The State Of Unclaimed Property: The Chaos Continues
An Interview with Michael Mackey, Managing Partner, Alliance Advisors, LLC
Q: Michael, please describe the role of Alliance Advisors, LLC in the shareholder meeting process and some of the benefits for our readers.
Michael: As proxy management consultants, Alliance Advisors orchestrates the filings, financial printing, mailing and distribution of shareholder documents, proxy solicitation and vote tabulation. With the adoption of the Notice and Access rule, we have expanded our services to include the conversion and posting of annual reports and proxy statements, hosting on an approved website and the fulfillment of materials for one year. What differentiates the work we perform is the level of analysis and advice we provide the client. This includes fee comparisons, operational recommendations, confidential bidding, cost projections and invoice processing. Our role begins with consultation, followed by the management of the entire shareholder meeting process for the client.
Q: What qualifies Alliance Advisors, LLC to perform so many different functions?
Michael: Simply, our experience. As former executives of CIC, a proxy solicitation firm that provided print through solicitation solutions, we know the mechanics and costs of all of these services and how to best manage the entire process. CIC also had the largest client base of any proxy firm so we have the advantage of having worked with thousands of corporations each year. Perhaps even more important is the network of industry partners we utilize, each of whom have their own qualifications in their respective fields. Since Alliance Advisors manages so many aspects of the process, we are far more involved with the client now than we ever were as a proxy solicitor.
Q: Has Alliance Advisors, LLC managed “Notice and Access” for corporations?
Michael: Yes. Approximately one third of our clients chose to implement Notice and Access this year and with great success. Once again, we provided them with detailed analysis including timelines, cost comparisons versus full-set and variations using a blended approach, where some shareholders receive hard copy while others are mailed only the notice. Since we utilize actual price quotes and not industry averages or assumptions, the client is better prepared to make an informed decision. Alliance Advisors also offers corporations three choices for document conversion and posting with different levels of navigability making the materials much more interactive for shareholders. Since companies may save considerable money with Notice and Access, it can be a sound business decision to reinvest a tiny portion of these savings to provide shareholders with more searchable documents. For other companies who will continue with the full set delivery option the basis format for conversion and hosting can suffice.
Q: What impact do you see “Notice and Access” having in the future?
Michael: Based on the low participation rate this year, it’s evident that many large-cap companies had a wariness of the concept even with the guarantee of substantial cost savings. We now know that retail voter participation is down considerably when Notice and Access is employed and many companies also had difficulty with the 40 day time requirement. Next year companies under $700 million in market capitalization (small-cap companies) will have to comply with the rule and make a choice between the “Notice Only” or the “Full Set Delivery” options. Considering that 75% of all public companies fall into this category, the rule will impact far more issuers than this year who may not be as fluent on the process. The cost savings for these companies are also much less obvious and will require detailed calculations – especially considering the additional fees from Broadridge. Small-cap companies will also have the added work and cost of converting and posting the shareholder documents, website hosting and the fulfillment of requests.
Historically, small-cap companies do not have a lot of institutional ownership – and therefore, a significant reduction in retail voting will have much more of an adverse effect on them when seeking support for a non-routine proposal. All of these factors will have to be carefully considered in order to make a strategic decision and reap the benefits of this model. Eventually, the potential savings and advantages of e-proxy will compel all size companies to consider the implementation of Notice and Access, even if it is on a year to year basis.
Q: Why is the business model you offer so beneficial to corporations?
Michael: Primarily because of all the new regulations and changes relating to the shareholder meeting process. Over the years, corporations have been faced with Sarbanes-Oxley, new compensation disclosure rules, the loss of discretionary voting on compensation proposals, broker proportional voting, financial reporting in XBRL and now Notice and Access. These revolutionary changes have made the execution of a shareholder meeting the most complex event on the corporate calendar. To assist the client, Alliance Advisors utilizes value engineering to police the process while interfacing with all suppliers, from financial printers to web hosting firms. This business model offers issuers a single point of contact to manage the entire shareholder meeting process, thereby reducing the workload on the client.
Q: What kinds of companies do you have as clients?
Michael: In addition to managing Notice and Access for several large issuers, the majority of our clients, to date have been small and mid-cap companies. These corporations typically do not have the resources of their large-cap counterparts and the logistics of coordinating a multitude of suppliers can be overwhelming. Our clientele also includes a number of transfer agents and law firms who recommend Alliance Advisors to their clients for various corporate transactions, including shareholder meetings, tender offers and information statement distribution.
Q: What does Alliance Advisors, LLC bring to the table?
Michael: As confidential strategists, Alliance Advisors continues to improve procedures and streamline the shareholder meeting process for our clients. We have also maximized cost savings and we do so whenever it is possible and practical. Based on the number of projects we conduct, Alliance Advisors is able to provide corporations with preferential pricing from our industry partners for multiple services. As former proxy solicitors, we counsel clients regarding their shareholder constituencies, particularly from a voting perspective, and provide advice on the need for solicitation services. Essentially, Alliance Advisors is an advocate for the client – ensuring that all procedures are properly executed, all timetables are met and the process is professionally managed with a view toward financial efficiencies. Whether the client selects “Notice Only” or “Full Set Delivery” Alliance Advisors has proven that our pioneering concept and turnkey approach produces proxy management – at it’s best.