Global transfer agent Computershare has confirmed its support for an industry-led pilot intended to deliver end-to-end vote confirmations during the AGMs of Fortune 500 companies this spring.
The pilot is intended to achieve the dual purpose of improving transparency of voting for investors and issuers, while increasing confidence in the beneficial shareholder voting process.
The pilot follows extensive discussions and cooperation between transfer agents such as Computershare and other members of the SEC-initiated industry working group on implementing end-to-end vote confirmation, which is led jointly by the Society of Corporate Governance and the Council of Institutional Investors.
Since 2020, Computershare has provided vote confirmations to proxy service providers for approximately 1,000 US corporate clients, enabling them to share the information with their bank or broker clients and, in turn, their customers, the beneficial shareholders. The company confirmed that it will continue to deliver such confirmations throughout 2022 and beyond, going further than the expectations outlined in the industry pilot.
Computershare says that extending confirmations more broadly across the industry will provide beneficial shareholders with proof that their votes were cast at the AGM in accordance with their instructions or rejected by the tabulator because of an irregularity.
The proxy voting process is complex and involves multiple parties such as intermediaries, proxy service providers, agents and tabulators like Computershare.
“Computershare has always supported the development of voting protocols that can facilitate more efficient and effective voting by beneficial shareowners as well as provide greater transparency and confidence in the overall system,” said Paul Conn, President of Global Capital Markets at Computershare.
“Establishing formal, standardized voting protocols clarifies the responsibility for each party in the AGM proxy voting process, including intermediaries and their proxy service providers.
“The automation of formal vote confirmations reduces risk and issuer burden while promoting confidence for all stakeholders.”
As tabulator, Computershare receives aggregated votes for beneficial shareholders from the banks’ and brokers’ proxy service providers and records the vote for the issuer, including votes of non-objecting beneficial owners (NOBO) and Objecting Beneficial Owners (OBO). Currently, the ‘street-name’ beneficial voting system does not provide issuers with any details of the underlying investors who voted.
Computershare says that the use of a third-party proxy service provider to mail out proxies to beneficial shareholders, selected by an intermediary and not the issuer, adds complexity and cost to the overall voting process and further obscures the identity of investors.
As part of the overall Fortune 500 pilot program, industry parties have also agreed to conduct an early-stage entitlement reconciliation pilot, enabling brokers to compare their records with a tabulator before the proxy vote.
Participating banks and brokers will seek to reconcile their investor clients' aggregate voting positions to discrete voting entitlements that may be reflected directly and indirectly in the tabulator’s voting register.
This sub-pilot is being conducted with 20 companies (including eight Computershare clients) during the 2022 AGM season.
Computershare noted that without a semi or fully automated solution for early-stage entitlement transfers, a significant administrative burden would likely shift to the vote tabulators and their issuer clients.
“We look forward to taking part in both pilots and will continue to push for positive improvements to the overall voting system, including the development of an automated, systematic approach to confirm changes to bank and broker voting entitlements after the record date for voting,” continued Conn.
Further demonstrating its commitment to introduce improvements to the voting system, Computershare is also working on a parallel pilot program with Proxymity, a select group of issuers, custodians and institutional investors to simulate how end-to-end vote confirmations improve communications and transparency in the voting process for all.
Computershare says that there are no changes to the voting protocols for registered shareholders, whether shareholders hold their shares in book-entry form, including through a direct registration system (DRS), or with paper certificates. They cast their votes directly with the company’s agent and confirmations are built into existing electronic vote capture systems. Although demand has historically been low, registered shareholders may request a formal confirmation for mail-in votes.
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