I WASN’T going to write about this because I’m trying to be more positive in my posts. But my arm has been twisted by TheCorporateCounsel.net editor Broc Romanek.In a blog post yesterday, Broc writes about his negative experiences visiting the websites of two companies that are doing e-proxies — Pike Electric and Itex.
He sums up his experiences like this (emphasis added): “I am still disappointed about how they fail to clearly inform shareholders about what they’re doing on their IR web pages – and more importantly for them, fail to make it easy for shareholders to vote.“
That last part about voting not being easy is what I want to elaborate on because, from my experience, voting is actually too easy.
Why such different conclusions? Because Broc and I we are looking at completely different websites. You see, most shareholders in these companies are not actually being directed to the companies’ websites to access their proxy materials and then vote their shares.
Instead, the notices they are receiving by mail are directing them to go to www.proxyvote.com, and to a lesser extent to www.investorEconnect.com. Both are websites run by Broadridge Financial Solutions, which has a near-monopoly on the North American proxy voting business.
You can see that in the notice that Pike Electric’s shareholders received. The link to www.proxyvote.com is capitalized and bolded. It’s also an easier URL to remember than www.investorEconnect.com, so I think it’s reasonable to assume that most shareholders are going to ProxyVote.com. Note that the company’s website is not mentioned.
|This is the notice most shareholders received from Pike Electric. The most prominent URL is for WWW.PROXYVOTE.COM|
So while Broc’s experiences and observations on the companies’ websites are perfectly valid, they’re not what most shareholders are actually experiencing. To see what most shareholders are experiencing, you have to review the Broadridge e-proxy sites.
And that’s not easily done. You have to be a shareholder with a valid control number to access the Broadridge sites to see what materials shareholders are getting. This is not a very transparent approach, and it certainly doesn’t help the SEC monitor implementation of its new rules if it cannot see how each site is being implemented.
|This is the page most shareholders are directed to when they receive a notice of Internet availability in the mail. You need a control number to see what information they are getting.|
However, let me now take you behind that first screen and show you that making it easy to vote is actually the only thing that Broadridge cares about. Inappropriately so.
The ProxyVote.com site is set up to capture shareholders’ votes immediately after they type in the control numbers imprinted on their notices. What’s more, the first page is set up in such a way that shareholders are being steered into voting in line with the directors’ recommendations.
At the same time, shareholders are not being encouraged to review the proxy materials so that they can make informed voting decisions. The link to the proxy statement and annual report is easily missed.
You can see that in the screenshot below, which is of the first screen on Broadridge’s ProxyVote.com site for Sun Microsystems’ annual meeting site last month. Click on the image to see a full-screen version.
Remember, the screenshot shows you the first screen people see immediately after they enter their control numbers. The most prominent thing on the page is the “Vote” button in the center of the page. If you click that button, you vote in line with the directors’ recommendations.
I’m willing to bet that a good number of shareholders just click that button without reading anything else. They’re likely to do this simply because it’s the most prominent thing on the page. Of course, that means the board and management are getting unintended support from shareholders. That’s a problem, especially in hotly contested votes.
And while shareholders could change their votes by simply voting again, that’s not explained to them on the site. In fact, I doubt that most people even know they can redo their votes. You don’t get that option in other elections, so there’s no reason to think you can do that in shareholder votes.
The other issue is that shareholders are in effect being given the proxy voting card before they receive the proxy statement and annual report, something the SEC insisted it didn’t want to see happen. The link to the proxy statement and annual report is in the least noticed area of a typical web page — the top right corner.
Shareholder’s who go to Broadridge’s other domain, www.investorEconnect.com, get a slightly different experience, but not much better. The emphasis on that site is still on getting people to vote before they review the proxy materials. Interestingly, the secondary focus on that site is getting shareholders to order printed materials from Broadridge at the company’s expense.
Bottomline: Whether by design or error, Broadridge’s ProxyVote.com and InvestorEconnect.com sites skew shareholder votes in favor of directors and encourage shareholders to vote without the benefit of reading the proxy statement and annual report first.