What happens to your unvoted proxy??
The Securities Transfer Association, Inc.
A PUBLICATION OF THE SECURITIES TRANSFER INDUSTRY
Excerpt
Street Proxy Tabulation Results:
Over-Voting Still Pervasive
During the 2005 proxy season, one major transfer agent conducted a thorough review of all street proxies submitted for banks and brokers through ADP. The objective of the review was to ensure the accuracy of the voting and to assess the progress in addressing over-voting and other voting conditions. The agent tabulated 341 U.S. equity issuers. Attempted over-voting of street positions occurred for every tabulation! The following is a summary of causative factors observed:
Simple Over-Votes: The agent continued to see over-votes cast by DTC participants, who, when contacted, simply explained that the excess voting is attributable to the brokers stock loan services or other trading-related situations.
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Discussion - Over-voting continues to be a problem. The SIA letter indicated that a resolution for this situation was a lottery or proration of voting rights when commingled shares are on loan. This solution has clearly not been implemented across the board. ADP's over-voting service, in its weakest implementation, resolves the issue by simply capping a participant's vote at its DTC record date position. This neither effectively addresses the issues regarding integrity of voting rights nor the excess issuer cost caused by mailing of materials to holders not entitled to vote.
Summary and Conclusions
Street voting problems continue to abound, The over-voting services provided by ADP clearly do not address the issues created by stock lending, trade fails and other record date brokerage record deficiencies. The street proxy system lacks audit accountability required of meeting inspectors and is still too costly and difficult for issuers to effectively communicate with their shareholders. Some improvements were made, but the basic integrity of the system is still questionable. After a year plus of industry proxy committee meetings, the underlying issues appear to remain.
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