WASHINGTON (Reuters) - Federal rules that let companies deliver proxy voting materials electronically may be depressing retail investor participation in elections and should be reviewed, a top U.S. securities regulator said Thursday.
“I believe that a retrospective review is overdue,” Mike Piwowar, a Republican member of the Securities and Exchange Commission, said.
Piwowar’s comments came at an SEC roundtable convened to explore bolstering the shareholder voting processes and retail participation.
Robert Schifellite, an executive with Broadridge Financial Solutions, said Thursday that retail investors represent 30 percent of the U.S. shares held in street name - those held electronically in the account of a stockbroker or custodian - but they only vote 30 percent of those shares.
Piwowar suggested part of the problem could be pegged to electronic proxy delivery rules adopted in 2007, which initially were only voluntary and let companies notify shareholders electronically about upcoming elections and post the materials online.
Later that year, the SEC made the rules mandatory without waiting to study the impact of the voluntary rules.
The SEC’s e-proxy rules give companies options for delivering the materials. They can alert investors electronically or on paper about upcoming elections and how to access the materials. Alternatively, they can mail a full paper set.
Schifellite said that retail investors vote 41 percent of the shares when they receive the full mailed packet, versus 23 percent when notified by e-mail, and a mere 18 percent when notified about voting by mail.
James McRitchie, an activist individual retail investor who has been pushing for companies like Whole Foods to permit shareholders to nominate board members, said Thursday there should be more transparency surrounding how large funds vote to help overcome apathy.
He suggested using “push technology” that would let investors easily see how large investors like pension funds are voting on corporate issues so they can make comparisons.
Another panel weighed the pros and cons of allowing for universal proxy ballots.
Currently, only shareholders who physically attend annual meetings are allowed to split their ticket in contested elections and vote for a mix of candidates nominated by company management and by large shareholders.
If they vote by proxy, they can generally only support one slate - management’s or the slate nominated by shareholders.
SEC Chair Mary Jo White said Thursday it is too soon to say if the SEC will write rules to permit universal proxies or review the e-proxy rules, but said the SEC will be looking at all the issues to see if there are ways to improve retail participation.
Reporting by Sarah N. Lynch; Editing by Leslie Adler