How Independent Inspectors Of Election Came To Be...
With Special Thanks To Mister Smith... And Mister Jones. Another Fun Story For Our “History” Section.
We’ve been wanting to tell this story for some time, since there are several important lessons here – plus an interesting bit of ‘historic trivia’ – since state laws require that there be Inspectors of Election but are silent on the “Independent” part, assuming, we assume, that the Inspector’s Oath to exercise the duties “with strict impartiality and to the best of my ability” should adequately serve the purpose.
It is an especially funny story, we think if you ever saw any of the colorful cast of characters in action – and one that features the Shareholder Services Association’s beloved mainstay Jim Smith, in whose honor the SSA’s now fully-funded college scholarships for especially deserving children and grandchildren of SSA members is named.
Let’s start with Jim Smith’s version:
The move to having Independent Inspectors began either in 1968 or 1969, he recalled, at an ITT annual meeting where the inimitable Evelyn Y. Davis needed 3% of the votes in favor of her proposal to resubmit it the following year.
Up until then, most Inspectors were employees, or sometimes retirees of the company itself. We, at the Old Manny Hanny, used to use our most recently retired Corporate Secretary, assisted by a priest, a nun, a rabbi and a Baptist minister: Can you believe it? They’d come in for a little tour to review and admire the process, after which they would adjourn for a nice lunch. Then, after the meeting – where they’d all been brought up on stage, to be solemnly introduced - there would be a little stipend to take away as a thank you. Let’s also remember that back in those good old days, the typical results were Company: 99%; Proponents: 1%...but we digress…
When the votes were announced, Jimmy recalled, the percentage of the votes in favor of Evelyn Y. Davis’s proposal worked out to be 2.99%.
“Who counted those votes, Mr. Chairman?” she shrieked. “I want to know right now! This has never happened to me at a single other meeting this year!”
Here’s the way your editor’s mentor and friend, the late, great Bob Byrne of the “Old Manny Hanny’s” Corporate Trust and Agency Group recounted what came next:
“Immediately, there was a huge flurry of activity around the dais – kind of like a football huddle with only seconds to go. In less than a minute, a note was handed up to the famously fierce ITT Chairman, Harold Geneen. He unfolded it, and – what great stage presence he had – a seemingly genuine smile slowly began to form on his usually scowling face:
“Well, Mrs. Davis, this may sound kind of funny to you at first…but the votes were counted by two employees of our Treasurer’s Office who manage our stock transfer and recordkeeping operation… Mr. George Jones and Mr. James R. Smith.” Even Evelyn Davis had to laugh" Bob recalled... "Though not in a really nice way.”
But Geneen was totally prepared, before Evelyn could say a single word: “I can assure you, Mrs. Davis, that even though I feel certain that Mr. Smith and Mr. Jones have done a completely thorough and accurate job, we well double check everything, and will publish the final results in our first-quarter report.”
And indeed, anyone would bet their own life that Messrs Smith and Jones – who had the legendary Harold Geneen to answer to directly – had done a better and more careful job than any outside TA was doing back then, when the millions and millions of proxy cards that were mailed back were sorted into piles - according to the various ‘vote patterns’ - totally with human eyeballs and totally by hand - before being tabulated.
Of course, no correction was necessary. And Evelyn Y. Davis did what she had to do – and simply submitted a different proposal at ITT the following year.
And that year, Bob Byrne came back with another Manny Hanny colleague, to serve as ITT’s Independent Inspectors of Election - a role they continued to play for many, many years.
And gradually, more and more of the Inspectors of Election at annual meetings were selected to be “Independent” of the company too - although a lot of them are still “inspecting” their own work – which is not really a best practice or a smart one, we say…
And most of them lived happily ever after, except for the few cases each year when something goes wrong – maybe a number is transposed – or even dropped – or the percentage is calculated using the wrong denominator…and nobody notices until it’s too late to fix the “Final Report” in the corporate world…