More News from the 2017 Meeting Front: The Best & Worst
BofA’S DONATIONS TO SPECIAL OLYMPICS PRODUCED BIG NEW-VOTER TURNOUT: In our last issue we singled out Bank of America’s proxy package for special mention as “required viewing.” With most of the ‘big season’ now behind us, it remains the best and most effective set of proxy documents to cross our desk this year.
Following their meeting, we spoke with Ross Jeffries, BofA’s Deputy General Counsel and Corporate Secretary and his colleague, Gale Chang, to learn more about their process - and, of course, we especially wanted to hear if their prominently featured plan to donate $1 to the Special Olympics on behalf of every individual investor who returned a voted proxy drew the big support we’d predicted.
“As to our process, it was really a top-down thing, starting with our Chairman, and our Board, and our entire Management Team” Jeffries told us. “We wanted to educate all of our shareholders about the many important things that are going on at BofA. We also wanted to think more creatively - and to focus on themes, and how they relate to one another, as a way to better tell our story. “We used three different printers for the three main items, and, as you’d noted, we devoted a lot of time and attention to our ‘by the numbers’ highlights, and to the graphics, where we got excellent support from our financial printer” [RR Donnelley] “who produced the proxy statement. We were not looking for something pretty, or glitzy. Too much glitz can actually detract from the story. We wanted all the graphics, and all of the highlighted sections to be useful.
“We also spent a lot of time and effort on our separate ESG piece, as you’d noted. We hadn’t seen anything like ours before, but we felt that investors do want to learn more about this, and we were right. We got a lot of positive feedback from investors, many of whom remarked ‘Wow, we didn’t know that’ about ESG information that struck a chord with them.
“As to the Special Olympics incentive, it was not just about getting votes. It was a good organization for us to pick, as you noted, but a natural one for us. Our support for the Special Olympics goes back three decades. “Our total accounts voted went up by 8%” [almost 50,000 more voters than last year] “and our quorum went up to 86% vs, the low 80s in previous years. It’s hard to attribute all of the increase to our promised additional donations, because we made some other new efforts to get out the retail vote - which amounts to a third of our shares outstanding. We sent full proxy packages to every shareholder with 101 or more shares and we had our proxy solicitor make calls to the larger un-voted positions. We also paid more attention than usual to our employee plan votes, and, of course, we were very satisfied with the results.”
Editor’s note: As very long-term and up-close watchers of proxy voting, we at the OPTIMIZER would definitely attribute the lion’s share of the increased voting directly to the appeal of the Special Olympics donations, since this year, as in the past 10 years, retail voting went down, again, at almost every meeting we studied.
So an increase of nearly 50,000 net new voters is something very special - as is a 4% or 5% increase in the quorum - thanks to shares that are actually voted, where, as we keep reminding, “Broker Non Votes” keep going up as a percentage of the quorum at most companies, effectively narrowing the margins between the For and Against votes. Accordingly, since virtually all of the retail votes keep on voting with the management positions, almost any increase can make a noticeable difference…
BROADRIDGE ALSO SUCCEEDS WITH ‘SPECIAL OUTREACH’ TO ‘LOW-PROPENSITY VOTERS’…Their latest newsletter reported on a client that wisely cranked up its efforts to increase the retail investor vote (which represented a whopping 37% of the outstanding shares): “After failing to get 70% support for its Say On Pay proposal” they sent ‘targeted communications’ in advance of the mailing date for proxy materials, with “customized content, designed to better engage with retail investors with a ‘low propensity to vote.’” Then, closer to the meeting date, they sent reminder letters, with a message to “GO VOTE” to the larger, still un-voted holders. The result: Recipients of the ‘targeted communications’ responded at a 50% greater rate than non-recipients.
GE FLUBS BIG in our book - and misses a big opportunity: Our last issue sent kudos to GE for promising to send the poor folks who simply got a “Notice of Internet Availability of Proxy Materials” - and therefore, who did not get a proxy statement - or a proxy card - “a paper copy of their integrated summary report [that] combines in one concise document the most critical information from our annual report, proxy statement and sustainability website”…AND…“to make it easier for you to vote you will receive a proxy card or voting instruction form.”
Kudos turned out to be undeserved - and shame on you, GE…When the promised package arrived, it did include a VIF - but it did NOT contain all of the “most critical information” a reasonably diligent voter would need to cast a fully informed vote on important matters: On page 61 of its 63 page, old-fashioned and overcrowded “integrated summary report” the shareholder proposals were summarized in a single short sentence for each one. Then, to the right, they stated, in a single sentence of their own, “Why the Board recommends a vote Against the proposal” (boldface theirs). In our book, this violates not only the spirit but the letter of the law where shareholder voting procedures are concerned: No proxy statement information provided? No proxy should be solicited. The really sad thing is that GE could easily have provided the information needed in the summary report - and could have broken important new ground in doing so.