The Shareholder ForumTM

Electronic Participation in Shareholder Meetings

Forum Home Page [see Broadridge note below]

"E-Meetings" Home Page

"E-Meetings" Program Reference


New York Times DealBook,  September 29, 2010 article



With Fewer Nasty Battles, One Firm Profits Less

September 29, 2010, 10:45 pm


Brutal proxy fights that pit shareholders against executives are the lifeblood of IVS Associates, a private firm with a headlock on the high-stakes business of tallying shareholder votes in corporate battles.

But as proxy fights show some signs of waning and competitors emerge, IVS is facing a struggle of its own: how to maintain and expand its business.

“The economic downturn has changed the size and scope of proxy fights, so our earnings have been affected,” said William A. Marsh, the president and sole owner of IVS. He declined to discuss earnings or revenue.

The battle that ensued when Hewlett-Packard bought Compaq in 2002, a megabrawl for which IVS counted the votes needed to seal the deal, earned IVS an estimated $1 million and put the tiny firm, based in Wilmington, Del., in the spotlight.

But with an economic damper on the mergers and acquisitions activity that breeds such fights, “it’s now small stuff,” said Mr. Marsh, 53. He was referring to “small biotech companies, where a chair has been thrown off the board, and stuff like wars of personality.”

Since its founding in 2000, IVS, short for Independent Voting Services, has tabulated the votes for more than 90 percent of all proxy fights in corporate America, giving it a virtual monopoly. Typically hired by the management of Fortune 500 companies like Target, Motorola and Disney for proxy fights, the firm prides itself on its independence and accuracy.

“If you call other people in my industry and ask them for any one person that could take our place, you will not get any names,” Mr. Marsh said with confidence.

But the intensity and size, and thus profitability, of proxy fights have faded in recent years, despite a recent flurry of battles that notably includes the billionaire investor Ronald W. Burkle’s challenge to the board of Barnes & Noble, which Mr. Burkle lost this week.

Looking beyond proxy fights, IVS is embracing less sexy work. Think tabulating votes for director seats at professional associations like the National Society of Hispanic M.B.A.’s, counting votes at routine annual shareholder meetings and auditing votes tallied by other securities-processing and investor communications firms for corporations, mutual funds and retirement systems.

“We’ll still do 30 proxy fights a year, but the majority of our stuff is audit” of tabulations by other firms, Mr. Marsh said.

A competitor, Lang Johnston, the chief executive of Corporate Election Services in Pittsburgh, said, “If you live by the proxy fight, you die by it; their revenue is probably like a roller coaster.”

While not required to do so, corporations like to have an independent party certify votes in proxy fights, now more than ever since a new Securities and Exchange Commission rule makes it easier for shareholders to nominate directors.

“Companies want tabulation beyond reproach; it’s key to show to a judge if a fight goes to litigation,” said Mr. Marsh, whose firm created the industry of independently certifying proxy votes. “There’s an intrinsic value in having a totally independent signature.”

But sometimes, there is also a cost. In 2008, a client, CSX, lost a bitter fight against two hedge funds that sought to install members on the railroad company’s board. IVS, which counted the votes and certified that the funds had won, refused to consider CSX’s pleas for a vote recount based on new arguments CSX raised after the polls closed.

Mr. Marsh argued that doing so would have violated regulatory statutes. CSX is no longer a client.

IVS, which has only five full-time employees, is facing competition for even its less glamorous work. One competitive threat is from stock transfer agents, the back-office companies that process trades, maintain shareholder records and mail financial and legal statements, interest payments, dividends, proxies and other materials to shareholders and regulators. Some agents are pushing into the business of tabulating the votes of scores of registered shareholders, or mom-and-pop stockowners, and not just “street” shareholders, the brokers and financial institutions that own stock on behalf of investors.

Another is Broadridge Financial Solutions, an investor communications and tabulation company that mails proxy statements to more than 90 percent of all publicly traded companies. Broadridge acquired a stock transfer agency, StockTrans, this year and can offer a service that IVS does not.

The selling point of all these competitors, some of which are also cutting prices, is that their stock transfer and investor-communication services are bundled together, so a client does not have to use a separate niche firm like IVS for routine counting.

“The bigger picture is not tabulation” — IVS’s specialty — “but proxy distribution and communications services,” said Niels C. Holch, the executive director of the Shareholder Communications Coalition, an advocacy group for transfer agents and corporations.

But if Mr. Marsh is worried, he does not show it. He said he has no plans to sell the firm or take it public. “I’m happy with the client base I have,” he said. “We’re not in this to be millionaires.”

– Lynnley Browning

Copyright 2010 The New York Times Company




This Forum program is open, free of charge, to anyone concerned with investor interests in the development of standards for conducting shareholder meetings with electronic participation. As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

The organization of this Forum program was encouraged by Walden Asset Management, and is proceeding with the invited leadership support of Broadridge Financial Solutions, Inc. and Intel Corporation to address issues relevant to broad public interests in marketplace practices, rather than investor decisions relating to only a single company. The Forum may therefore invite program support of several companies that can provide both expertise and examples of leadership relating to the issues being addressed.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.