Survey Demonstrates Significant Savings
Opportunity on Proxy Processing Costs for Public Companies
Average Savings of More Than 42
Percent When Compared to NYSE Regulatory Fees
Oct. 3, 2011 /PRNewswire/ -- The Securities
Transfer Association ("STA"), the industry organization representing the
transfer agents for over 12,000 U.S. public companies, today released a
survey that demonstrates significant cost savings related to annual meeting
The survey of the STA's largest members
showed an average cost savings, for public companies, of 42 percent for
distributing annual meeting materials under a proxy processing system that
uses competitive pricing instead of a fixed fee schedule established by
This STA survey evaluated 20 invoices sent to
public companies by Broadridge Financial Solutions, Inc., the dominant
service provider for distributing annual meeting materials to shareholders
who purchase shares through brokers and banks. The fees charged by
Broadridge for these services are currently established by a regulatory fee
structure approved by the U.S. stock exchanges and the Securities and
Exchange Commission ("SEC").
The STA sent these 20 Broadridge invoices to
its largest transfer agent members and asked them to provide individual
price quotes for providing the same services in a marketplace where fees are
established through a competitive process.
Transfer agents generally distribute proxy
materials to shareholders who are registered directly with a public company.
These agents compete with one another to provide these services to more than
12,000 public companies in the United States.
The STA survey included
companies ranging from 110 shareholders to more than 2 million shareholders.
Cost savings could be achieved for all but one of these companies, with
savings ranging from 13 percent to 80 percent, when compared to fees charged
by a fixed fee schedule. The only invoice in which savings could not be
achieved involved a company with the smallest number of
shareholders—110—where the average transfer agent price quote exceeded the
Broadridge invoice by $133.
These results show that a proxy processing
system subject to competitive market pricing is significantly less expensive
for public companies than a system in which prices are established by
Additionally, the STA survey found:
For companies with 5,000 or more owners, no individual transfer agent
quote—including the cost of obtaining a list of owners from brokers and
banks—exceeded the Broadridge invoice for the same number of owners;
The cost savings were more significant as the number of owners increased,
with an average of 50 percent in potential cost savings for companies with
5,000 or more owners; and
As a group, these 20 companies could save more than
$1.6 million in proxy processing fees, or an average of
$80,081 per company, under a competitive
The STA survey also documented more than
$700,000 in unnecessary charges for processing
proxy materials for individuals who typically do not receive annual meeting
materials in broker-dealer managed accounts.
A substantial majority of these investors
have delegated investment and proxy voting authority to an investment
adviser. The STA's stated position is that public companies should not be
charged for any investor who elects not to receive annual meeting materials,
pursuant to an account agreement with his or her financial intermediary.
The SEC is currently reviewing the U.S. proxy
processing system and is considering a regulatory change to permit
competitive pricing for proxy services provided to investors who purchase
shares through brokers and banks. This STA survey was conducted to better
understand the impacts of a transition to this type of market-based system.
"This STA study is further confirmation that
market-based pricing for proxy services is less expensive for public
companies than fees set by regulatory rules," said
Charles Rossi, STA President. "Not only are there cost savings for
both small and large companies, but the potential savings are even more
significant than even our STA members realized."
"This study highlights the many different
pricing inefficiencies that are imposed on public companies in a regulated
fee environment," said Thomas Montrone,
Chairman of the STA Proxy Communications Committee. "We need to introduce
free market principles into the proxy processing industry, in order to
generate cost savings for companies and encourage direct communications
between our issuer clients and retail shareholders."
The STA survey, 2011 Transfer Agent Survey
to Estimate the Costs of a Market-Based Proxy Distribution System, is
available on the STA's website through the following link:
About The STA
The Securities Transfer Association ("STA")
is an industry trade association, established in 1911, comprised of transfer
agents that provide services to over 12,000 large and small public companies
in the United States. The STA and its
members work closely with issuers of securities on a variety of public
policy matters and have been active for many years in advocating for a fair
and efficient system for proxy distribution and communications. Because of
its influence on corporate governance matters, the proxy processing system
is extremely important to the operation of the capital markets in
the United States.
Securities Transfer Association, Inc.
Tel +1 904 683-5158
SOURCE The Securities Transfer Association