Computershare: Looking Ahead

An Interview With Jay McHale, President US Equity Services, Computershare

In your view, what are the dominant trends and major challenges facing our industry?

The biggest challenge is the constantly changing regulatory environment. It’s relentless. No sooner do we finish off with the IRS changes related to cost basis reporting than the IRS comes back with FATCA. We updated our security authentication model to meet strict OCC standards. The SEC jumps in with new requirements around Rule 17Ad-17 “unresponsive payees” and the change in how we can present proxy voting options to shareholders. At the state level, laws and interpretations regarding abandoned property and escheatment are continually evolving as well. Add to this the increasing focus on corporate governance, as
well as the ongoing evolution of privacy and data security measures that need to stay current.

While all this has been going on, technology has not stood still. The ways in which issuers and shareholders interact has vastly changed. The days of traditional printed stock certificates and paper mail communications are mostly gone, replaced by demands for access to information and services via multiple channels with 24/7 convenience.

What is Computershare doing to help corporate clients achieve their goals in this challenging environment?

The most important thing we do is listen to our clients. We strive to understand the challenges they face and exactly what they want to achieve. Every issuer is different: whether micro-cap or large-cap, OTC or blue-chip, these are important and successful businesses and we are privileged to work with each one of them. Every client we service has a dedicated relationship team, and we aim to partner with our clients to create custom solutions, helping them meet their corporate objectives and interact successfully with their stakeholders.

In addition, we are extremely focused on innovation and continuous enhancement of our products and services. The “voice of the customer” is critically important to us and I’d like to think that every client knows how much we value their input. I include my contact information on alerts and updates we send to clients and personally respond to emails. We also host client advisory board meetings that are open to all clients, regional client dinners and events, and conduct semi-annual satisfaction surveys to solicit more feedback. At the end of the day, people do business with people.

Can you give us an example of recent service improvements?

Sure. Our clients know we’re committed to providing the highest quality shareholder service. Again, our scale allows us to continually invest in technology and enhanced service capabilities to meet our clients’ changing needs, as well as the needs of their shareholders, and we’ve recently enhanced the shareholder experience across all channels.

This year, we’ve expanded our customer service hours to twelve hours per day on weekdays, plus eight hours on Saturdays – making agents available when our clients’ shareholders have time to call. We’ve also enhanced self-service channels for shareholders, for those who want the ability to transact 24/7. Our automated telephone system accepts spoken commands and requests, making it easier to use via mobile phone, as you don’t have to pull the phone away from your ear to press buttons. It’s safer, too, for those busy shareholders who call from their car!

Meanwhile, our redesigned investor website allows shareholders immediate access to accounts on their first visit, while also meeting strict OCC security requirements and standards. The site is mobile-device friendly and allows shareholders to pull up proxies through smart phones. To assist shareholders online, we have our virtual agent technology “Penny,” as well as live chat with a service representative to assist with any technical website issues. Shareholder documents can be accessed via the web, and tens of thousands of shareholders have already used our online Transfer Wizard to navigate the myriad requirements of stock transfer.

Looking ahead, are there any regulatory changes on the horizon that you feel will have a major impact on the industry?

It can be challenging for issuers to keep up with all the industry and regulatory changes. Many of our clients simply don’t have the bandwidth to be aware of all the moving parts. Therefore, we strive to keep them informed of the items that will impact them. Once again, due to our scale and expert staff, we are able to work closely with government agencies and industry associations to advocate on behalf of our clients and help influence industry changes, rather than simply react to new rules and regulations.

There are a few potentially big changes on the horizon. The current proxy system continues to be scrutinized and we expect there to be a consistent stream of changes, large and small. Dematerialization – the move away from certificates

— is another hot issue. DTC has an initiative underway to reduce certificate inventory, which has reinvigorated discussions around full dematerialization across the industry. Somewhat related is a movement toward shorter settlement cycles – shifting from the current T+3 settlement to T+2 or even T+1, which would require significant changes to existing systems and processes. Tangentially, “crowdfunding,” the new capital raising approach for small businesses created by the JOBS Act, is something we’re watching closely, too – both in terms of how it will be regulated and how it could change the way people invest.

With all these changes underway, what do you think issuers need to look for in their transfer agent?

Well, naturally, I believe Computershare offers a number of advantages that make us the best choice for issuers, such as our service quality, unmatched product suite, talented staff, and commitment to the industry. But stepping outside and looking in, I think the most important thing is for issuers to find a partner they can rely on for the long haul. Speaking to an issuer, I would say first and foremost, your transfer agent needs to assist you in complying with changing regulations

and must be able to adapt as the industry evolves and your needs change. Secondly, you should look for an agent that invests in the technology, systems and processes needed to protect you and your shareholders, including strong data security and privacy programs, comprehensive disaster recovery and business continuity plans, robust controls and rigorous compliance.

Looking fart her ahead, what do you see as the future of the TA business?

We’re excited and optimistic about the future of the industry. As you are aware, we successfully completed the integration of the BNYM Shareowner Services division earlier this year. So, our clients can rest assured that we’re fully committed, long-term. Plus, the integration has made us a much stronger organization, with an unmatched team of experienced and talented staff focused 100 percent on helping our clients achieve their corporate goals.

We expect that regulations will to continue to change and that transfer agents will need to comply with ever-stricter standards, likely starting with updated SEC rules for transfer agents. Many think this could lead to additional consolidation, as smaller agents, in-house agents and companies where transfer agency is not their core business look to exit the market rather than invest in the future.

There will be a continued demand for new products and services to meet the changing needs of public companies and their shareholders. Cost control and environmental responsibility will continue to drive new channels of communication. Issuers will always expect excellent service for their registered shareholders, who are often loyal customers as well as investors. Robust technological capability and related data security will be required to meet these challenges.

Any closing thoughts?

I’m going to close the way I always do. We want every one of our clients to be delighted with our services and willing to recommend us to their colleagues — not just for transfer agency work, but for any of the services we deliver. Across the board, we’re committed to being the best: offering the best products, delivering the best services, being the best partner. We’re looking forward to building strong relationships with our new clients, including those who joined us with the Shareowner Services acquisition, while continuing to earn our clients’ loyalty by working hard every day to service them.

And for your readers: If there is anything you can think of that we can do to better service our clients or their shareholders, please feel free to email me directly at jay.mchale@computershare.com.