Settlement with Broadridge reached to include the language below in their proxy. I then withdrew my proposal, and they withdrew their no-action request. (SEC file)
After considering issuer practices during virtual shareholder meetings and to respect the voice of our shareholders, during our annual meeting we will pause to allow time for stockholders to ask questions, vote or change their vote after the proposals are read for a minimum of two minutes and that during this time the business presentation will be provided before the polls are closed in order to provide shareholders with adequate time to cast their vote. The disclosure also would provide that we will announce in the meeting that the polls will be closing after the business discussion to provide stockholders with fair warning to vote or change their vote. [See page 87 of the proxy.]
Settlement with Broadridge: Alarm Did Not
Earlier, I had filed a similar proxy proposal at Alarm.com Holdings. They decided to move back to in-person. My proposal only won 2.6% of the vote. I don’t know why very few funds appear to care about the shareholder’s ability to make an informed vote. Is their assumption that nothing really happens at ritualistic AGMs; because Alarm changed to in-person and everyone at the meeting could see if someone needed time to vote, or what?
CalPERS, my own pension fund, voted against the proposal; CalSTRS voted in favor. I would be interested in learning why funds voted against this proposal.
I sold my stock after the AGM, since I am not excited about Alarm’s prospects. (So far, that appears to be a mistake financially, but I would rather not own shares in a company that wants to deny informed voting.)
Settlement with Broadridge: My Legal Rationale
As I stated in my August 10 rebuttal to the no-action request by Broadridge:
As the SEC noted in Release No. 34-87458 (Nov. 5, 2019, page 6), “Rule 14a-8 enables shareholder-proponents to easily present their proposals to all other shareholders, and to have proxies solicited for their proposals, at little or no expense to themselves. The rule, the concept of which was first adopted by the Commission in 1942, thus facilitates shareholders’ traditional ability under state law to present their own proposals for consideration at a company’s annual or special meeting, and it facilitates the ability of all shareholders to consider and vote on such proposals.” (my emphasis)
“At” the meeting has a different meaning than “before” the meeting. If the rule is to facilitate consideration at the meeting, voting must be allowed after consideration is given to all the information on the proposals. That includes presentations of board and shareholder proposals. Significantly, shareholder presentations may rebut the board’s opposition statement, which is included in the proxy. Additionally, shareholders need time to consider any questions on proposals raised at the meeting and any responses provided. Shareholders do not know what relevant information will be provided at the meeting until such presentations and any questions and answers on proposals are completed. Finally, allowing no time to vote after proposals are presented precludes floor proposals from getting any votes at all.
Ironically, I am suing the SEC over the very rulemaking I quote above but for reasons other than its interpretation, which I read as evidence of the right to vote at an AGM after all relevant information has been provided.
Settlement with Broadridge: What Now?
I expect that I or someone else will file a similar proposal at another company that will take the position that allowing time to make a more informed vote at the AGM is simply an “ordinary business” decision that shareholders have no right to request in a proxy proposal. As a Broadridge shareholder and as someone who worked with them on a couple of reports on virtual shareholder meeting practices, AND since Broadridge hosts most of the AGMs, I found their position especially troubling.
I won’t feel so bad if another company opposes a similar proposal, and I am confident that a no-action will not be granted. I may be naive, but I still have faith the SEC will honor its historic purpose of ensuring shareholders are able to make informed choices.
Always enlightening to see the latest thing you’ve been up to. Thanks for spelling out the rationale behind the settlement with $BR – very interesting!
– Your readers and fans over at Shareholder Vote Exchange
I’ve been waiting for decades for someone to set up a vote exchange. It looks like you are doing it. You might be interested in exploring a few posts on this site about that subject over the years, such as https://www.corpgov.net/2013/07/qvb-vs-proxy-exchange-buy-votes-or-assign-them/ I am very interested in seeing how your work progresses.
So, just a thought, that I’m sure you have also considered: If your Shareholder Vote Exchange really catches on, won’t it accelerate control of corporations by billionaires?
Great article! I’ll certainly be on the lookout for others. I’ve come across materials by Posner-Weyl and Holton in the past, and their ideas are very interesting.
In response to your second comment, this is something we’ve considered. I don’t think SVE will necessarily accelerate that trend by a meaningful amount. As things stand now, those with the means can already take control of most small/mid cap companies. I think the more important change is that we’ll create greater competition for control, which will at least result in better outcomes for shareholders (if not stakeholders as well).
I’ll be interested to learn who is using your exchange and what they are able to accomplish.