National Investor Relations Institute
Seattle Chapter Newsletter
April 2000 Seattle
THE IMPACT OF THE INTERNET AND ON-LINE INVESTING ON
CORPORATE GOVERNANCE AND THE PROXY PROCESS
Allen Nelson, President of Allen Nelson & Company, spoke to the chapter abut the challenges public companies face as volatility of the stock market increases, as well has how dynamics of the Internet and on-line investing impacts corporate governance.
Allen suggested that due to the explosion of on-line trading, companies should solicit the shareholder early in the process in order to assure sufficient materials and resources are available. The annual cost of servicing a shaerholder is approximately $10.00 (this figure includes the ADP processing fee, handling fee and postage, but excludes the actual cost of the report) so the costs of servicing shareholders can be staggering.
Most corporations are expanding the proxy voting process for shareholders in order to include voting by phone, on the Internet and by mail. Only approximately 5 percent of investor are taking advantage of Internet voting, while about 16% are voting by phone. The majority of shareholders still vote by mailing in the proxy card, however the difference in cost to tabulate the results is significant: $.34 per proxy card, $.18 per telephone vote and $.03 per Internet vote. Even more staggering is that only 5% of shareholders with less than 1,000 shares of stock vote their proxy.
This is why there is movement to increase electronic delivery of materials and encourage electronic voting in order to decrease the costs for the corporations. This was an enlightening presentation with loads of current information just in time for the proxy season.