February 11, 2014

Broadridge’s Changes to Proxy Mechanics Called Off!

Very shortly after I blogged the below, I became aware that Broadridge reversed it’s position with this note: “Upon further internal review, Broadridge will not be implementing the change announced last week. Both sides of a proxy contest will continue to receive interim voting updates for their own and each other’s ballot.” Thanks to Sabastian Niles of Wachtell for the heads up!

This was my early morning blog: In this Davis Polk blog, Ning Chiu reports:

Broadridge has announced a new policy that during proxy contests, each party will only receive the interim results of votes cast for its own proxy card, reports the WSJ. Companies and dissidents can share voting information if both sign confidentiality agreements. This new policy could make it more difficult for solicitations, including determining whether an investor has not voted at all, or has instead voted for the other side.

A possible effort by the ABA to ask the SEC to shorten the period required to conduct broker search cards could also impact proxy contests. Currently, SEC Rule 14a-13 requires issuers to notify or “search” the banks and brokers at least 20 business days prior to the record date. A petition may seek to shorten that time to five days. Some argue that the lengthy period does not account for technological advancements, and a shorter period would facilitate the process for voting on major transactions and allow for a shorter period before annual meetings take place. Others, however, contend that the compressed broker search period would affect the time for activists and others aligned with their views to invest in the stock prior to the record date, or permit a competing offer for transactions.