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Insights from company meetings held in 2012Attendance and votingVoting reminders play an important role for companies who are looking to increase their overall voting participation. Companieswho issue a ‘reminder to vote’ to their securityholders in the days before the proxy close date see a noticeable increase in votingparticipation within a short time after the email communication is sent. A day after one company issued a reminder communicationin 2012, they experienced a fivefold increase in the number of holders who voted online and an uplift of twelve times the issuedcapital received compared to the previous day.Companies who issued a voting reminder in 2012- proportion of securityholderswho voted and issued capital received prior to proxy close date80%70%60%50%40%30%20%10%0%18 days13 - 17 days8 - 12 days 4 - 7 days 3 days 2 days 1 days Proxy close dateBUSINESS DAYS FROM PROXY CLOSE DATE% of issued capital received % of securityholders votedFigure 08: Companies who issue a voting reminder in the days before the proxy close date see a noticeable increase in voting participation.11
Insights from company meetings held in 2012Attendance and votingOver-voting continues to cause headaches for issuersThere has been plenty of discussion recently across the industry and in the media regarding the issue of proxy ‘over-votes’. Overvotingoccurs when more shares are instructed to be voted than the actual number of shares owned by a registered securityholder.It can occur when there is an imbalance between the perceived voting entitlements of individual investors whose shares are pooledwith other investors within a nominee holding and the actual (lesser) voting entitlements held by the nominee on the share register.The impact on issuers is significant; from meetings held in 2012, we identified 187 cases of over-voting affecting 117 issuers. Overvotingrepresented more than 20% of the issued capital voted for four companies and in the most extreme case, one issuer sawover-voting make up 56.8% its issued capital voted or 31.7% of its total issued capital.98.9% of the over-vote cases in 2012 were lodged via paper proxy forms. To encourage a reduction in paper proxies and combatover-voting, Computershare launched Intermediary Online in 2008; the only online service offered by a registry that is specificallydesigned to meet the needs of institutional investors. Intermediary Online supports real-time proxy processing which means thatwhen a lodged vote causes a securityholding to move into an over-vote position, an on-screen alert is immediately broadcast to theuser. In addition, if an over-vote occurs sometime after lodgement of an electronic vote, the custodian or nominee receives an alertabout the over-vote via email.Chasing over-votes is a time consuming and time critical exercise. It requires significant rework for all parties, mostly in the lasttwo days prior to the proxy cut-off date. Computershare endeavours to contact any proxy agent who lodges an over-vote position.In only three of the 187 over-vote cases in 2012 were we not able to contact the lodging agent and resolve the issue. However, theimpact on these three cases was that votes had to bedisregarded in their entirety. We then reviewed the resultsfor all resolutions put to meetings where there was anover-vote, and found that the inclusion of the over-voteposition would not have changed the outcome in all threeinstances.In our recent submission to CAMAC’s review of ‘The AGMand shareholder engagement’, we discuss how the currentpractice of custodians and nominees holding institutionalinvestors in pooled account structures rather than indesignated accounts named on the company register iscontributing to a number of market inefficiencies, includingthe issue of over-voting. The pooling of investors into oneaccount on the register means that over-voting cannotbe adjusted by a simple pro-rating down of votes ‘for’ or‘against’.What’s the differencebetween a ‘designated’ and‘pooled’ account?A pooled account is thecombination of client assetsheld through an omnibusaccount in the name of thecustodian or its nominee,rather than in individualaccounts for each underlyingclient. For example,HSBC Custody Nominees(Australia) Limited orNational Nominees AustraliaLimited.A designated account is thesegregation of underlyinginvestors into individualaccounts on the shareregister. For example,QIC Limited or INVIACustodians Pty Limited.Designated or segregatedaccounts can be establishedwithin CHESS and directly onthe share register, facilitatingdirect communications andvoting between companiesand shareholders.Figure 09: Computershare’s Intermediary Online supports real-time proxyprocessing which is helping to combat the incidence of over-voting.12
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