TheSecurities and Exchange Commissionhas been very busy over the last few months with concept releases and new proposed rules. So, lost amidst this activity, you might not have realized that today is the deadline for comments about proposed changes to proxy system.
Before your eyes glaze over, let me say that it's actually a very good thing. And, unlike most situations, there is one proposed change under consideration on which both investors and public companies are in complete agreement: ending the monopoly enjoyed byBroadridge(BR_)for counting proxy votes.
Typically, shareholders and general counsels are at loggerheads on how best to reform the voting process for director elections each year. The lawyers protecting the interests of the managers who pay them seek to keep shareholders at bay as best they can. This is why the whole "proxy access" issue generated so much heat earlier this year.
In "proxy access," shareholders wanted to be able to nominate their own representatives to stand for election to a corporate board -- without paying millions of dollars to run a full-blown "proxy contest." The lawyers for management lashed out against "proxy access" stating that such a process would be "hijacked" by nefarious "special interest groups" who would dangerously promote non-business related ideas on corporate boards if elected.
Shareholders countered that director nominees wouldn't get elected without the majority consent of the company's owners, so why would they elect someone who wouldn't best represent their interests?
Even still, by the time the lawyers and corporate "special interests" got through lobbying politicians, the SEC's passed rule on proxy access stated that investors had to own 3% of a company for at least three years before they could even make the nomination. So much for PETA and Amnesty International being able to hijack the process.
But the corporate paid lobbyists didn't stop there. The US Chamber of Commerce and Business Roundtable have recently sued the SEC to stop the newly passed proxy access rule from being implemented.
So, how is it possible that investors and management can come together on the issue of Broadridge holding a monopoly on counting votes? Easy. Both companies and shareholders aren't being well-served by the status quo.
On the company side, they are held hostage to whatever prices Broadridge wants to charge for their services. As the Shareholder Communication Coalition recently argued to the SEC: "The prices for proxy distribution and communications services should be established by open competition among service providers handling these functions, based on value to end users, and not through a fee schedule established by regulators."
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