Good morning.
In 2010, just one in 20 individual retail investors voiced their opinions about the company they invested in by exercising their fundamental shareholder right—their proxy vote. Let me repeat that, that’s just 5%, just one out of 20.
That compares to recent historical levels 4 to 5 times as high. This alarming decline is happening at a time when a partnership between the shareholder owners—management, and directors is more important than ever as our economy is only now emerging from a period of intense mistrust. So engaging shareholders has never been more important.
Richard Daly
Public companies need to understand the seriousness of this issue and act to reverse this troubling decline to get each of their individual investors—and all individual investors generally engaged with their companies.
This decline in individual investor participation also comes at a time when new regulations demand greater transparency and provide shareholders with increased influence, so we can no longer assume that ownership of a company’s shares is evidence of support for the company. Now companies need the expression of individual investor opinion, and hopefully their support, which can only come by the voting of shares.
Further, new regulations such as say on pay, create even more pressures on management and boards to reach out and hear from shareholders. Better to hear from actual owners—whose interests are likely aligned with the company—than from outsiders whose agendas may be in conflict with shareholders’ long-term interests.
As the major player in investor communications and proxy distribution, we at Broadridge are committed to making the investments in systems, technologies, processes, and intellectual capital to reverse the decline in individual investor participation. Given our pivotal role connecting all market participants, we believe we have an underlying responsibility to operate on a path of continuous improvements that can enhance corporate governance and shareholder suffrage.
Certainly Broadridge, by itself, cannot arrest or reverse this decline in individual investor voting.
As an initial step of our overall strategy to increase individual shareholder voting, we are focusing on those areas where public companies can quickly have the greatest impact.
We are calling on chief executives of the top 1000 American businesses to join with us in launching a nationwide effort to encourage their employees—numbering in the tens of millions—to exercise a fundamental shareholder right—and need—to vote their proxy ballots, whether it be proxies relating to their employer or proxies relating to other companies in which they invest.
A relatively small increase in voting participation by employees could meaningfully increase individual investor voting participation from 5% per year, as I noted earlier, back to 20% or more per year.
We must all lead by example within our own enterprises.
So, on every investor communications distribution Broadridge makes, where the investor is not receiving communications through a digital channel, we will let them know, within the constraints of regulatory boundaries, that they have the ability to do all of this online, eliminate the paper, have all their information stored in any format they want, have access to it anywhere they want, and vote at any time they want, even on their new iPhones or iPads.
Before I continue, I’d like to stress an important point—Broadridge makes no more or no less money from an increased exercise of proxies. But, as I noted earlier, given Broadridge’s place at the nexus of investor communications and having witnessed and tallied the declining participation, we are stepping up to bring awareness—and hopefully action—to address this important issue.
But what can we, as chief executives do to encourage our employee shareholders to vote their proxies?
First, simply communicate. Be bold. Tell employees, that as shareholders it is their company. They are owners. The message to them is—if they value the company, if they believe it’s going in the right direction, then they should vote their proxies and thereby demonstrate their support for the company. And just as importantly, if they have a differing opinion, that’s good too, express it—Vote your proxy.
Second, make available to their employees and other shareholders of the company the tools they need to easily and efficiently vote their proxies. The tools exist; we need to create the awareness.
Clearly, people today are busier than ever. With dual-income households and the conflicts of what goes on in a day, including the seemingly never-ending Blackberry or iPhone emails, people are occupied 24/7 with various activities.
Yet the same technology that connects them 24/7 also makes their ability to express their views as a shareholder and to participate in corporate governance easier than ever.
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