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Forum Report: Electronic Participation in Shareholder Meetings


Investor View of Need for SEC Proxy Reform

(Comments of Leonard Rosenthal)

Leonard Rosenthal, Professor of Finance at Bentley University, has asked that his recent response to the SEC's request for comments on the U.S. proxy system be presented to Forum participants for their consideration in relation to our interest in improved shareholder communication processes.

It should be noted that Professor Rosenthal, who has in the past offered us his views as an academic expert,[1] is now reporting his experience and views as an individual investor. This "real" investor perspective is especially important in the context of the other responses to the SEC from representatives of commercial and professional interests.

His letter provides two examples from this year's beginning of the proxy season in which he had to overcome delays and errors to vote the shares he owns, observing that the inefficiencies of the current system "almost cost me my voting rights." As both an expert and an investor, Professor Rosenthal stated these conclusions:

I am strongly in favor of a significant overhaul of the current “proxy plumbing” system which is seriously outdated, needlessly more complex than required given current technology, and not in the best interest of shareholders.


Our proxy plumbing must be modernized and monopoly control of the process has to end. The straightforward way to do this is have direct registration of the names of non-objecting beneficial owners at a central depository (such as DTC) or at the transfer agent.* There is no need to have stock held in street name. Issuers (not the brokerage firm) would then have the opportunity to determine which third party provider to use to distribute proxy information. This would allow the marketplace to determine which firm is most timely and cost effective distributor of proxy information. It is a win-win for shareholders and issuers.

* Objecting beneficial owners would still have the right to have their shares registered in the name of a nominee.

The full letter has been posted by the SEC on its web site page for "Comments on Concept Release on the U.S. Proxy System," accessible from this link:[2]

Your comments will be welcomed.

GL – April 15, 2011


Gary Lutin

Chairman, The Shareholder Forum

c/o Lutin & Company

575 Madison Avenue, 10th Floor

New York, New York 10022

Tel: 212-605-0335



[1] See, for example, the April 22, 2009 Forum Report: Views of Responsibility for Investor Communications (Comments of Leonard Rosenthal).

[2] Professor Rosenthal's letter can also be downloaded in printable form from the Forum website, by clicking here.




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.

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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.