Following the announcement that EQ, the relatively new owners of Wells Fargo Shareholder Services was entering the proxy solicitation business, our good friend, loyal reader and fellow history lover Michael Mackey, President of Alliance Advisors, sent us an outline of the many comings and goings there have been in this fascinating and hotly contested space. We could not resist adding additional information from our own archives, and elsewhere, to provide the following, fairly detailed history of this seventy-five year old business…and adding a few observations at the end…
1935 – Georgeson & Co. - Originally a brokerage firm, P-R experts from the Nye family repurposed it to establish the first ever “proxy solicitation firm.” Sold to the London based Corporate Communications PLC in 1989, it was subsequently acquired by key Georgeson employees after lofty British growth plans fizzled. In 1999, Georgeson was acquired by Shareholder Communications Corp., which continued to use the Georgeson brand name, as does Computershare, which acquired the business in 2003.
1941 – Kissel-Blake - Bill Willis, Russ Houseman and Bob Schwede from DF King bought Kissel-Blake in 1982 from then owners John “Bucky” Blake and Thomas Kirby. In 1998, the firm was sold by Willis to Shareholder Communications Corp. – SCC’s first entry into the corporate proxy solicitation business, and the first of other SCC acquisitions soon to come.
1942 – D.F. King & Co. - Founded by the Long family and others, DFK steadily built and continues to maintain one of the largest “books” of large-corporate solicitation business in the industry. They were the first proxy firm to get into the mutual fund proxy solicitation business in a big way and they continue to be a major contender in the proxy fight arena. In 2008, Sage Holdings, founded in 2007 and led by a former Computershare CEO - backed by U.K. venture capital firm The Riverside Company - acquired a majority interest in DFK and London based PR firm M Communications for a whopping $180 million…in an (ultimately failed) bid “to build a global financial communications agency.” Subsequently, after employees were twice found guilty of trading sports tickets and other perks in exchange for confidential voting info, DFK was acquired by AST in 2014, where it is still doing business, very successfully, under the D.F. King name.
1969 – Shareholder Communications Corp. - Founded by ex-Citi-banker Alexander Miller as a lost-shareholder finder and odd-lot tender offer firm, SCC was the first firm - and for a long time the only firm - to get into mutual fund solicitation business. SCC also invented the Post-Merger Clean-Up business, where their success allowed them to make three consecutive acquisitions in 2+ years - of Kissel Blake, Georgeson and CIC between 1998 and 2000. The entire enterprise was sold to Computershare in 2003.
1972 – Morrow & Co. - Founded by Joe Morrow, ex of Georgeson, it was acquired by European-based proxy firm Sodali, Inc. in 2016 and re-named as Morrow Sodali. Interestingly, the current Chairman of Morrow Sodali is the estimable John Wilcox - a very long-term employee and a former Chairman of Georgeson who departed for Sodali soon after the CPU acquisition - and one of the best-known and most highly regarded people in the industry.
1975 – The Carter Organization – Founded by the famously flamboyant Don Carter - who had been a lost-shareholder and odd-lot-buyback guy (!!) at Shareholder Communications Corp. - it was acquired in 1987 by British investors VPI Group, which kept the Carter name. It was dissolved precipitously in March of 1990 after founder Donald Carter pleaded guilty to felony counts of grand larceny - via wildly inflated bills for “out-of-pocket expenses” - and tax evasion.
1975 – Corporate Investor Communications - Founded by Don Gundry, Mike Mackey and Herb Janicki, ex of Georgeson, it was acquired in 2000 by Shareholder Communications Corp. The two Mackey sons stayed in the business until it was sold to Computershare in 2003…and two years later, in 2005 (see below) they founded Alliance Advisors.
1987 – MHT Stock-Watch and Proxy Solicitation - Founded by your editor in chief, and others (including Larry Dennedy, now President of MacKenzie Partners) - in response to having been “spoofed” by proxy solicitors (one of whom stuffed the ballot box with duplicate proxies and a “stealth revocation and re-vote” at the last moment - and another that urged the Chairman to close the polls immediately when they thought victory was theirs - and also…in response to continuing complaints from the Bank’s Inspectors of Election that proxy cards were being apparently “manufactured” - and slipped under their hotel room doors after midnight and through the wee hours of the morning!!) It was dissolved in 2010, after the aptly-named “Chemical Mellon” was sold to Mellon and virtually all the proxy solicitation ‘talent’ - and the clients - had departed.
1990 – MacKenzie Partners - Founded by current Chairman Dan Burch, and others, ex of D.F. King, MacKenzie Partners and Innisfree M&A, have become the top-two players in the high-flying, high-margin proxy fight and M&A transaction businesses.
1991 – Regan Proxy - Founded in 1991 by Artie Regan, ex of Morrow & Co., Regan specializes in small to mid-cap banks, credit unions. credit union conversions, and proxy fights at mostly-smallish banks and other “community-oriented” companies.
1997 – Innisfree M&A - Founded by the late Alan Miller, Arthur Crozier, Jennifer Shotwell and Meredith Cole, ex of Georgeson, Innisfree, as noted above, has become one of the top-two proxy fight and M&A firms in the country, and abroad as well.
2001 – InvestorCom - Founded in December, 2000 by current owner John Glen Grau, and specializing in small-company proxy fights. Earlier, Grau was a co-owner for 10 years of Beacon Hill Partners, a company he formed - along with Ed McCarthy, Rick Grubaugh (now at D.F.King), the peripatetic John Siemann,, now retired and Paul Schulman (now at MacKenzie Partners) - following the collapse of The Carter Organization –
2002 – The Altman Group - Founded by P-R expert Ken Altman, they were the 3rd firm to enter the mutual fund solicitation business, where, for a while, they enjoyed fairly good success. It was acquired by AST in 2011.
2005 – Alliance Advisors - Founded by the Mackey brothers, Michael & Kevin Mackey, following the expiration of their non-compete agreements, it has grown steadily and rapidly since its founding, due, we think, to its special emphasis on governance advisory work and client service at small-to-large-cap companies - and mega-cap companies as well - that are often underestimated and sometimes under-served by the largest solicitors.
2007 – Laurel Hill Advisors - Founded by the Catacosinos family, whose very savvy patriarch experienced some life-changing circumstances as Chairman of Long Island Lighting Company, and the many machinations of Don Carter, during its historic proxy fight in the 1990s. Laurel Hill has offices in the U.S. and in Canada, where it claims to have the best winning record in Canadian proxy fights over the past seven years.
2008 – Okapi Partners - Founded by Bruce Goldfarb and Patrick J. McHugh, ex of Georgeson, Okapi Partners has been giving the top-two proxy fight providers (by fame, market-share and revenues) quite a run for the money in recent years. The first large firm to work for dissident groups, rather than to serve only as defenders in proxy fights, they make a strong case that they have a much better than average understanding of the ways activist investors think, and act.
2016 – Saratoga Proxy Consulting LLC - Founded by ex-Morrow staffers John Ferguson, Ann Marie Mellone and Joe Mills
Other recent entrants:
Harkins Kovler - Formed by Peter Harkins, a 23 year veteran and former President and CEO of D.F. King, following their sale to AST, and later joined by 13-year DFK veteran Jordan Kovler; billed as an “independent full-service proxy solicitation firm, specializing in complex and contested campaigns in the U.S. and Europe.”
Kingsdale Advisors - A well-known proxy solicitation firm in Canada since 2003, they have had an office and staff in NYC for the past three or four years, but have gained relatively little traction in the U.S. to date.
2019 – EQ Proxy - “Led by Rudy Muzik, founding partner of Market Intelligence Group prior to its acquisition by Okapi Partners, and Tom Cronin, former Senior Vice President of Business Development, Laurel Hill Advisory Group.”
We can’t resist concluding with a few observations on this very long history:
First-off, is the startling fact that there are now at least 14 proxy solicitation firms vying for business with a still steadily-shrinking number of public companies!
Most notable, perhaps, is the strong “people aspect”: Virtually every firm has been founded by seasoned, and somewhat charismatic experts - at least where the big successes are concerned - entrepreneurs all - who either left their old firms, or saw them dissolved or sold - or who, sometimes, were dismissed - foolishly as it usually turned out - from a then “major firm.”
Another part of the history of this business, and worth noting, we think - periodically - in their eagerness to “win” - over-eager folks have succumbed to “dirty tricks. This, in fact, is what led your editor in chief to establish the first (and only) bank-owned proxy solicitation firm, which enjoyed very long-running success…until the key people were lured away by other firms - or were sometimes driven away by new management - taking their clients with them. And please note well: the determining factor when it comes to the relative degree of success in the business is the ability of the industry’s super-stars to draw clients away from their over-numerous competitors - and to retain them, of course, come what may.
We can’t resist noting how much V-C money has gone up in smoke here over the years - starting with the ill-fated investment in The Carter Group in 1987 by British investors VPI Group, followed by the short-lived acquisition of Georgeson by Corporate Communications PLC in 1989 followed by the Sage Group’s short-lived, V-C-backed acquisition of D.F. King in 2008. Please note, however, that except for The Carter Group, both Georgeson and D.F. King found able rescuers - and continue to do well.
The most important takeaway for readers, as we have often noted here; this is ultimately a “people business” - where all the talent leaves the business every night - but where “the people at the top of the house” - and the people who are assigned to you own account - are the most important factors, we say, in choosing a solicitor…as the record clearly indicates if one studies the many ups and downs with care.
See the UPDATE on The Carter Organization below
A note from Don Carter on “The Long and Checkered Past of the Proxy Solicitation Business”: “Read the ‘Long and Sometimes Checkered Past’ article today. Just to correct, I worked with Al Miller for only one year [and] started the proxy side of the business at Shareholder Communications. For the record, my guilty plea and conviction were overturned by an Appellate Court judge five years later, citing prosecutorial misconduct. It was irrefutable that I had nothing to do with “overbilling” and an exhaustive $500K audit by Arthur Young & Co. of TCO’s billing practices showed that in the prior three years we had actually under billed clients by an average of 15%. To this day, in my older years, I am most proud of the survival and successes of many of my employees…not one of whom was ever hired from a competitor.”
And a P.S. from the OPTIMIZER: We must say that we were pleased to hear from Don after so many years, and to update the record here, and in our History section. We have long said that Proxy Solicitors should pass a hat and erect a statue of Don in downtown NYC: In our book, he took the old-fashioned “Proxy Chasing Business” to totally unforeseen heights by focusing on proxy fights. And yes, he hired, trained and mentored many of the best people in the proxy fight game, most of whom are still in the game.
The OPTIMIZER’s editor-in-chief will never forget the three or four days during which he introduced the Corporate Secretary of one of the old Manufacturers Hanover Trust Company’s Stock Transfer unit’s most prestigious public companies to each of the leaders of then-leading proxy solicitation firms. After visiting with Don Carter, followed by a meeting with the grand-guru of the then largest firm, our client could not stop laughing about the contrast between the sharp and aggressive Don Carter and the pompous fustiness - and basic cluelessness - of the industry’s “grand guru.”
And it was Don Carter - and the leader of yet another proxy solicitation firm who shall be nameless - who impelled your editor to start a proxy solicitation business at Manny Hanny: We vowed we’d never be out-foxed again, after Carter baited a client, and its proxy solicitor, who should have known better - into closing the polls as soon as a vote to convert from a savings and loan association to a New York chartered commercial bank and trust company had, apparently, won the day. But what they did not know until Carter stood up to loudly contest the “win” - was that folks at the Carter Org had planted numerous duplicate votes in favor of the deal to lull the company into a premature closing of the polls - only to reveal the dupes - and to revoke many of the biggest votes in favor before the polls closed and vote NO - in order to thwart a deal that was certain to be approved if the meeting had been adjourned to solicit the many non-voters. In the end, the deal WAS handily approved - but only after MHT - whose IOE had not had a chance to examine any of the items delivered at the meeting, and at the last minute to our NYC office - had to fund a second meeting. And the company’s solicitor, who was the real culprit here (we called him Rumpelstiltskin because of his famously hot temper, and whose company was famous for slipping new proxies under hotel doors of the IOEs in the wee hours of the morning) had to work for free.
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