CORPORATE governance activist Evelyn Y. Davis, well-known for berating CEOs at annual meetings across the US, has complained about the SEC’s new default electronic delivery process for annual meeting materials.
On CNBC’s Power Lunch show, the 78-year-old Davis told host Bill Griffeth that the SEC’s process of requiring shareholders to request paper materials from companies that are using the new “notice-and-access” option involves too many steps. She said the added burden will affect shareholder participation and voting results.
|Shareholder crusader Evelyn Davis on CNBC this week|
The proxy season is now in full swing and I’ve seen enough of the SEC’s pathetic e-proxy initiative to know that it’s one gigantic flop from an investor protection perspective. It may also have some unexpected consequences for companies, such as amplifying the influence of activist investors.
Not only are people like Davis disadvantaged by having to request paper materials using the phone or an error-prone email system, but people who are comfortable using the web cannot read or use the online documents companies and their vendors are providing.
In essence, investors in companies that are using notice-and-access are not getting any of the information they formerly received.
And as we have just experienced in the debt markets, there can be no greater danger to the capital market system than investors who don’t know what they own.