Council of Institutional Investors

CII Reaches Impasse on Agreement to Release Preliminary Vote Tallies
Thursday, May 7, 2015
by: Andrew Droste and Jeff Mahoney

Section: CII Governance Alert

For well over a year, CII staff has devoted significant time and resources to work with Broadridge Financial Solutions and the Society of Corporate Secretaries and Governance Professionals on developing a template for a confidentiality agreement that both shareowners and companies could use when shareowners request, and companies agree to, allow interim vote results to be released by Broadridge on a particular voting item. Last week, CII was surprised and disappointed to learn that the template that it had been commenting on, and that the society was preparing to post to its Web site, was unacceptable to Broadridge.

Broadridge said it would not execute the template because its procedures currently do not allow it to provide vote tallies to a shareowner unless Broadridge distributes the communication relating to the shareowner's proposal that qualifies as an exempt solicitation under Rule 14a-2(b)(1). Upon learning this, CII requested that Broadridge expeditiously change its procedures to accommodate the template.

In the meantime, shareowners may seek to obtain vote status information directly from the company without Broadridge’s involvement. Shareowners distributing an exempt solicitation letter through Broadridge will receive an interim vote tally from Broadridge upon execution of the existing three-way non-disclosure agreement (company, exempt solicitor, and Broadridge). Where Broadridge is involved, the steps are as follows:

• Step 1—contact the company: Shareholders should contact the company and request written authorization to receive preliminary vote tallies.
• Step 2—contact Broadridge: Assuming written company authorization was granted, the shareholder should next contact Broadridge. The contact person at Broadridge regarding requests and receiving vote status information is Charles (Chip) Pasfield, Vice President, Client Services, 631 254 7533,
• Step 3—sign confidentiality agreement: The company, the designated party and Broadridge must sign a three-way existing non-disclosure agreement provided by Broadridge.
• Step 4—receive preliminary tallies: Broadridge will forward the interim vote status information by email, as of the time requested by the shareholder. The interim vote status information is provided in the aggregate for the proposal(s) or director nominee(s) of interest.

CII believes that a change in procedures by Broadridge to accommodate the template is not an acceptable long- term solution for investors. The Council, therefore, plans to continue its pursuit of interpretative guidance or rulemaking by the SEC to require Broadridge to provide preliminary vote information on an impartial basis to investors and companies or, in the alternative, that Broadridge be prohibited from providing preliminary vote information to any party.

This is not the first time the Council has weighed in on this issue with the commission. During the 2013 proxy season, CII sent a letter to SEC Chair Mary Jo White detailing its concerns when Broadridge made a significant policy change that reversed its decades-old practice of providing interim vote tallies to shareowners engaged in exempt solicitations.
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