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Baseball And Corporate Proxy, Change Can Be A Home Run
Chris Perry
Contributor
I explain the impact of new financial technologies on our markets.
Mar 14, 2024,09:00am EDT
![](Forbes%2020240314%20baseball%20x40.png)
Professional baseball isn't the
only season that will be moving more quickly. Thanks to
new technologies, proxy voting season is also changing for
the better. SHUTTERSTOCK
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Some of our biggest rites of spring are changing for the better. Of
course, I’m talking about two of my favorite annual events: baseball’s
opening day and the start of the corporate proxy season—both of which
this year will feature innovations designed to streamline and enhance
the experience for all participants.
Last year, Major League Baseball (MLB) instituted strategic rule
changes designed to improve the pace of play and make the game more
engaging for fans. The league implemented a pitch timer, limits on
defensive shifts and bigger bases. The changes were considered a huge
success. Batting averages throughout the league were up five points
last year, and the number of bases stolen and runs scored per game
also increased. Attendance was up 9.6% and the average length of a
game declined by 24 minutes. Huge improvements all around!
The league is also pushing ahead with an even more radical experiment:
automated ball and strike calls. As was the case last season,
automated balls and strikes (ABS) will be used extensively this year
in AAA minor league baseball games. These electronic systems determine
whether a pitch is a ball or a strike and communicate the correct call
to the umpire. Although the league says there will be no “robo-umps”
of any kind at the major league level this year, in my opinion it’s
only a matter of time before it’s adopted in “the show.” The
technology is powerful and unobtrusive and brings clear benefits to
the game.
Giving Retail Shareholders Better Access and More Say
In the same way that Major League Baseball instituted changes to make
the game more accessible to fans, regulators and the financial
services industry have implemented some dramatic changes to make proxy
voting more accessible to retail investors—and they are experimenting
with additional innovations this spring.
At the top of the list of important enhancements already in place are
virtual shareholder meetings (VSM). Virtual
shareholder meetings make
it easier for retail shareholders to participate in the corporate
governance process. They also eliminate costs for venues,
transportation and physical security, while reducing carbon emissions
by removing the need for travel to in-person annual meetings.
Broadridge rolled out its VSM technology in 2009. In 2023 we hosted
2,425 virtual shareholder meetings, attracting more than 60,000
attendees. Because this technology helps increase shareholder
participation while also delivering real benefits to companies, we are
projecting continued growth for VSMs in 2024 and beyond.
Proxy voting apps are another innovation making it easier for retail
investors to cast their votes. Since its launch in 2021, more than
133,000 investors have downloaded Broadridge’s ProxyVote
App, which enables them to not only submit their votes and
confirm that their vote has been tabulated but also to preset voting
instructions to specify how they want to vote on common types of
proposals, including elections of directors and say on pay, among
others.
Rule Changes
Regulators are also taking steps to increase shareholder engagement.
Last year marked the debut of an important rule change from the SEC
intended to give retail shareholders more of a voice. Universal proxy
cards make it easier for shareholders to vote for the director
nominees they support, regardless of whether those nominees were put
forward by the company or by dissident shareholder groups. Under the
new rules, ballots produced by either side must list all nominees—not
just their own. Instead of having to support the full slate of
candidates from one side or the other, or attend a meeting to vote,
shareholders can now vote for nominees on an à la carte basis.
Giving Fund Investors a Voice in the Vote
In 2024, some of the world’s biggest asset management companies are
going a step further to facilitate shareholder engagement by launching
pilot programs for “pass-through
voting.”
Programs from Vanguard, BlackRock, State Street Global Advisors and
other asset managers provide various methods to give their fund
investors more say in how they cast votes of portfolio companies.
Since retail investors don’t directly own the shares of the portfolio
companies held in their mutual funds and ETFs, pass-through voting can
make their preferences known to asset managers, including on the
election of directors and shareholder proposals on climate and social
issues. This year, asset managers are reaching out to fund investors
in concerted communications campaigns and offering them a variety of
choices for pass-through voting. In most of these options, retail
investors do not need to review proxies and cast votes for every one
of the portfolio companies in their fund or ETF. Instead, they can
indicate or select the voting policy they prefer. Funds can then vote
the pro rata portion of the underlying equity shares according to the
investor’s policy selection.
Broadridge is also developing an alternative solution that will give
retail fund investors the direct ability to easily cast a vote on any
of the individual equities held in the fund. This new system, which
should be available in 2025, will incorporate voting preferences and
alert filters to help retail fund investors navigate the potentially
high volume of meetings.
All these corporate proxy enhancements are being tested and rolled out
gradually. The goal is to see which changes enhance the process and
encourage participation. I believe that for the corporate proxy
process, the outcome will be similar to the recent experience for
baseball fans with pitch clocks and robo-umps. Call it an investor’s
home run. It is fantastic to see America’s game evolving, right
alongside the trend of democratized investing in America. While we had
nothing to do with the former, we exist to deliver for investors on
the latter. Change can be scary at first, but in the end, smart policy
adjustments and technology innovation will lead to an improved
experience and better outcomes for everyone.
As President of Broadridge Financial Solutions, I’ve long been
fascinated by the way technology enhances the way the financial
ecosystem powers markets. Since I arrived in 2014, I have
helped direct a client first approach with our next generation
solutions for our clients essential but non-differentiated
services. We have reinvented our approach to serving the industry by
totally re-orientating our thinking to market segments; Asset
Management, Capital Markets, Wealth Management and Issuers. My
colleagues and I have helped transform the organization from a
portfolio of companies to a SaaS FinTech enterprise cloud-based
services provider. Previously, I worked at Thomson Reuters, where I
served as Global Managing Director of Risk for the Financial and Risk
Division.
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