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Proxy Fee Advisory Committee Proposes Recommendations on Proxy Distribution Fees
Recommendations reflect the views of issuers, brokers and investors and propose to streamline proxy fees and make them more transparent to issuers
New York, NY May 16, 2012 - The Proxy Fee Advisory Committee (PFAC), formed by the New York Stock Exchange, today published its recommendations for changes to the fees paid by public companies to banks and brokers for the distribution of proxy materials to shareholders who hold their stock in "street name."  Composed of issuers, broker dealers and investors, the PFAC was formed in September 2010 to review the existing proxy distribution fee structure and make recommendations for change. Any changes to these fees are subject to SEC approval.
Overall, the Committee's recommendations will propose to streamline proxy fees and make them more transparent to issuers as well as result in a modest decrease in total fees paid of approximately 4%, although some fees will increase and others will decrease.  The impact on any individual participant will vary somewhat depending on their circumstances.
"Proxy distribution fees have been part of the NYSE's rules since 1937, and have been reviewed and changed periodically over that time," said Scott Cutler, Co-Head of U.S. Listings and Cash Execution and member of the PFAC Committee.  "The NYSE has long operated under the assumption that these fees should represent a consensus view of the issuers and the broker-dealers involved." 
The goals of the Committee have been to support the current proxy distribution system, including continued support for the elimination of mailings; to encourage and facilitate active voting participation by retail beneficial owners; improve transparency of the fee structure and ensure that fees are as fair as possible and aligned with the work involved.
"The recommendations reflect a great deal of careful consideration by the Committee, with invaluable support by the NYSE, and input from many different stakeholders in the process," said Paul Washington, Senior Vice President, Deputy General Counsel and Corporate Secretary of Time Warner Inc., and PFAC Chair.  "The proposed fee structure is intended to continue to support a world-class process that facilitates communications with, and voting by, stockholders; and one that will be flexible enough to encourage further efficiencies and voter participation by retail stockholders."
Recommendations of the Proxy Fee Advisory Committee
  • Streamline the proxy fee categories into three basic fee categories - a nominee fee, a basic processing fee and a preference management fee - to increase transparency.
  • Provide a more gradual tiering of the basic processing fee to smooth the "cliff effect" that occurs between large/small issuers.
  • Reduce preference management fees for managed accounts to half the normal rate, and eliminate all processing fees for managed account positions of five shares or less.
  • Increase modestly the processing fees for special meetings and contests.
  • Reduce by half the fee for annual meeting reminder notices, to support improved shareholder communication.
  • Subject the Notice & Access fees to the proxy fee rules.
  • Allow issuers to stratify their NOBO lists, rather than require issuers to pay for complete lists as is currently industry practice (see below).
The PFAC also recommended that the NYSE:
  • Explore the impact of allowing issuers to request stratified NOBO lists, including an extra fee for stratification. 
  • Discuss the proposal to create an investor mailbox as a possible means to increase voting participation by retail shareholders with additional industry representatives so it can be determined whether the proposed "success fee" is at an appropriate level. 
  • Create an ongoing process to review proxy fees and services more frequently going forward.
The Committee recognizes that there is a reliable, accurate and secure proxy distribution process in place today.  The Committee's stated purpose is to bring proxy distribution fees in line with the work performed and add increased transparency.  It should be noted that the Committee's fee recommendations do not attempt to take into account potential changes to SEC rules that are discussed in the SEC's proxy plumbing concept release.
The NYSE will initiate discussions regarding the PFAC's recommendations with the SEC, after which the NYSE would expect to submit a rule change proposal to the SEC reflecting the outcome of these discussions.  Any rule filing proposal would be published for public comment prior to SEC approval.
To read the full Proxy Fee Advisory Committee report, please click here.

Media Contact
Keara Everdell
NYSE Euronext

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