Securities Transfer Association Analysis of Proposed NYSE Proxy Fee Schedule
Proposed fees increase costs for issuers
Flaws in the process used in developing the proposed fee structure
NEW YORK, July 12, 2012 /PRNewswire/ -- The Securities Transfer Association ("STA"), the industry trade association comprised of the transfer agents for over 12,000 large and small public companies in the US, announced the results of an analysis of the proposed fees for proxy distribution and communication as issued by the NYSE Proxy Fee Advisory Committee ("PFAC"). In reviewing actual invoices for 33 issuers of varying sizes, the STA found they can expect an average price increase of 7.43% on proxy distribution costs if the new fee structure is approved by the Securities and Exchange Commission.
While the PFAC's report does address several minor issues, it ultimately fails to address major concerns raised by issuers and regulators in recent years. The PFAC's proposals – which were not arrived at through an independent review – raise fees for most issuers and fail to properly address the managed accounts issue.
The STA is disappointed that the PFAC chose not to engage an independent third party to conduct an independent cost analysis prior to recommending changes to the NYSE proxy fee schedule, instead relying almost exclusively on data provided by a near-monopoly service provider, Broadridge Financial Solutions Inc., with very little information or analysis provided by independent sources or industry organizations.
"It's surprising that the PFAC didn't follow the NYSE Proxy Working Group's 2006 recommendation and engage an independent auditor," said STA President Charles Rossi. "We support proxy fees that reflect reimbursement for reasonable expenses, but those fees should be transparent and based on actual costs of proxy distribution and communication."
Specific findings related to the proposed fee structure in the STA analysis of the 33 issuer invoices are as follows:
- The proposed basic processing and intermediary unit fees result in an average increase of 4.90%
- The proposed suppression fees result in an overall average decrease of only 0.20%
- The proposed nominee coordination fees to be charged result in an average increase of 13.69%
- The proposed Notice and Access fees, which include charges for wrap fee accounts result in an average increase of 0.78%
The STA is also disappointed that the PFAC recommended that issuers continue to be charged proxy fees for separately managed accounts. This recommendation comes despite testimony before the PFAC that almost all beneficial owners in these managed accounts make a single election not to receive proxy materials and delegate all voting rights to the investment manager.
"Issuers shouldn't be charged for these account positions when the beneficial owners will never receive proxy materials and have delegated their voting rights to an investment adviser," said Thomas Montrone, STA Vice President and Assistant Secretary. "They should be charged for the single proxy package that is supplied to the adviser."
The STA's full analysis can be read at www.stai.org.
About The STA
The Securities Transfer Association, ("STA"), is an industry trade association, established in 1911, comprising 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.
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