Over at CorpGov.net Jim McRitchie is doing his bit to raise some vital issues about the quality of the US proxy system.

This time, Jim is airing doubts about the quality of informatiion presented to shareholders on 3rd party voting platforms, more specifically Broadridge, the monopoly US platform.

The point he makes is this: SEC Rule 14a-4(a)(3) states the proxy “shall identify clearly and impartially each separate matter intended to be acted upon, whether or not related to or conditioned on the approval of other matters, and whether proposed by the registrant or by security holders.”

Broadridge, on the other hand, is not bound by this rule because it is presenting Voter Information Forms (VIFa), not legal proxies.

A shareholder resolution at Altera Inc from activist John Chevedden has therefore gone from this:

"Shareholders request that our board take the steps necessary so that each shareholder voting requirement in our charter and bylaws, that calls for a greater than simple majority vote, be changed to a majority of the votes cast for and against the proposal in compliance with applicable laws. This includes each 80% supermajority provision in our charter and bylaws."

to a highly mangled version which reads thus:

"TO CONSIDER A STOCKHOLDER PROPOSAL REQUESTING THAT BOARD TAKE THE STEPS NECESSARY SO THAT EACH STOCKHOLDER VOTING REQUIREMENT IN ALTERA S CERTIFICATE OF INCORPORATION." see http://www.moxyvote.com/ballots/1142 for more.

Both McRitchie and Chevveden are lobbying the SEC to introduce a system of direct share registration to address this and and a number of other long overdue reforms: "I urge readers to bring this abusive practice to the attention of the SEC’s Investor Advisory Committee through use of their online comment form and to Chairman Mary Schapiro"

International investors have had to cope with mangled agendas for some time now so this arbitrary re-writing probably doesn't come as a surprise. As we pointed out this week in our analysis of overly long voting deadlines, most of the glitches in the voting plumbing point to a classic market dominance scenario. In the absence of counterparty co-operation investors are now faced with no optiion but to put out a regulatory SOS.

So, if voting matters to you, please ensure that your voice is heard.

Links

http://corpgov.net/wordpress/?p=1290