UNDER the U.S. Securities and Exchange Commission’s controversial notice-and-access (N&A) process for the delivery of annual meeting materials, companies can mail their shareholders a slip of paper containing a URL where recipients can access their proxy materials online.
Moody’s Corporation (NYSE:MCO) is one company that is in the process of sending such a notice to its registered shareholders, part of which reads like this:
Please visit http://www.amstock.com/ProxyServices/ViewMaterial.asp?CoNumber=26180, where the following materials are available for view:
• Notice of Annual Meeting of Stockholders
• Proxy Statement
• Form of Electronic Proxy Card
• Annual Report on Form 10-K
Now remember that people are getting this on paper and they have to manually key in that long URL –http://www.amstock.com/ProxyServices/ViewMaterial.asp?CoNumber=26180
If ever there was a disincentive for people to go online to read the annual meeting materials and cast their votes, it’s the prospect of typing in such a long URL.
No support for user error
Even if shareholders do resolve to give the long URL a go, the chances are high that they’ll make a mistake on the first try. And if that happens they’ll get a generic error screen like the one below.
What’s infuriating about the above generic error page is that it would be a piece of cake for Moody’s and its transfer agent, American Stock Transfer and Trust Company (AST), to set up a custom error page. If they did this, investors who type in the wrong URL will get something useful that helps them complete the task for which they came.
Oh, I don’t know, how about an alphabetical list of AST’s proxy clients so that shareholders can find the company they’re looking for and then retrieve the materials and vote.
But they can do even better than that.
How hard is it to shorten a URL?
Moody’s and AST could easily help to prevent people from making mistakes in the first place. It would be a second piece of cake to set up a redirect to a shorter, more memorable URL. You know, something like http://amstock.com/moodys Honestly, it’s a 1-minute job!
And even if AST is so slow that they can’t do custom domains for their clients, then Moody’s could have done what everyone on Twitter has learned to do and used a URL shortener.
In less than 5 seconds, they could have turned http://www.amstock.com/ProxyServices/ViewMaterial.asp?CoNumber=26180 into http://bit.ly/daYkmx. Not the best solution, but still much better than that awful long URL.
SEC not enforcing format requirements
On a related note, why is the SEC letting companies like Moody’s get away with posting their proxy materials in half-baked, barely usable formats? Together, Moody’s annual report and proxy statement run to 214 pages, but they’re only posted in PDF with no navigation support, not even a bookmarks panel.
That’s not in keeping with what the SEC outlined in it’s adopting releases for Notice and Access, yet the regulator seems content to let things slide. All it would take is one or two well-placed comment letters to a couple of prominent issuers asking about their compliance with the format requirements and the entire industry would get a clue.
It’s important for the SEC to do this otherwise even the most motivated retail shareholders are going to become discouraged. Imagine, after making an effort to manually type in that long URL, and possibly making an error on the first try, Moody’s shareholders get to download a bunch of slapdash PDFs.
As online experiences go in the age of YouTube and Facebook, that’s akin to a root canal. It will make people prone to ignore the next notice that arrives in the mail.
And when that happens, the 75% drop in retail shareholder participation in N&A-based meetings might deepen and become permanent.