A spat over advanced annual meeting voting counts at US companies has re-ignited, with investor body the Council of Institutional Investors issuing a new appeal to the Securities and Exchange Commission.
The CII, which represents investors with a combined $3trn, has written to the SEC to get proxy services firm Broadridge Financial Solutions to start disclosing again the vote count on key shareholder proposals ahead of AGMs. It’s the latest development in a wrangle that dates back to JPMorgan Chase’s shareholder meeting just over two years ago.
According to the CII, Broadridge used to inform shareholders of how the vote on a proposal was going, upon request and largely without restriction. Such “preliminary proxy results” would be made available beginning approximately 10 to 15 days before the AGM in question.
Shortly before the investment bank’s AGM in May 2013, however, Broadridge abruptly stopped telling shareholders in the bank how a vote on a motion calling for the separation of the chair/CEO was going. At the time, Broadridge said it had been asked to do so by Sifma, a lobby for US brokerage firms of which J.P. Morgan is a member.
By ending advance disclosure of the vote tally, it’s argued that Broadridge may have helped stop the momentum behind the motion – which the banking giant opposed.
Indeed, the motion, which was co-sponsored by the likes of New York City’s Comptroller and Hermes Equity Ownership Services, was ultimately defeated with around 68% of shareholders voting against. Since J.P. Morgan’s AGM, Broadridge has adopted a general policy of not disclosing vote tallies to investors in advance of AGMs.The CII wants the SEC to order Broadridge to reactivate the access to advance vote tallies. About a year ago, it opened talks with Broadridge and the Society of Corporate Secretaries and Governance Professionals (Society) to see whether a short-term compromise could be reached. One idea was that all three parties – i.e. the issuing company, the investor and Broadridge – would sign a confidentiality agreement prior to the release of the information to the investor.
But according to the CII, Broadridge changed its mind about the vote tallies again last month. “We were both surprised and disappointed to learn that the agreement that CII had been providing comments on and which the Society was preparing to post to its website for member use was declared unacceptable by Broadridge,” wrote CII General Counsel Jeff Mahoney in a letter to the SEC.
According to Mahoney, Broadridge has indicated that its internal procedures prohibit it from providing advance vote tallies to investors unless the communication relating to the shareowner’s proposal qualifies as an “exempt solicitation” under US securities law and Broadridge is paid by the investor to distribute related proxy materials to shareholders.
In view of Broadridge’s stance, Mahoney reiterated the CII’s request that the SEC provide guidance requiring the firm to provide “interim vote tallies on ballot items to any participant in an active solicitation upon request.”
Mahoney notes this would be consistent with SEC Rule 14a-2(a)(1) and with a recommendation from the SEC’s Investor Advisory Committee.
A Broadridge spokeswoman did not answer queries seeking comment on the CII’s letter and its policy regarding disclosure of advance vote tallies. The CII does not expect the SEC to get to its request anytime soon due to a huge workload at the regulator. The SEC declined to comment.