Reforms at ProxyVote Don’t Go Far Enough

ProxyVoteBroadridge Financial Solutions, Inc. BR, launched a newly upgraded ProxyVote site, which improves the shareholder communication and proxy voting experience for individual shareholders. Read the press release below, then my commentary.

“ has long been a key technology in the corporate governance process,” said Broadridge Investor Communications Solutions President Robert Schifellite. “Since its launch more than 17 years ago, usage has grown tremendously and, in the past year alone, more than two-thirds of all proxy votes by individual shareholders were cast on  The newly upgraded platform reflects extensive input from individual investors, companies, broker-dealers, corporate governance experts, and regulators.”

“Better usability of the proxy voting platform is key so that shareholders feel welcome by the companies they invest in,” said Broc Romanek, editor of

Broadridge’s is designed for use by beneficial and registered shareholders, including mutual fund owners, in the U.S. and Canada. The website features a user interface that’s optimized to provide a consistent experience across all devices – desktops, tablets and smartphones.

New features make it easier for shareholders to review proxy information and other communications, and to cast informed votes. Examples include a capability to vote additional ballots, with fewer steps, for other shares held in current meetings, and to easily view additional communications from issuers, including video and virtual shareholder meetings. As part of this initiative, Broadridge also redesigned the content and format of the email messages that initiate proxy communications with shareholders. Broker-dealers can also easily add their branding and custom messages.

Serious Problems With ProxyVote

More than six years ago, I filed a petition with the SEC requesting a rulemaking recommending that votes left blank on the proxy be counted as abstentions, not as votes in alignment with board recommendations. Up until the latest redesign announce above, Broadridge’s system has been misleading voters who did not scrutinize the fine print.

When shareowners voted at least one item and left others blank, the subsequent screen warned them that their blank votes would be voted as recommended by the soliciting committee. This provided an opportunity to the shareowner to change their blank vote before final submission, if they don’t want it to be voted as recommended. However, the type font was small. I’m sure many voters didn’t even see it.

Rule 14a-4(b)(1) requires that when the security holder does not specify a choice, a proxy may confer discretionary authority “provided that the form of proxy states in bold-face type how it is intended to vote the shares represented by the proxy in each such case.” (my emphasis)

Broadridge says that shareowners using ProxyVote are communicating “voting instructions” to their bank/broker. They are not voting a proxy. Since Rule 14a-4(b)(1) pertains to “forms of proxy,” not the “voting instruction form,” there is no violation. However, subdivision (1) refers to the “person solicited” and the need to afford them opportunity to specify their choices. The person being solicited is the beneficial shareowner. Therefore, unless the subdivision applies both to a voting instruction and a proxy, the requirements to indicate with bold-face type how each field left blank will be voted loses meaning.

Blank Vote WarningThe new system is a substantial improvement but still does not meet the bold-face type requirements of proxies. The change is better only because the notification to go back is bolder (see graphic to right).

Blank votes should default to abstentions, not to votes in favor of the board’s recommended position. In civil elections, we don’t give blank votes to the ruling party. We shouldn’t do that in corporate elections either.

Proxy Ballot Labeling at ProxyVote

One thing that apparently has not changed is that ballots still are not going to be impartially labeled.  SEC Rule 14a-4(a)(3) states the proxy “shall identify clearly and impartially each separate matter intended to be acted upon, whether or not related to or conditioned on the approval of other matters, and whether proposed by the registrant or by security holders.” Broadridge claims they don’t have to follow the rules required for proxies because they use a Voter Information Form (VIF), not a legal proxy.

Here’s part of an email I received from Broadridge after these recent changes. 

In all cases (including where there would otherwise have been a space limitation), the proposal language that is displayed is the language the issuer provides.  The new system is in use for registered as well as street shareholders.  The only difference is that for street accounts provides an easy means for street holders to request a legal proxy to attend the meeting in person.

The redesign is a result of substantial input from individual investors, issuers, brokers, and governance experts.  We heard you regarding the vote button… Broadridge invested approximately 11,000 hours of development and QA staff time, as well as out-of-pocket expenditures on design consulting and user testing. (my emphasis)

Leaving issuers to decide the language describing a shareholder’s proposal means we are likely to see continued examples such as the following:


See “Corrected” Ballot at Altrea Tips Votes to Management. The above proxy ballot title ‘described’ a proposal submitted by John Chevedden to Altera, asking them to end supermajority voting requirements. However, it certainly does not meet the requirements of SEC Rule 14a-4(a)(3) that the proxy “shall identify clearly and impartially each separate matter intended to be acted upon.” Titles such as the above discourage shareholders from voting that item at all and if they leave the item blank, it still defaults to a vote for management.

The email from Broadridge went on to extol various improvements.

Further to your question of what’s in it for shareholders, I would make the following points:

  • The new provides a more engaging user experience with a simplified, step-by-step process.  Clear calls for action to read, to vote, etc.
  • Shareholders can now view their voting status, review how their vote was submitted and easily make changes to their vote.
  • Shareholders can attend a Virtual Shareholder Meeting (if applicable), request materials, opt-in for e-delivery (if applicable), all from a single web page.
  • “Responsive” design delivers the same experience across all computers, tablets, and mobile devices.  Over 6,000 variations were tested.
  • A video or audio message box provides companies with additional ways to communicate to their shareholders.
  • Links to SEC’s proxy education website are prominently displayed throughout the site.
  • Security features were added.
  • Issuers and brokers can add branding.
  • Shareholders can easily vote their next proxy for any positions they have where voting is underway.

These are all well and good. However, my primary complaint remains. VIFs should be required to meet the same legal standards required of proxies. What good to rules designed to protect shareholders do if they only apply to the 10-15% of shares that remain directly registered? With the “paperwork crisis” on Wall Street in the late 1960s, we moved away from direct registration. More that fifty years on, it is high time SEC regulations caught up with technological changes. We need to level the playing field.

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