New report suggests opening up the proxy market could dramatically cut costs
According to a report released by the Securities Transfer Association (STA), US corporate issuers could save between 40 percent and 50 percent on proxy distribution services if the market was opened up to more competition.
The report examines what companies are paying under the current system by looking at actual invoices, and compares that with the average pricing transfer agents have been quoting in handling proxy processing services for registered shareholders. The amount of cost savings in each example depended on the size of the issuer, the number of beneficial owner positions, and whether notice and access was used.
Under STA’s proposal, ‘the current proxy functions of beneficial owner list compilation and proxy distribution would be separated, providing issuers with the opportunity to select a proxy distributor of their own choosing... The prices for proxy distribution and communications services would be established by free market competition.’
The report examined only three issuers, however, leading one industry expert to question the veracity of the results. The survey was sent to six transfer agents, which between them account for slightly more than 90 percent of the proxy solicitation market. The full report can be found at www.stai.org
