shareholder proposal had greater attendance and voting than did the routine meetings and shareholders asked more questions. These meetings also lasted nearly twice as long.

Further information can be found at ProxyPulseTM, which covers the results of 3,844 public company annual meetings held between January 1 and June 30, 2020 and provides insights into key corporate governance and shareholder voting data. Additional information can be found at 2020 Proxy Season: Key Statistics and Performance Rating.

  • Next Generation Virtual Shareholder Meeting (VSM) Platform: The meetings provided an overview of Broadridge’s plans for enhancements to the VSM platform, based on discussions and feedback from VSM clients, including:
    • A next-gen user interface: streamlined navigation and enhanced video integration will enrich the experience and further engage shareholders.
    • Easier meeting management: modular options, simple and intuitive controls and role-based views will enable the issuer to easily set up, manage and execute the live meeting as well as streamline the preparation process and enable dry runs and dress rehearsals more easily.
    • Enhanced Q&A functionality: the new platform will enable issuers to more easily manage, organize and address shareholder questions, increase transparency and provide new options for issuers to tailor the Q&A experience for their meeting and their shareholders.

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For more information, visit Broadridge Announces Next Generation Virtual Shareholder Meeting Platform.

  • Additional discussions included:
    • Application Programming Interfaces (APIs): Recently developed by Broadridge to ensure data privacy while enabling validation of beneficial shareholders who log on to other virtual meeting platforms.
    • VSMs for contested meetings: The VSM platform supports contested meetings for corporate issuers or mutual funds. Shareholders are able to access the meeting via Broadridge supplied control number and voting will be handled by Broadridge call center equipped to handle management and opposition voting instructions with live operators taking instructions from shareholders during the virtual meeting. Broadridge will send vote confirmation and post-meeting will provide voting reports to the tabulator. Future automated tabulation capabilities for contested meetings will eliminate the need for call center voting.
    • For the limited instances of shortfalls in delivery of physical mailing materials due to COVID-19, Broadridge was able to print in-house or scan and host with an accompanying notice and access.
    • Effectiveness of e-delivery versus physical mailings or full packages: analysis determined that hard copy was most effective, followed by e-delivery, then notice.

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SEC & Regulatory Updates

The Committee received a report from the law firm of Covington & Burling, LLP, at the October 29, 2020 meeting, on the themes to watch and the upcoming priorities of the SEC. Topics included:

  • Proxy Process
    • Rules for proxy advisors
    • Guidance for investment advisors
    • Shareholder proposal rule
    • Forthcoming developments: universal proxy, form 13F, and proxy plumbing
  • Investment company modernization
  • Regulation BI and DOL fiduciary rule
  • E-delivery of investor communications

For more information, visit Covington & Burling News & Insights, SEC Regulation webpage, or Broadridge Webinar Program.

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SEC Proxy Industry Working Groups Recommendations

Updates were provided on the SEC Investor Advisory Committee, Recommendations on Proxy Plumbing, and the market-based practitioner Working Groups, including:

  • Universal Proxy: has concluded its work and made recommendations to the SEC. Broadridge supports the SEC’s proposed rules.
  • Fees: was postponed for several months. A meeting took place on November 16, 2020.
  • End-to-End Confirmation: after the 2020 proxy season, the group shifted focus to virtual shareholder meetings. Expected return to end-to-end confirmation for the December meeting.
  • NOBO/OBO: Transfer agents, issuers and brokers have diverging views, posing difficulty to find common ground. The rule is that NOBO is the default designation.
  • Technology: no updates as of yet.

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Broadridge Technology & Business Continuity Plan (BCP)i:

A review Broadridge’s technology initiatives: investments; resilience/readiness; security, and automation was provided:

  • All communication and voting platforms are performing to normal standards.
  • Geographically dispersed data centers are effectively managed remotely by teams working from home, while local and site failover testing is underway with completion anticipated in early January 2021.
  • Infrastructure capacity to support full staff working remotely in place. Broadridge cybersecurity certifications and risk frameworks were also reviewed.

Updates on Broadridge’s BCP included:

  • Broadridge utilized its seven production sites during the 2020 proxy season.
  • All sites follow previously defined pandemic safety protocolsii.
  • Post-season BCP assessment and enhancement is underway with the goals:
    • Improving geographic diversity of alternate sites.
    • Further reducing single site dependencies and reliance on subject matter expertise.
    • Increasing operational efficiencies by increasing load balancing options.
    • Increasing automation and eliminating manual processes.

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Independent Accountants’ Reports:

The Committee reviewed the following Independent Accountants’ Reports:

  • Applying Agreed-Upon Procedures Relating to the Company’s Testing of the Accuracy of its Processing and Reporting of Voting Instructions.
  • Applying Agreed-Upon Procedures Relating to Testing of Compliance with Certain SEC and NYSE Proxy Rules.
  • Applying Agreed-Upon Procedures Relating to Measurement Criteria.

For more information on BCP or COVID-19 Response, visit the Broadridge Governance webpage.

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Product Enhancements & SRD II

Meeting participants reviewed new product developments, including:

  • 70% of proxy emails in the 2020 proxy season were sent with enhanced 3.0 experience; increasing email vote participation to 8.3%., with flat-to-negative results across clients not utilizing the new template.
  • New proxy notice scheduled for release by end of 2020 providing clear call-to-action, branding, and QR codes to increase voting response.
  • ProxyVote redesign to launch in January 2021 improving the retail shareholder experience and addressing unusual conditions and new regulations.
  • Proxy policies & insights data API enabling broker-dealers, mutual funds, regulators and academics to access over 5 million proxy voting datapoints (academics, regulators, and nonprofits granted access free-of-charge).
  • Ongoing platform transformation integrating US proxy, global proxy and corporate actions onto a single infrastructure and front-end providing consolidated searching and reporting across all lines of business, real-time processing, self-trigger or trigger-response storage of data, improved user experience, improved ability to customize data output, and additional layers of security.

Broadridge Shareholder Rights Directive II (SRD II) Updates:

  • Regulatory compliance: Ability to accept, process and deliver the issuer golden record via STP, meeting notices and agendas available to all investors the same day, issuer confirmations to investors, manage shareholder disclosure requests and responses
  • Client experience: Leverage US platforms to deliver seamless experiencing for all markets: 3.0 emails with custom templates, global proxy included in investor mailbox and upgraded API for single-sign-on, end to end confirmation as part of core solution
  • Market requirements: Full service via ISO 20022 SWIFT MX processing for proxy and disclosure, aligning with Securities Market Practice Group (SMPG) Standards

For additional information on SRD II Compliance and Solutions, visit Fulfill Your Shareholder Rights Directive Obligations.

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Committee Members (as of October 2020)

Stephen P. Norman
President of S.P. Norman and Co., LLC
Chair of the Independent Steering Committee of Broadridge


Institutional Investors

Ray Cameron
Global Head, Investment Stewardship
BlackRock
Philip Larrieu
Investment Officer, Corporate Governance
California State Teachers’ Retirement System
Michael McCauley
Senior Officer, Investment Programs & Governance
State Board of Administration of Florida
Yumi Narita
Executive Director of Corporate Governance
New York City Comptrollers’ Office


Broker-Dealers

Lawrence Conover
Vice President
National Financial Services, Fidelity Investments
Steven Dapcic
Director
Pershing LLC
John O’Day
Director
Bank of America Merrill Lynch
Christina Young
Managing Director, Operations
Charles Schwab & Co.


Custodial Banks

Thomas Broderick
Vice President
State Street Bank
Gloria Lio
Managing Director
Bank of New York Mellon
Michael Marino
Director – PS Client Service
Credit Suisse
Joseph Swanson
Senior Vice President
Northern Trust Company


Corporate Issuers

Christopher A. Butner
Assistant Secretary & Supervising Counsel
Chevron Corporation
Stacey Geer
Executive Vice President, Deputy General Counsel, Corporate Secretary
Primerica, Inc.
Rick E. Hansen
Assistant General Cousnel & Corporate Secretary
General Motors Company

Non-Voting Observers

Glenn Davis
Deputy Director
Council of Institutional Investors (CII)
Granville Martin
Senior Vice President & General Counsel
Society for Corporate Governance (Society)

Any comments or suggestions may be sent to Stephen P. Norman, Editor at steve@spnormanco.com


i. Broadridge follows the NIST framework which measures 98 dimensions over five functions (identify, protect, detect, respond and recover); has ISO 9001/27001 Data Security Standard Accreditation for Core Products, Businesses, Supporting Technologies and Data Centers; CSA STAR Level 2 Certification (Cloud Security Alliance Security Trust Assurance and Risk), and a SOC 2 Type II unqualified opinion that the applicable controls relating to the security trust services principles were suitably designed and operated.

ii. Broadridge received a Grade A from an independent infectious disease evaluation.


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