bny mellon dr issue
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e Page
BNY Mellon Shareholder Meeting Handbook
2011 for Depositary Receipt Issuers
January 2011
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Table of Contents
Letter from Michael Cole-Fontayn, CEO, BNY
Mellon Depositary Receipts Division
Overview of the Depositary Receipts Division
Corporate Governance & Proxy Group
Recent Regulatory Developments
The Basics of the Proxy Process
The Process Flows of the Proxy Process
Other Relevant Considerations
Q & A Section
Glossary
BNY Mellon Depositary Receipt Corporate
Governance & Proxy Contacts
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We are pleased to present our Shareholder Meeting Handbook for the 2011
proxy season.
We expect that 2011 will continue to present corporate governance issuessimilar to those that were at the forefront of shareholder meetings last year.
The ongoing consequential effects of the global recession will continue to fix
close scrutiny upon directors remuneration, board independence and share
capital proposals. We also expect that company dividend policies will be
monitored closely by institutional investors as financial results recover or remain
in a laggard state, as the case may be.
2011 may well also result in a series of regulatory reforms to areas of the U.S.
proxy voting infrastructure which would most likely impact our clients in 2012.
We have been involved in the SEC consultation process on this issue and you
can read more detail on the range of issues for discussion on page 6 of the
Handbook.
Last year we successfully handled 411 shareholder meetings for clients from 43
countries. We are the only depositary bank that has a specialized team of
experts dedicated to the shareholder meeting process and the corporate
governance issues associated with it. You are encouraged to utilize the
resources of the Governance & Proxy Group and learn about the skill sets the
Group has to offer as you read the Handbook.
As with every interaction we have with our clients to best serve their needs,your Relationship Manager will provide valuable guidance, support, and
assistance in ensuring that your shareholders meeting proceeds smoothly.
I wish you a successful shareholder meeting for 2011.
Yours sincerely,
.
3
Michael Cole-Fontayn
Chief Executive Officer
BNY Mellon Depositary Receipts
Dear Valued Client,
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Overview of the Depositary Receipts DivisionCorporate Governance & Proxy Group
BNY Mellons Depositary Receipts Division has a dedicated Corporate
Governance and Proxy Group to facilitate proxy voting for holders of depositary
receipts (DRs)1. While other depositaries often process proxy events in their
general Corporate Action departments and view a shareholder meeting as a
process, our experience has shown that regional, national and company
differences can impact an issuers shareholder meeting. An issuer is therefore
better served by a dedicated team of specialists who understand the significant
role that local market practices can have on the exercise of voting rights by DR
holders, as well as the relevant corporate governance issues that might apply to
a clients shareholder meeting and the proposals under consideration.
Because of the international legal, regulatory and market attention now being
paid to the corporate governance practices of all companies in the aftermath of
the recent economic crisis, the annual general meeting (AGM) has taken on
added significance. For DR holders, the AGM is often the most publicly visible
governance event and the only opportunity to participate in the governance of
the company. For issuers, a shareholder meeting is a rare opportunity to
communicate with shareholders.
Institutional investors are increasingly active in the voting process (the voting
participation rate up 4.6% overall compared with 2009) and rely in a large part
on the voting recommendations given by global proxy advisory firms. There is
also institutional investor scrutiny of Board performance, executive
compensation, and the skills and qualifications of Board nominees.
Accordingly, the Group provides issuers with the dual benefit of having a
specialized team handling the core processing and administrative logistics of the
proxy event and a corporate governance team that contributes insight and
advisory services relevant to an issuers shareholder meeting. The structure
enables the Group to coordinate the delivery of a range of services that a client
may need to make its shareholding event successful.
DR Proxy Group services nominally include the printing and delivery of proxy
cards and associated documents, the official notification of exchanges (NYSE,
NYSE Amex) and clearing firms (DTC, Euroclear, Clearstream), and oversight of
the distribution process (physical mailings and electronic delivery).
Note: Throughout this document the term shareholder(s) is used at various times. Shareholder(s)
refers to the rights, powers and privileges of the holders of depositary receipts (whether in a registered
or beneficial capacity) and is not a reference to the shares issued by the non-U.S issuer in the non-U.S
issuers home market.
Institutional investors are
increasingly active in the
voting process and rely in a
large part on the votingrecommendations given by
global proxy advisory firms.
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BNY Mellon Shareowner Services (BNY Mellon SOS) is responsible for the
distribution of materials to registered holders and the tabulation of voting
instructions from all DR holders. Optional services include internet and
telephone voting for registered holders.
The Governance and Proxy Group can assist issuers by interacting as a local
agent for DR issuers with third-party firms. Institutional Shareholder Services
(ISS), Glass Lewis & Co. (Glass Lewis), and other proxy advisory firms canhave a dramatic impact on final voting results. While the Depositary cannot
have a position on any item to be voted upon, the Governance Group can often
facilitate direct contact between issuers and the analysts that make voting
recommendations. Also, the Governance Group maintains strategic
relationships with shareholder identification and investor relations firms that are
experienced with the nuances of DR programs and have the global coverage
necessary to also service local shares.
Regional Voting Studies
In 2010, the DR Corporate Governance and Proxy Group produced regional
voting analyses for each of Western Europe, Russia, Latin America and Asia.Each of the analyses contains a detailed examination of the voting
characteristics and trends for the 2010 shareholder meeting season as well as
insights into the influence of prominent proxy advisory firms on voting
outcomes. The analyses are available at www.adrbnymellon.com.
The Governance Groupmaintains strategic
relationships with
shareholder identification
and investor relations firms
that are experienced with
the nuances of DR
programs and have the
global coverage necessary
to also service local shares.
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U.S. SEC Proxy Concept Release 2010
The U.S. SEC has released a Proxy Concept Release (the Release) seeking
comment on structural reform to the U.S. proxy system. Broadly, the SEC is
interested to hear from market participants on a number of issues that go to theintegrity, accuracy, cost and complexity of the current proxy system. The Release
is available at http://www.sec.gov/rules/concept/2010/34-62495.pdf.
The DR Division consulted with members of our European Client Council in order
to ascertain their collective views in formulating a response to the Release (see
http://www.adrbnymellon.com/dr_pub_detail.jsp?linkNo=31076&areaId=30).
The major areas of comment are set out below.
Reform of the Indirect Holding System
The current U.S. securities settlement system (DTC) intermediates issuers fromtheir shareholders by requiring shareholder communication through a chain of
financial intermediaries (banks and brokers). The current system dates back to
the paper crunch in the 1960s where in order to clear and settle trades
efficiently a decision was made at that time to immobilize all securities at DTCC
by depositing paper certificates in custody accounts to allow book entry transfers
of claims on those accounts. This means that a shareholders securities are
registered in the name of the bank or broker with the consequence that only the
bank or broker knows the identity of the shareholder and the shareholder has no
property, contract or corporate law rights vis--vis the issuer. The bank or broker
can charge the issuer for information about the issuers shareholders and
accordingly becomes a necessary party in all issuer communications with their
shareholders. This results in added costs, complexity and opacity for shareholder
communication.
An argument can be made that since all securities are now required to be
dematerialized, that ownership transfers in uncertificated securities can take
place at the time of clearing and settlement in DTC rather than the current
system which is based on claims on certificated securities. Under the new
model, changes in ownership could be recorded directly on the books of the
issuer without the need for bank or broker involvement. If this change was made,
bank and broker intermediaries would process and communicate trading
information but not own securities and information about beneficial
shareholders. This model exists in Europe and the UK, for example. It enablesmore direct shareholder identification and communication.
Recent Regulatory Developments
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http://www.sec.gov/rules/concept/2010/34-62495.pdfhttp://www.adrbnymellon.com/dr_pub_detail.jsp?linkNo=31076&areaId=30http://www.adrbnymellon.com/dr_pub_detail.jsp?linkNo=31076&areaId=30http://www.sec.gov/rules/concept/2010/34-62495.pdfhttp://www.sec.gov/rules/concept/2010/34-62495.pdfhttp://www.sec.gov/rules/concept/2010/34-62495.pdf -
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Enhance the Direct Registration System (DRS)
A potential alternative to the wholesale reform of the indirect holding system is
better utilization of DRS. DRS enables a shareholder to move their shares from a
brokerage account and have those shares held in their own name on the books
of the issuer (or its transfer agent). Under the current operation of DRS,
uncertificated shares can be held in databanks managed by transfer agents for
issuers, but in order to be transferred, such shares must then be pulled into abrokers account where they are re-registered for clearing and settlement in
DTC.
An enhanced version of DRS linked to the clearing and settlement system would
enable transfers of ownership resulting from trades on securities exchanges to
be simultaneously recorded in the books of the issuer (or their transfer agent)
without the need to then distinguish between registered and beneficial owners
unless a shareholder intentionally chose to remain anonymous by purchasing
shares through a trust or some other fiduciary.
Preservation of the OBO/NOBO Distinction
At the heart of possible reform of the indirect holding system and DRS, noted
above, is the issue of identification of shareholders so that more direct and
effective communication can occur. The current ability for shareholders to
remain anonymous (OBO) (a large majority of large institutional investors are
OBOs) creates serious problems for issuers wishing to engage and
communicate with their shareholders. Moreover, even in the case of NOBOs, an
anomaly of the current U.S. shareholder communication rules requires issuers to
pay intermediaries for NOBO information and then communicate through those
intermediaries to all NOBOs.
Whilst privacy issues will always be raised in the context of arguing to preserve
the OBO/NOBO distinction, empirical evidence suggests that the governancecost of issuers not being able to engage with shareholders might well outweigh
preserving the distinction as it currently stands. The shareholder anonymity
issue has been addressed in other markets with a compromise being found that
permits issuers, utilizing regulatory permission, to periodically request the
identification of shareholders for the purpose of communicating with them.
Reform of the Market Structure for Proxy Distribution
This issue focuses on the current costs for proxy distribution that is currently
monopolized by Broadridge Financial Services. Distribution fees have not been
reviewed since 2002. Since that time the NYSE, who regulates the current fees,
has demutualized and become a public company and is now regulated by
FINRA. Two choices therefore present: have FINRA evaluate and regulate the
fees; or let the market set the fees (in an essentially unregulated environment).
Under the latter, the market would be opened to competition with providers of
proxy distribution services being granted access to shareholder information if
they were designated as the issuers agent for proxy distribution services.
In addition, there is a strong sense that fees should not be set with reference to
justifying fee levels based upon costs saved for a physical proxy mailing as is
currently the case. Rather, fee levels should be set based upon electronic
distribution costs given the realities of a world in which electronic
communication dominates.
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Proxy Advisory Firms
There needs to be greater oversight of proxy advisory firms due to their
significant influence and the fact that in some circumstances conflicts of interest
can arise where a proxy advisory firm acts for both an issuer and an institutional
investor client. Further, a code of conduct regarding communication with proxy
advisory firms may be required given that some issuers have reported an
unwillingness from proxy advisory firms to rectify incorrect information, orproxy advisory firms have purportedly sought to charge a fee to issuers in order
to exchange dialogue on issues arising from proxy voting recommendations.
Vote Confirmation
Investors are seeking confirmation from issuers that their proxy voting
instructions have been received. The need for confirmation has arisen as a
result of certain instances where voting instructions have gone missing as they
make their way through the chain of financial intermediaries.
The current U.S. proxy voting system does not lend itself well to vote
confirmation due to current concerns around the accuracy of shareholderrecords (particularly with reference to loaned shares). Accurate shareholder
records are a pre-condition to being able to confirm voting instructions.
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The Basics of the Proxy Process
This section provides clients with an introduction to key aspects and terminology associated with the proxy process.
Types of Firms involved in the Proxy Process
The Issuer
The issuer sets the agenda for the shareholder meeting, distributes information,gathers instructions from holders of ordinary shares, and conducts the
shareholder meeting.
The Depositary
BNY Mellon, as the issuer of DRs, distributes information and gathers
instructions from holders.
Distribution and Voting Agents
Most banks and brokers have outsourced proxy distribution to some extent and
only retain limited in-house support for the process.
In the U.S., over 95% of banks and brokers have contracted Broadridge
Financial Solutions (BFS) as their exclusive proxy distribution and voting
agent.
Outside the U.S., DRs are held through Euroclear or Clearstream and are
often serviced by internet voting platforms operated by Broadridge Global
and ISS.
Proxy Advisory Firms
ISS, Glass Lewis and others are contracted by institutional shareholders to makevoting recommendations on proposals presented at shareholder meetings. For
many institutional investors the proxy advisory firms are also retained to vote
proxies on their behalf.
Shareholder Identification Firms
Thomson Reuters, Capital Precision, IPREO and other Shareholder Identification
Firms specialize in identifying the ultimate beneficial owners of the shares. As
these efforts require 30+ days in most cases, ordering a shareholder
identification report is an often neglected first step in any investor relations
effort.
Proxy Solicitation Firms
BNY Mellon SOS, DF King, HQB Partners, Innisfree MA, Sodali, and other proxy
solicitation firms are often contracted by issuers to influence outcomes and/or
assist shareholders and their brokers through the voting process.
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Week 1
Types of Shareholders
Registered Shareholders - have their shareholder details recorded directly on the
depositarys books. Registered shareholders usually account for a very small
percentage of the shareholder base, because most shareholders buy, sell, and
hold their shares through a bank or brokerage firm. Registered shareholders are
serviced directly by the depositary.
Beneficial Shareholders - have purchased their shares through a bank or
brokerage firm, and their shares are held in the U.S. Clearing and Settlement
system, the Depositary Trust and Clearing Corporation (DTCC), in the accounts
of their bank or brokerage firm. Since the overwhelming majority of U.S. banks
and brokerage firms have employed BFS as their exclusive agent to service
underlying beneficial shareholders and lodge votes on their behalf, the
Broadridge Process has essentially become industry standard. BFS does make
certain information available to issuers and has several options for servicing
beneficial holders (pages 22-23), but the basic process, and the fees, are
primarily set by regulatory entities in the U.S.
Non-U.S. shareholders often hold their shares through a bank or brokeragefirm in the European clearing and settlement systems, with the key clearing and
settlement agents being Euroclear and Clearstream. Unlike in the U.S., where
participant banks and brokers use BFS to service beneficial shareholders, in
Europe, Euroclear and Clearstream themselves are the primary conduits for the
delivery of shareholder voting instructions to beneficial shareholders.
Timing Requirements
NYSE- and NYSE Amex-listed programs - NYSE and NYSE Amex exchange
rules require 10 days advance notification of the record date for a shareholder
meeting and recommend 30 days between the record date and the date of the
shareholder meeting. In order to prepare shareholder materials and order thenecessary searches to determine the number of shareholders who will require
materials, the depositary requires a minimum of 40 days notice before the
meeting date.
NASDAQ and Over-the-Counter (OTC) programs There is no record date
notification requirement as for NYSE-listed programs. However, the depositary
must still prepare shareholder materials, obtain necessary searches, and work
within the constraints of the timing requirements of third parties. The
depositary therefore requires a minimum of 35 days notice before the meeting
date.
Unlike in the U.S., where
participant banks and
brokers use BFS to service
beneficial shareholders, in
Europe, Euroclear and
Clearstream themselves are
the primary conduits for the
delivery of shareholder
voting instructions tobeneficial shareholders.
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Rule 144A Programs There is no record date notification requirement as for
NYSE-listed programs. However, the depositary must still prepare shareholder
materials, obtain necessary searches, and work within the constraints of the
timing requirements of third parties. While a typical DR holder under a Rule
144A program often has a relationship with a bank or broker that can enable
quick notification of a shareholder meeting and voting, the process remains the
same. The depositary therefore requires a minimum of 30 days notice before
the meeting date.
Regulation S Programs Many Regulation S programs are processed through
Euroclear and Clearstream, and almost all have large Euroclear and Clearstream
holdings. As Euroclear and Clearstream both use electronic platforms to
communicate with shareholders, the process is somewhat quicker. The
depositary requires a minimum of 20 days notice prior to the meeting date, and
we suggest 30 days where possible.
Custodian Timing Requirements
Often, in order for the depositary to submit voting instructions from DR
shareholders, those instructions must be submitted to custodians in the homejurisdiction of the issuer. Custodians impose their own deadlines upon the
depositary for the receipt of voting instructions. Those deadlines can range
from two days to as many as 10 days before the date of the shareholder
meeting. Failure to meet the deadlines can result in the voting instructions from
DR shareholders not being admitted at the shareholder meeting. Your
Relationship Manager can advise you as to the particular custodial timing
requirements that apply.
Adherence to timing requirements benefits shareholderparticipation rates
The importance of giving shareholders enough time to vote cannot beoverstated. Year-on-year analysis of voting data indicates that if issuers allow
DR shareholders a proper period of time to receive voting materials, consider
them, and provide voting instructions, they have markedly improved
participation rates.
The importance of giving
shareholders enough time
to vote cannot be
overstated. Year-on-year
analysis of voting data
indicates that if issuers
allow DR shareholders a
proper period of time toreceive voting materials,
consider them, and provide
voting instructions, they
have markedly improved
participation rates.
Average Percentage Return by Time Period Given to Beneficial Shareholders to Vote
41.89%
50.66%46.18% 45.84%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
1 - 5 6 - 10 11 - 15 16 +
VoterResponse(%
)
Response Time (Days)
Overall Voter Participation in all Regions
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The Process Flows of the Proxy Process
Process Overview
The distribution of DR voting materials involves those materials passing through
layers of bank and broker participants who hold their clients shares in
International Central Security Depositories which are, in effect, the network of
international clearing and settlement systems.
American depositary receipts (ADRs) clear and settle exclusively in the U.S.
clearing and settlement system. These types of programs often have the most
intermediaries, require printing and hard-copy mailings, and can be subject to
the additional requirements of U.S. exchanges. They therefore tend to require
significantly more processing time than global Depositary Receipt (GDR, or
Regulation S) programs which utilize the electronic distribution services
facilitated by the two European clearing and settlement parties, Euroclear group
and Clearstream.
ADR Process Overview
Any ADR that has a significant number of DRs outstanding requires processing
through BFS.
BFS is the exclusive agent employed by most banks and broker-dealers in the
U.S. to handle distribution and voting for securities.
BFS covers approximately 95% of the U.S. market share of all broker-dealers.
BFS has two platforms, U.S. and Global. Broadridge (U.S.) is the primary
distribution and voting agent servicing the overwhelming majority of beneficial
holders and interacts with many other institutions and voting platforms.
Broadridge Global provides electronic distribution and internet voting for a
portion of the DR program held by Euroclear and Clearstream, as well as a
portion of ordinary shares. The coverage varies, as BFS has significantly less
market share of broker-dealers outside the U.S. ISS, primarily an advisory firm,
operates Internet voting platforms in the U.S. and Europe to facilitate voting for
its institutional clients.
While the ISS platform is only for underlying holders that pay for the service, the
Broadridge Global platform can be enabled by the issuer (page 13) and can also
service ordinary shares.
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The chart below depicts the distribution and vote-collecting network for an ADR
program.
GDR Process Overview
Most Regulation S GDRs are held entirely in the clearing and settlement
systems of Euroclear and Clearstream. Both have developed an electronic
system to distribute relevant voting materials to their member banks and
brokers. In addition, a number of third party vendors offer certain value-added
specialized voting services to one or more of issuers, banks and brokers and
investors over and above the standard services offered by Euroclear and
Clearstream.
Broadridge Global operates an internet voting platform that services the holders
of 31 member firms, while ISS offers a similar product direct to underlying
holders of almost any firm. Broadridge Global indicates that its International
Shareholder Communication Program for issuers provides quick distributions,
proactive broker-dealer outreach, and preliminary tabulation information.
Of course, the most effective option for communicating with shareholders for
both ADR and GDR programs remains specialized proxy solicitation firms.
Issuer The Depositary
RegisteredHolder
Broadridge(US)
Bank/Broker(JPM /Citibank)
Euroclear (via JPMorgan / Clearstream(via Citibank)
ISS EuropeanInternetPlatformBeneficialHolder
BroadridgeGlobal InternetPlatformBeneficialHolder
Bank/Broker BeneficialHolder
BeneficialHolderBeneficial
HolderISS
US InternetPlatformBeneficialHolder
ProxySolicitationFirmNon-BroadridgeBank/Broker
BeneficialHolder
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The chart below depicts the distribution and vote-collecting network for a GDR
program.
Beginning-to-End View of the U.S. Process
Stage 1 Meeting date and type is available
The depositary notifies the relevant U.S. exchange of the shareholder
meeting date and U.S. record date (if applicable).
The Depositary Trust & Clearing Company (DTCC) is notified of the
shareholder meeting date and type.
If the issuer does not hire a proxy solicitation firm (page 18), Proxy Services
Corporation, a specialized agent, is retained by BNY Mellon. A proxy
solicitation firm (if hired) or Proxy Services Corporation delivers the
shareholder meeting materials to BFS for onward distribution to beneficial
shareholders holding shares through a bank or broker in DTCC.
BNY Mellon SOS is notified and will distribute shareholder meeting materials
to registered shareholders.
Stage 2 Meeting resolution/agenda are available
The depositary prepares a draft of the proxy card for registered shareholders,
and the Relationship Manager sends the draft to the issuer for
review/approval.
Issuer The Depositary Bank/Broker
ISSEuropean InternetPlatform
Beneficial Holder
Broadridge GlobalInternet Platform Beneficial Holder
Bank/Broker Beneficial Holder
Euroclear (via JPMorgan /Clearstream(via C itibank)
Broadridge GlobalInternet Platform Beneficial Holder
Bank/Broker Beneficial Holder
Beneficial Holder
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Stage 3 The proxy card and any additional documents are approved for
distribution
The voting deadline, or cutoff, is firmly set. This is the final date by which
all voting instructions must be received by the depositary for them to be
included at the shareholder meeting. This date and time is contingent upon
local requirements and matters relating to the lodging of the vote with the
custodian in the home jurisdiction. It is set by the Relationship Manager and
is normally at least one business day prior to the day that the final tabulation
of voting instructions is required.
The depositary facilitates the printing (if needed) and/or delivery of any
additional shareholders meeting materials.
The issuer must decide whether to employ a management
recommendation or default (see Questions and Answers, page 25).
IMPORTANT: BFS is permitted by SEC regulation to mail shareholder meeting
materials five (5) business days after it is in receipt of all materials. Therefore, it
is not uncommon for the actual mailing to take as long as seven-to-eight
calendar days after approval of the proxy materials and associated documents.
Stage 4 Shareholder meeting materials are printed and delivered
BNY Mellon SOS distributes shareholder meeting materials to registered
shareholders .
For beneficial shareholders BFS distributes materials to beneficial holders
directly via mail or electronic delivery.
Stage 5 - The period between distribution to shareholders and tabulation of
voting instructions
Registered shareholders submit votes directly to the depositary.
Beneficial shareholders submit votes directly to BFS, which then transmits
votes to the depositary.
Stage 6 After the voting cutoff/deadline
The depositary undertakes a quality control check of tabulated voting
instructions to ensure that no bank or brokerage firm has attempted to
submit instructions for more shares than they actually owned on the record
date.
The depositary converts the number of DRs represented by voting
instructions from both registered and beneficial DR shareholders into local
shares (based on the appropriate ratio) and reviews the voting section of the
relevant deposit agreement. Your Relationship Manager can answer any
questions regarding the voting section of the deposit agreement.
The final vote representing the voting instructions of all DR shareholders is
submitted at the shareholder meeting. Normally, the voting instructions are
submitted to a custodian in the home jurisdiction of the issuer where the
custodian, in turn, facilitates the formal representation at the shareholder
meeting. Your Relationship Manager can discuss the process that applies to
your program.
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Beginning-to-End View of the European Process
For shareholders whose DRs are custodized in Euroclear or Clearstream, the
process is very different. Two variations of the process are possible.
Type 1 Part European Component
Most programs have a European component, with Euroclear and Clearstream
custodizing through DTC participants JPMorganChase (JPM) and Citibank.
When proxy solicitation is conducted as part of the U.S. process, BFS notifies
the custodians of JPM and Citibank, who in turn notify Euroclear and
Clearstream.
Once notified, Euroclear and Clearstream initiate a largely electronic process
that notifies their bank and broker participants and collects voting
instructions.
The shareholder meeting materials most holders will see are PDF files of the
proxy card and any additional materials as mailed to U.S. and Canadian
holders.
Voting instructions are largely communicated through the Society for
Worldwide Interbank Financial Telecommunication (SWIFT) system, until
the instructions reach JPM and Citibank electronically.
JPM and Citibank lodge the vote with BFS.
BFS lodges the vote with the depositary.
Type 2 Entire European Component
Most Regulation S programs are entirely European, with Euroclear and
Clearstream custodizing shares with BNY Mellon London as Common
Depositary.
When proxy solicitation is conducted as a stand-alone European process, thedepositary prepares the proxy card and works with the issuer to finalize any
associated documents.
BNY Mellon then notifies Euroclear and Clearstream.
Once notified, Euroclear and Clearstream initiate a largely electronic process
that notifies bank and broker participants and collects voting instructions.
The shareholder meeting materials most holders will see are PDF files of the
proxy card and associated documents. There are no print requirements.
Voting instructions are largely communicated through the SWIFT system,
until the instructions reach the depositary electronically.
Unlike the U.S. process, the European process often proceeds without the direct
involvement of the issuer, does not require the printing and mailing of hard copy
materials, and incurs fewer costs. Also, underlying shareholder information is
not readily available, and issuers that wish to increase participation or
communicate directly with underlying holders often encounter difficulty.
When proxy solicitation is
conducted as a stand-alone
European process, the
depositary prepares the
proxy card and works with
the issuer to finalize any
associated documents. BNY
Mellon then notifies
Euroclear and Clearstream.
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Shareholder identification efforts in Europe often require 30 days to generate a
list of shareholders. In some instances, issuers will benefit from the hiring of a
proxy solicitation firm (page 18) or shareholder identification firm (see
Questions and Answers, page 27). For a proxy solicitation firm to be successful,
it needs time for shareholder identification and experience in the local markets
where shareholders reside.
While many proxy solicitation firms will employ Broadridge Global, this service
can also be coordinated with the assistance of the depositary. Your Relationship
Manager can help with the hiring of a solicitation firm, a shareholder
identification specialist, or Broadridge Global.
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In order for a proxy
solicitation firm to be
successful, it needs time for
shareholder identification
and experience in the local
markets where
shareholders reside.
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Other Relevant Considerations
BNY Mellon and other vendors also offer a number of value-added services, separate and distinct from the core shareholder meeting servdescribed in the preceding pages. These services are designed to help clients address a variety of different needs that may arise in relationtheir shareholder meeting.
1. Proxy Solicitation
Proxy solicitation firms offer value-added services to issuers with DRs and local
shares before, during, and after the voting process. Employing their services can
be the most effective way to increase overall participation and influence
outcomes on specific proposals.
Globally, it has become increasingly common for issuers to employ the services
of a proxy solicitation firm as a standard part of the shareholder meeting
process. A number of factors create demand for the service: an international
shareholder base with shares held through multiple custodians across
numerous jurisdictions; increasing shareholder appetite for exercising corporate
governance rights by voting their shares; shareholder activism around executive
compensation plans and Board nominations; and the significant influence that
the voting recommendations of proxy advisory firms can have on the votingbehavior of institutional investors. While some issuers have extensive investor
relations departments that can provide some of the critical interface with key
shareholders around the shareholder meeting, many issuers find it
advantageous to employ a specialist. In cases such as proxy contests or
complex corporate actions, use of a proxy solicitation firm can become essential.
For DR programs, most issuers do not have extensive U.S.-based investor
relations assets with experience in Western markets. The depositary, unlike
issuers and their other agents, can enable shareholders to have their shares
represented at a shareholder meeting, but cannot encourage their participation
or advocate a position on how holders vote on specific proposals.
Therefore, when a DR issuer wishes to increase participation or influence
outcomes, a proxy solicitation firm experienced in DRs is the best option.
In past years, The DR Division has worked with a number of proxy solicitation
firms, including The Altman Group, DF King, HQB Partners, Innisfree M&A,
Mackenzie Partners, Sodali and others. These firms also have various levels of
expertise when dealing with special voting requirements and tend to develop
geographic specialties when servicing local shares.
We will be modifying the approach we take to proxy solicitation services
provided on behalf of our clients in 2011. We are currently undertaking a
Request for Proposal (RFP) process with proxy solicitation firms with a view toidentifying preferred providers of proxy solicitation firms in particular geographic
regions and then monitoring the service such providers deliver to clients who
chose to contract with them.
We believe that such an approach will result in a more effective matching of
client needs to a given proxy solicitation firms capabilities and expertise in a
clients market, as well as providing quality assurance of the end-product that
proxy solicitation firms provide to our clients.
While some issuers have
extensive investor relations
departments that can
provide some of the critical
interface with key
shareholders around theshareholder meeting, many
issuers find it advantageous
to employ a specialist. In
cases such as proxy
contests or complex
corporate actions, use of a
proxy solicitation firm can
become essential.
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2. Shareholder Identification Reports
Studies have shown that the success of a proxy campaign relies on the issuers
ability to encourage shareholders to vote. The first step in encouraging investor
participation is identifying your shareholders this is key. Whether the issuer
chooses to use the service of a proxy solicitation firm, a Shareholder
Identification Report is essential to identify the current holdings of investors who
maintain voting rights, to provide insight into the proxy voting tendencies of
your investor base, and to include contact information for each shareholder. Acurrent and accurate Shareholder Identification Report will produce a more
effective solicitation effort by investor relations personnel and/or a proxy
solicitation firm.
Shareholder identification firms such as Thomson Reuters, IPREO, Capital
Precision, The Altman Group, DF King, and others require approximately 30
days to generate an effective report. Since this report is used in planning the
solicitation effort, it needs to be finalized 20-30 days prior to a shareholder
meeting. Therefore, shareholder identification is usually the first action an
issuer would need to take to enable investor relations personnel and/or a proxy
solicitation firm to mount a large campaign later in the process. Without a
Shareholder Identification Report, should a proxy solicitation firm be employed
by the issuer, limited solicitation services can only be facilitated through
quarterly public filings made by certain institutions or semi-annual mutual fund
unit/investment trust disclosure.
3. Proxy Advisory Firms
From 2007 to 2010, representation at shareholder meetings by DR holders
remained high. This demonstrates an increasing desire by DR holders to
participate in the corporate governance of their company.
While current market conditions have led to investors paying more attention totheir portfolios in general, these same market conditions that can have an affect
on if a shareholder votes can also affect how a shareholder votes.
Normally, most votes are lodged in aggregate at the broker-dealer level with
hundreds of instructions from different sources combined. This practice does
not permit a true analysis of voting behavior of different types of holders as
instructions from all potential classifications are commingled at the source.
However, even the high-level tabulation data available can quantify the overall
influence of a Proxy Advisory Firms such as ISS and Glass Lewis.
The role of ISS is to perform analyses of proposals and issue voting
recommendations to their clients that hold shares in the companies they
analyze. In many cases, they will also vote on behalf of these clients. Generally,
ISS is considered the most influential of these firms with Glass Lewis second.
Studies have shown that the
success of a proxy
campaign relies on the
issuers ability to encourage
shareholders to vote. The
first step in encouraging
investor participation is
identifying your
shareholders this is key.
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Based on our experience, ISS tends to encourage direct contact between
themselves and issuers as part of the process when formulating
recommendations on proposals. They have internal guidelines on some types of
issues, but direct issuer involvement can help clarify matters and prevent a
negative recommendation based upon limited information which can often be
the result for DR issuers.
ISS suggests meetings between issuers and advisors should take place in the
off-season and well before the shareholder meeting. However, in practice, these
meetings often take place just a few weeks before an annual shareholder
meeting. Generally, ISS is open to direct contact via phone, face-to-face
meetings, and/or e-mail. An experienced proxy solicitation firm can make
arrangements for such contacts, but for those firms that do not employ a
solicitation firm, with certain limitations, the depositary can make these
arrangements on behalf of our issuers.
Based on our experience with Glass Lewis, they have less direct issuer contact
and do not speak to issuers once the proxy has been made public, and any
contact at that time is conducted by a conference call that will include some
underlying beneficial holders, including dissident shareholders, if any.
The Governance Group can often facilitate direct contact between a
representative of the issuer and the advisory team of analysts that make voting
recommendations.
4. Independent Inspector of Vote Tabulations
IVS Associates, Inc. (IVS) and American Elections Services (AES)
independent tabulation certification firms, may be contracted by the depositary
on behalf of the issuer to certify the final tabulation of contested proxy
solicitations, and/or meetings with controversial proposals on the general
meeting agenda. IVS and AES provide independent audit and vote tabulation
and monitor the DR Divisions adherence to relevant internal procedures. This
service can be requested by any issuer for any type of shareholder meeting.
5. Printing
While the printing of the proxy card for registered holders and the Voting
Instruction Form (VIF) is part of the basic process with few options available,
the printing and delivery of any additional materials to be sent to DR
shareholders is decided by the issuer. Physical documents often printed for DR
shareholders on behalf of issuers include:
Annual Reports Most issuers print their annual report themselves for local
shareholders and deliver copies to the depositary for DR shareholders,
rather than initiate a less cost-effective second printing. The NYSE and
NASDAQ rule changes now permit annual reports to be posted online,
subject to fulfillment requirements for those shareholders who request
physical copies. Often, an issuer that is subject to these rules will fulfill such
requests itself or warehouse a small number of reports in the U.S. However,
in a few cases, it is advantageous to print-on-demand as the requests are
made. Your Relationship Manager can be helpful in determining which
fulfillment options are available for your program.
An experienced proxy
solicitation firm can make
arrangements for such
contacts, but for those
firms that do not employ a
solicitation firm, with
certain limitations, the
depositary can make these
arrangements on behalf of
our issuers.
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Dear Shareholder Letter Although no hard data is available, it is
generally believed that many shareholders pay far more attention to a Dear
Shareholder letter that accompanies the proxy card and seeks to explain in
a less formalistic manner the technical details of the proposals set out in the
Proxy Statement. If an issuer has a recommendation or specific message
they wish to impart to shareholders, often a Dear Shareholder letter can
be effective.
Proxy Statement While many issuers choose to post this information
online, a number of DR issuers (and U.S. issuers) prefer to print and mail it
for internal policy reasons.
There are many options for printing, and the cost is based upon the number of
pages, the thickness of the paper, the number of items being printed, and the
process employed. Color printing can be far more expensive than black-and-
white, and heavier paper tends to be more expensive to mail.
A few issuers choose to print any additional documents themselves and deliver
them to the depositary. Your Relationship Manager can help with any customs
issues and provide a delivery destination based upon the process being
employed. The depositary, when arranging the printing of additional materials,
can be helpful in selecting the most appropriate and/or cost-effective option.
6. Registered shareholders options
Registered shareholders are serviced directly by the depositary by mail. For
issuers that wish to increase participation, provide additional voting options,
reach holders sooner, or enhance the experience of voting, BNY Mellon offers
several optional processing services.
Mail Options
Bulk When a program with a large number of registered holders hassufficient time, USPS Standard A, or Bulk Mail, can be a very effective cost-
saving option.
First-class USPS First-Class Mail is employed in many cases, as it isappropriate for small and large programs and gets the material to
shareholders in just a couple of days.
Overnight When time is short, or to increase participation, some issuerswill choose to employ an overnight mail option for all, or some, shareholders.
The costs associated with overnight mailing can be $10-20 per holder,
depending upon the type of service and whether the overnight option is one-
way or two-way.
Stratified Often, an issuer will choose different mail types for differentlevels of share ownership. While a stratified mailing is less common for
registered shareholders than it is for beneficial shareholders (see next
section), it can be employed in the same fashion.
Telephone Voting Telephone voting is available as a stand-alone product or as
part of a combined Internet voting service. In addition to set-up fees for the
service selected, the costs associated with telephone voting are determined by
the number of holders who choose to employ it.
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If an issuer has a
recommendation or specific
message they wish to
impart to shareholders,
often a Dear Shareholder
letter can be effective.
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Internet Voting Internet voting is available as a stand-alone product or as part
of a combined telephone service. The costs are determined by the set-up fees
for the service selected and the number of holders who employ this option.
Telephone and Internet voting have several variations and often have other
considerations, such as hard-copy fulfillment obligations for annual reports
and/or proxy materials.
Through a dedicated service provider, issuer clients are offered electronic voting
(telephone and internet) applications. Both are custom branded for the issuer the website displays the issuers logo and color scheme and provides space for
issuer messaging to the shareholder including the board or management
recommendation. A unique toll-free number is assigned to each issuer and the
telephone system greeting plays the issuers name and meeting type. Both sites
offer the option for voting with management. Votes are captured in real-time
and online vote results reports are automatically updated. The website displays
the meeting date, time and location and can capture comments, address
changes and prompt for e-delivery consent. The phone system can also capture
meeting attendance. Both telephone and internet voting sites confirm the
shareholders vote record and an email confirmation can be sent for internet
votes. All of this information is reported via online reports so the issuer has
immediate access to the information.
7. Beneficial shareholders options
BFS
Searches:
Preliminary Search A preliminary search provides the total number ofbeneficial shareholders, the number who need proxy materials, and the
number who have consented to receive materials by e-mail. The primary
purpose of a preliminary search is to estimate print quantities.
Record Date Search A record date search gathers detailed information. Itsprimary purpose is to prepare for the distribution of proxy materials and
information to beneficial shareholders as of the record date.
Once a record date search has been performed, some information and
shareholder identification products become available to the issuer. These
include:
BFS Reports:
NOBO List - Non-Objecting Beneficial Owners (NOBOs) are those beneficial
shareholders who have not objected to their bank or broker sharing account
information with issuers. A current NOBO list can be ordered at any time and
usually captures a record date within two business days. Also, a NOBO list may
be ordered retroactively for any record date from a prior search and is often
ordered as of the record date for the shareholder meeting as part of a larger
proxy solicitation effort.
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Geographic Analysis (GEO) is often ordered as part of a shareholder
identification effort in conjunction with a shareholder meeting. Geographic
analysis can also be helpful in obtaining information about the shareholder base
in connection with local foreign ownership regulatory limits, in obtaining some
Form 20-F items, and in targeting any investor relations efforts. There are two
types of GEOs, U.S. and Canadian, and they show how many holders and shares
are reported to BFS from each U.S. state (or Canadian province) as well as the
total number of holders and shares owned by entities outside the U.S. (or
Canada).
Share Range Analysis A share range analysis can be generated from any
record date search and will show how many accounts exist within certain share
ranges. These reports come in two main varieties, pre-suppression and post-
suppression, which will either report on the entire shareholder base or just those
that require hard copy in proxy mailings. Custom share ranges can be set by the
issuer if the standard breakdown does not suffice. Post-suppression share range
analyses are often useful when determining costs associated with overnight and
stratified mail options.
Voted/Unvoted NOBO List - A voted/unvoted NOBO list can be ordered as a
follow-up to a record date NOBO list and will give the voted status of NOBO
accounts during the voting process. Please note that how these holders havevoted on proposals is not included, only whether they have voted their position.
BFS Distribution Options:
Telephone and Internet voting are part of the BFS process and are not
presented as optional services.
Alternate processing options, such as Notice and Access are available to DR
issuers.
Bulk mail is significantly less expensive for large programs than most other
options, but requires additional processing time to be effective.
First-class mail is appropriate for most situations and is often employed.
There are several overnight options available for $10-20 per package sent.
Stratified mailings occur when different mail options are employed for
holders depending upon their level of ownership. A typical example would
be to service all shareholders of over 10,000 shares by overnight mail and all
others by first-class mail, but other mail options and other share-breaks are
also viable. When contemplating a stratified mailing, the first step is to
inquire as to the numbers of holders above and below several thresholds.
Electronic distribution is an option for the underlying holder and records are
maintained by BFS. An issuer can choose whether, or not, to service these
holders by e-mail or send a hard copy instead. However, these holders onlyrepresent a portion of the shareholder base, so a hard-copy mailing cannot
be avoided when servicing holders that have not elected to receive e-mail
notifications.
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DTCC
DTCC is the national clearinghouse in the U.S. for the settlement of trades in
corporate and municipal securities, and it performs asset services for its
participating banks and broker/dealers. For proxy solicitation, DTCC is viewed
as the official record-keeper of share positions held by banks and brokers as of
the record date.
DTCC Reports:
DTCC Security Position Report (DTCC list) A DTCC list is a list of the shares
held by each bank and broker as of a given date. DTCC lists can be ordered as of
any business day, and for most programs, information is available as far back as
six years, although only the last two years can be ordered online and obtained
within a few hours. A DTCC list is initially ordered as part of the shareholder
identification process.
DTCC Subscriptions Some issuers prefer to maintain current records of their
shareholders and wish to order a series of reports at regular intervals. Usually,
in these cases, it is more cost-effective to order a subscription instead of
individual reports.
Your Relationship Manager can help facilitate the hiring of proxy solicitation and
shareholder identification services, obtain third-party tabulation certifications,
arrange for the printing of documents, set up telephone and Internet voting for
registered holders, and choose the best delivery method of hard-copy materials
for your program.
8. Employee Share Plans
Each issuer may have Employee Plans that participate in an AGM with full voting
rights and we have integrated our proxy processes to include them when the
plans are administered by BNY Mellon SOS. For external plan sponsors, this can
be coordinated through our specialized electronic vendor (Mediant
Communications) and may include internet voting, tabulation and lodging votes.
Your Relationship Manager can advise you on the most effective process.
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Q & A Section
Do all DR programs extend voting rights to shareholders?
No. The requirement for an issuer to obtain voting
instructions from DR shareholders can derive from
applicable U.S. exchange requirements and/or the issuers
home country requirements. Listing requirements of the
NYSE require issuers to solicit proxy voting instructionsfrom shareholders. NASDAQ allows issuers to follow home
country practices, provided appropriate disclosure is made
to NASDAQ and in the issuers Form 20-F. OTC programs
and Rule 144A and Regulation S programs are not subject to
any U.S. requirements regarding the solicitation of proxy
voting instructions.
DR voting provisions are contractual and are set out in the
Deposit Agreement. Voting rights therefore vary from
issuer to issuer. A large number of non-NYSE listed DR
issuers extend voting rights and therefore obtain voting
instructions from DR shareholders because of home market
requirements or because they regard it as important to
involve DR shareholders in the governance of the issuer.
Can a holder of depositary receipts attend a shareholder
meeting?
Unless the Deposit Agreement provides the DR shareholder
with the specific right to attend the shareholder meeting,
meeting attendance is at the discretion of the issuer. A DR
holder can never simply show up at a shareholder meeting,
since the meeting is for local shareholders. Therefore,
meeting attendance in any form needs to be approved bythe issuer.
Attendance itself can take two forms. In the first, known as
auditing the meeting, the DR holder can go to the meeting,
but has to have voted via the depositary in the normal
course earlier in the process. This requires the depositary
facilitating the request for the issuer, which always involves
proof of record date ownership and a determination of what
type of identification is required at the door for entry into
the meeting.
The second form of meeting attendance, which entailsattending the meeting and actually voting the local shares
represented by the depositary receipts, is more complex,
since these local shares are held in the name of the
depositary. In this instance, a power-of-attorney, or another
local market process, is required to attend and vote at the
meeting.
If any holder asks to attend a meeting, your Relationship
Manager will contact you.
What is Broadridge Financial Solutions (BFS)?
BFS, formerly Automatic Data Processing (ADP), is the firm
employed by the overwhelming majority of U.S. banks and
brokers to service their underlying clients (beneficial
shareholders). The process and their fees are SEC-
regulated and apply across the industry for all issuers,whether listed or not. BFS also has a global division,
Broadridge Global, with a different business model that
offers services to issuers to increase participation by
shareholders outside the U.S. who hold their local shares
and DRs. The U.S. process is described in detail on page 12.
What is a management recommendation, and why is it
important?
It is common for U.S. issuers to state the voting
recommendation of the Board of Directors and/or
management of the company on the proxy card and othervoting documents. Similarly, on many electronic voting
platforms (e.g., the BFS voting platform), shareholders are
given a click option to vote all their shares with
management. An issuer can stipulate whether a
management recommendation will be provided or not.
Your Relationship Manager can speak with you about this
matter in further detail.
What is a default?
A default instructs vote tabulators how to treat any
unmarked proposal on any otherwise valid proxy card,
resulting in balanced tabulations with equal numbers of
shares voted on each proposal. Issuers have the option of
defaulting an unmarked proposal to a voting instruction
For (management) or electing that such a proposal be
treated as not voted.
What is the difference between a proxy card and a VIF?
A proxy card is the paper voting document used for
registered shareholders that is created by the depositary in
consultation with the issuer. A VIF is the paper voting
document used for U.S. beneficial shareholders that is
created by BFS so that the clients of U.S. bank andbrokerage firms can provide voting instructions.
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Can non-traditional voting options be processed in the
U.S.?
Yes, in most cases. While some platforms are committed
to the For, Against, and Abstain option for each
proposal, for DR issuers, the Abstain option is not always
applicable to a Yes/No choice. Cumulative voting for
directors and conditional voting (a choice of five out of
seven auditors, for example) can also be processed, but
they have some limits.
Why does the preliminary broker search identify fewer
sets of materials than there are DR holders?
To prevent an unnecessary number of shareholder materials
from being mailed, U.S. regulation permits paper mailings to
be eliminated if relevant bank and brokerage firms can
establish that certain requirements have been met. In
general terms, mailings can be eliminated if beneficial
shareholders have consented to electronic delivery, have
granted voting authority to their broker or investmentmanager, or if multiple shareholders reside at the same
residence.
What are e-consents?
E-consents refer to beneficial shareholders who have
previously advised BFS to deliver materials to them
electronically. The depositary provides BFS with PDF files
suitable for e-mail distribution. Through BFS, an issuer can
obtain e-consents from beneficial shareholders. Your
Relationship Manager can discuss this with you.
Do all meeting-related documents need to be printed and
mailed to all DR holders?
No. Annual reports can be made available electronically on
an issuers website. Shareholder voting materials can also
be made available electronically, provided shareholders
receive a paper notice advising them of the electronic
location of those materials. It is important to note the
distinction between making shareholder meeting materials
available electronically and the actual electronic delivery of
those materials. Shareholders who have consented to
electronic delivery actually receive electronic files of all
shareholder meeting materials. If shareholder meeting
materials are available electronically, shareholders are
entitled to request paper copies of those materials free of
charge. Your Relationship Manager can help with any web-
hosting of shareholder meeting materials and/or fulfillment
requests for paper copies of materials.
Once all meeting materials are approved, how long does it
take to distribute them to DR holders?
Since registered shareholders are known to, and serviced
by, the depositary, the physical mailing is within the
depositarys control and can be processed in a timely
fashion. Beneficial shareholders are serviced by BFS, which
has a statutory five-business-day window to mail. If a
weekend intervenes, the process will take seven days, after
the delivery of all meeting materials to BFS.
What options are available for mailing?
There are many variations, but essentially the choices come
down to bulk, first-class, overnight, and overnight with
overnight return. Bulk options are cost-effective for large
mailings, but require time and planningusually a week or
more than other options to work effectively. First-class mail
is often the most appropriate option for depositary receipt
timeframes and is really quite fast. Overnight options are
very expensive and very effective, but are typically onlyemployed for a few holders in special situations (see
Stratified Mailing below).
What is a stratified mailing?
A stratified mailing occurs when different mail options are
employed for holders depending upon their level of
ownership. A typical example would be to service all
holders of over 10,000 shares by overnight mail and all
others by first-class mail, but other mail options and other
share-breaks are also viable. When contemplating a
stratified mailing, the first step is to inquire as to thenumbers of holders above and below several thresholds.
What is a reminder mailing?
A reminder mailing is a follow-up mailing that occurs after
the primary mailing. Unlike the initial mailing, there is no
requirement that all holders be serviced, and often a
reminder is only sent to a portion of the top. Also, typically
this mailing would only include a proxy card (or VIF) and a
letter, rather than an entire new set of materials. Generally,
beneficial and registered shareholders can be reached by
mail within two-to-three business days.
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Is preliminary vote tabulation information available?
Yes, but most holders and most brokers do not report until
the very end of the voting period, so often preliminary
tabulations do not accurately reflect final participation.
When can final voting results be expected?
With few exceptions, final results are available the firstbusiness day after the cutoff for the receipt of voting
instructions. The exceptions tend to involve cumulative
voting or disclosure of underlying holder information
processed through Euroclear and Clearstream.
What can be done to increase shareholder participation?
The most effective way to increase shareholder
participation is to conduct more detailed and thorough
communication with shareholders. A variety of processes
can assist in the communication process. These include
mailing more than once and/or mailing a portion by
overnight mail; setting up Internet and telephone voting for
registered holders; and in the case of GDR programs, using
Broadridge Global if the program has a large number of
European holders (pages 12-13). The most direct way of
influencing shareholders is by contracting a proxy
solicitation firm to communicate with shareholders prior to
the shareholder meeting (page 18).
What is the difference between a proxy advisory firm and
a proxy solicitation firm?
A proxy advisory firm (ISS, Glass Lewis, others) is a firm
employed by institutional shareholders. Proxy advisory
firms analyze all proposals and provide their institutional
shareholder clients with recommendations as to how their
shares should be voted. A proxy solicitation firm is
employed by issuers to contact shareholders to increase
participation and influence proposal outcomes. Your
Relationship Manager can provide previous meeting reports
and regional criteria for recommendations made by proxy
advisory firms and can arrange a consultation with our in-
house proxy solicitation group if clients are interested in
understanding this service in more detail.
What is a shareholder identification firm?
A shareholder identification firm specializes in identifying
the ultimate beneficial owners of the shares. A complete
shareholder identification is a necessary pre-condition for asuccessful proxy solicitation.
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Beneficial shareholders
Beneficial shareholders keep their holdings in accounts
maintained by their bank or brokers in clearing and
settlement systems. These holders are not visible to the
depositary, but will appear in the accounts of their broker.
Broadridge Financial Solutions(BFS, formerly Automatic Data Processing)
Broadridge is a full-service outsourcing provider to U.S.
financial institutions. For proxy voting, financial institutions
retain Broadridge to distribute proxy materials to their
clients, collect votes, and transmit all votes received to the
depositary. Most financial institutions have outsourced
their proxy solicitation and any shareholder meeting
information distribution requirements to Broadridge.
Broadridge GlobalBroadridge Global is the part of BFS active in servicing
holders outside the U.S. and Canada. For DR programs,
Broadridge Global is often active in servicing holders that
hold their shares through Euroclear and Clearstream. They
can play a role in local share voting.
Clearstream
Clearstream is the international clearing organization
located in Europe, responsible for holding, clearing and
settling international securities transactions. Clearstream is
the combination of Cedel and the German national clearingcenter.
DTCC, The Depositary Trust & Clearing Company
DTCC is the worlds largest securities depository, holding
nearly $33.9 trillion in assets for its participants and their
customers. DTCC is a national clearinghouse for the
settlement of trades in corporate and municipal securities
and performs asset services for its participating banks and
broker/dealers. DTCCs network links more than 6,000
broker/dealers, custodian banks and institutional investors,
as well as transfer agents, paying agents and exchange and
redemption agents for securities issuers. DTCC is owned
by members of the financial industry.
Euroclear
Euroclear is a settlement system for domestic and
international securities transactions, covering bonds,
equities, DRs and investment funds. Market-owned and
market-governed, Euroclear provides securities services to
major financial institutions located in more than 90countries. In addition to its role as International Central
Securities Depositary (ICSD), Euroclear also acts as the
Central Securities Depository (CSD) for Dutch, French,
Irish and UK securities. CIK, the CSD of Belgium, joined the
group in January 2006 and was renamed Euroclear
Belgium.
Proxy
A proxy is the authority or instrument that transfers a
shareholders voting rights to an authorized agent of the
shareholder. It may also be defined as the personempowered to act as an agent to vote in place of the
shareholder at a shareholder meeting. Foreign companies
seek the participation of DR shareholders in their
shareholder meetings by distributing proxies or voting
instruction forms that detail the various resolutions to be
voted on at the meeting.
Registered Holders
Registered holders are shareholders who elect to hold their
shares directly with the depositary or the transfer agent of
the depositary, rather than through a bank or broker-
dealer. Share positions for registered owners will appear
on the books of the depositarys transfer agent.
SWIFT
SWIFT is the Society for Worldwide Interbank Financial
Telecommunication, a member-owned cooperative that
provides the proprietary communications platform,
products and services that allow the financial community
to connect and exchange financial information
electronically.
.
Glossary
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Proxy Group Manager
Alvaro F. Quiroga
Tel: +1 212 815 [email protected]
DR Proxy Specialists
Michele Baratta
Tel:+1 212 815 4235
Michael Brooks
Tel: +1 212 815 4629
Mira Daskal (fluent in Russian)
Tel: +1 212 815 5021
Ellen OBrien
Tel: +1 212 815 3895
Minerva Rosario
Tel: +1 212 815 [email protected]
Jenell Wilkie
Tel: +1 212 815 4191
Corporate Governance
Verdun Edgtton
Corporate Governance OfficerTel: +1 212 815 3882
Michael S. OBrien
Senior Corporate Governance Specialist
Tel: +1 212 815 6007
BNY Mellon Depositary Receipt Corporate Governance & Proxy Contac
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8/3/2019 BNY Mellon DR Issue
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About BNY Mellon
BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countriesand serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth
individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services
through a worldwide client-focused team. It has $24.4 trillion in assets under custody and administration and $1.14 trillion in assets under
management, services $12.0 trillion in outstanding debt and processes global payments averaging $1.6 trillion per day. BNY Mellon is the corporate
brand of The Bank of New York Mellon Corporation. Additional information is available at www.bnymellon.com.
This information and data are provided for general informational purposes only. BNY Mellon does not warrant or guarantee the accuracy or
completeness of, nor undertake to update or amend, this information or data. We provide no advice nor recommendation or endorsement with
respect to any company or securities. Nothing herein shall be deemed to constitute an offer to sell or a solicitation of an offer to buy securities.
Members FDIC. 2010 The Bank of New York Mellon Corporation. Services provided by BNY Mellon and its various subsidiaries. All rights
reserved.
http://www.bnymellon.com/http://www.bnymellon.com/