View STA’s guidance, “STA Approach to Tokenized Securities.”

This year felt more like a period of refinement than disruption. The number of shareholder proposals declined across most categories; those that did reach the ballot pointed to sharper, more deliberate priorities – particularly around accountability, board performance and transparency. It seems investors are focusing less on volume and more on impact, according to data from Broadridge’s 2025 ProxyPulse report.

Another notable shift involves participation patterns, as we saw declines in both retail and institutional engagement. That dynamic invites us to think carefully about how we support and connect these distinct investor communities. Our ability to ensure timely communication and smooth engagement has never been more critical.

Technology also continues to shape how shareholders interact with companies. Expanded voting options and virtual participation tools are giving more investors a voice, wherever they are. It's encouraging to see these advances make the process both more inclusive and more secure – something our collective efforts have long supported.

Looking ahead to next year, regulatory and environmental considerations will again influence how governance conversations unfold. What stands out most to me is how much our work – and the foundation of trust created – anchors this evolving ecosystem. 

After many years, I'm continually reminded that the strength of our community lies in shared experience and open dialogue.

This resource includes:

• A final rule overview
• A compliance deadline timeline
• A step-by-step enrollment process guide
• A user role breakdown
• Real-world lessons from early adopters
• Common enrollment pitfalls

View or download the slide deck PDF below.

To provide shareholder services professionals with an overview of AI, its benefits, risks, potential uses in the transfer agent/shareholder space and considerations for issuers, EQ recently shared this article for SSA members.

While the practice of escheating foreign property has been legally questionable, some holders viewed it as a low-risk method of cleaning up their books. Many states were slow to liquidate securities and provided indemnification to property holders for shareholder loss. Under Delaware’s revised statute, however, conditions have changed, and holders should take caution.

Noteworthy factors creating this more volatile environment include:

• Delaware escheats securities based on a perceived lack of activity.
• The state has been liquidating securities upon receipt.
• The state does not make the owner whole if the value of liquidated securities has increased since liquidation.
• The state has significantly changed the conditions for indemnifying holders.

“This is a recipe for disaster and also conflicts with SEC Rule 17Ad-17,” said Jennifer Borden, founder of Borden Consulting Group. “Escheating without satisfying the SEC’s outreach requirements may open up issues with the Commission.”

With this increased risk in mind, securities issuers would be wise to reevaluate their treatment of foreign property not only in Delaware but nationwide to adopt a consistent approach. With Delaware’s unclaimed property reporting date of March 1 having just passed, seeking guidance from legal counsel and service providers can clarify practices for the new cycle and accelerate conversations with Delaware about the issue.

Issuers may want to explore whether they should treat property types differently based on risk. Dividend payments, for example, have a set, stable value. Share values, on the other hand, may fluctuate substantially, presenting a higher risk for issuers. If the value increases following liquidation and the owner files a claim, expecting to be made whole, issuers without indemnification from the state may be left holding the bag.

“Issuers should also take a look at their foreign shareholder base,” Borden said. “It is highly likely that it is made up of employees who can easily be reached. If not, issuers may want to consider some additional outreach to connect with their foreign shareholders.”

Based on comments included in a Feb. 26, 2025, update from the Delaware Office of Unclaimed Property of its Unclaimed Property Holder Handbook, it appears the state has already been flooded with inquiries. The update includes this clarification of the state’s position on the treatment of foreign property:

“The enactment of Senate Bill 267 on August 15, 2024, clarified and confirmed foreign addressed property that is reportable to, or specifically exempted by a foreign country is not reportable to the State. Please note this applies to reports filed and property remitted after the effective date of this legislative change. For more information, see 12 Del. C. §§ 1130(7) and 1141.

“The State has received numerous inquiries about the applicability of this amendment, including requests that the State provide comprehensive legal guidance to holders for every foreign jurisdiction. The State reasonably expects that holders who operate in foreign jurisdictions are appropriately aware of their regulatory and other compliance requirements, including their unclaimed property reporting obligations, in the foreign jurisdictions in which they operate. It is not an unreasonable expectation that holders are aware of or obtain legal guidance regarding the unclaimed property laws of the jurisdictions in which they operate, as a cost of doing business internationally.

“The State has never required the reporting of foreign property when that property has been previously reportable to a foreign jurisdiction. The State expects holders to comply with their legal obligations by reporting property to the appropriate jurisdiction or applying this exemption only to ‘property … specifically exempt from custodial taking under the law of this State or the state or foreign jurisdiction of the last-known address of the owner.’

“To the extent that foreign address property is not reportable or not exempted by a foreign country, such property is reportable to the State of Delaware by holders legally domiciled or incorporated in Delaware. If a country has no unclaimed property law, or is silent as to a particular property type, there is no specific, or express, exemption for a property type, and therefore, the property should be reported according to Delaware law and the Priority Rules.

“At the present, the State does not have reciprocal agreements with any other jurisdiction. All property with an address in any other state of the United States, the District of Columbia, or any territory or possession of the United States, must be reported in compliance with that jurisdiction’s unclaimed property laws.

“For more information about where to report, refer to 12 Del. C. §§ 1140 and 1141.”

Unfortunately, these conclusory statements do not clarify the statute, nor do they provide further insight of the interaction of applicable foreign laws with Delaware’s new provisions. SSA will continue to monitor developments surrounding this topic and will provide updates as appropriate.

The Customer Excellence panelist discussed the industry’s transition to a digital self-serve experience, the need for digital environment improvement, security and ease of use, and methods to increase shareholder value.

View the Customer Excellence session:

Computershare’s video series includes eight videos:

• Introduction and welcome
• What assets could become escheated?
• A real-life story of escheatment
• The importance of contact
• Keeping your stock accounts active
• Keeping your bank accounts active
• Common misconceptions
• Can a state really sell my shares?

View the Keep What’s Yours video series from Computershare and share it with friends and family!

A recent issue of Optimizer Magazine features several ESG-related articles. The issue includes an Ask the Experts article with insight from several experts, including Emmanuelle Palikuca, managing director and head of sustainability advisory at Alliance Advisors and featured speaker at SSA’s ESG Reporting Webinar on August 8, 2024. Palikuca shared her thoughts about preparing for the new sustainability reporting regulations.

“Even with the significant rise in regulation, there is a noticeable lack of specific guidance around how these requirements should be implemented,” she said. “Despite the uncertainty that still looms around these tangible details, companies can still take a few key steps over the course of 2024 to get started and ensure they are adequately prepared to meet these new expectations.”

Read her recommendations and insight on page 23 of the Optimizer digital edition.

This helpful document provides guidance for several aspects of service provider relationships:

• Collaboration techniques.
• Service level agreements.
• Service provider performance.
• Third-party services.
• Fees and costs.
• Escalations.
• Service provider changes.
• Requests for proposals.

Download the SSA job aid here.

Technology exists today to build verified shareholder communities – bringing together active online investors who want to engage. Safe, secured, verified environments with actual, real human beings. These communities have access to shareholder materials and proxy statements in an environment rich with data, information and tools. Forums can be created for finding, maintaining and recovering shareholders, for engaging in real-time dialogue and for stimulating shareholder participation.
 
Companies like Urvin have built this new technology to benefit issuers and shareholders alike. On April 18, 2024, at 2 p.m. EDT, SSA will host a live webinar to discuss technologies available to connect issuers with their shareholders in a digital environment. Urvin representatives will discuss their ongoing efforts to create verified shareholder communities and what this means for shareholder participation.  We hope you will join us!  Register here.

Frequently, issuers become mediators between the transfer agent and shareholders, navigating complex transfer requests and their requirements. Not only is it helpful to obtain the answer to specific questions, but it also provides an opportunity for those issuers who have yet to encounter such questions to be better equipped in the future. For example, a question discussed at the March Open Forum was whether it was an appropriate use of the Medallion Guarantee Stamp to affix to a legal document to certify that it is still in full force and effect, and whether that could or should be relied upon to support a request to a transfer agent that is not related to a transfer or sell.

Fleshing out ideas and considering opportunities to manage our registered shareholder base also remain important aspects of this type of gathering. We learned that issuers manage fractional share owners differently. Some have an automated process triggered annually, some opt to clean up owners immediately before the Annual Meeting of Shareholders and others haven’t yet undertaken the task. 

Attendees learned about recent legislation passed in Florida and how it will affect issuers and their shareholders. With recent legislative changes, Florida now looks at the shareholder’s life status to determine dormancy. In addition, we discussed how this will impact the current and future audit space.

As we look toward our Annual Conference, these issues and others will remain at the forefront of many members’ minds. We encourage you to review our planned agenda topics on SSA's website. If you haven’t previously attended and wish to know more, please contact Christy Docauer at cdocauer@shareholderservices.org, post a question on the blog or reach out to other SSA members.

Finding Institutions Offering Medallion Signature Guarantee: While not every financial institution in North America offers Medallion Signature Guarantees, with several thousand members of STAMP (Securities Transfer Agents Medallion Program), shareholders can leverage the Medallion Signature Guarantee Website (msglookup.com) to locate institutions by name and location. This user-friendly website streamlines the search process, making it easier for shareholders to find the required service.

As banks merge, invest in digital solutions, and consolidate branches, shareholders have encountered fewer “brick and mortar” locations from which to choose for a Medallion Signature Guarantee. Enter Universal STAMP; in Universal STAMP, firms can conduct their shareholder due diligence virtually, upload signed PDF transfer instructions, affix a digital medallion, and route the document to the Transfer Agent seamlessly, all from anywhere with an internet connection. Universal STAMP’s technology, therefore, will make it easier for shareholders to obtain Medallion Signature Guarantees, regardless of their physical location.

Understanding Online Guarantee Limits: The availability of online firms providing Medallion Signature Guarantee services has expanded and covers multiple continents. These online services charge a fee for their assistance, and the transaction dollar amount is restricted by the STAMP Surety Bond limit they hold. It's worth noting that these firms have the option to apply for higher STAMP Surety Bond limits, contingent on their financial standing. In most cases, if the service is completed by an institution where the shareholder has an established connection, it is performed at no cost. This insight empowers shareholders to make informed decisions and explore alternative options if needed.

Dealing with Foreign Shareholders: For shareholders dealing with the added layer of complexity involving foreign shareholders, Msglookup.com comes to the rescue again. The website provides geographic search options, enabling shareholders to identify U.S. banks with international branches. This can be a viable solution for foreign shareholders seeking a Medallion Signature Guarantee. In cases where this approach falls short, reaching out to the transfer agent for the securities can be a strategic move to resolve the issue.

Obtaining a Medallion Signature Guarantee may seem daunting, but armed with the right information and resources, shareholders can streamline the process. Utilizing platforms like Msglookup.com, exploring cost-effective options, and understanding the limitations of online guarantees empower shareholders to successfully navigate the Medallion Signature Guarantee maze. In earnest during this pilot phase and to a greater extent in the near future, Universal STAMP’s offerings will streamline the existing Medallion Signature Guarantee processes, improving outcomes for issuers, shareholders, financial institutions, and transfer agents alike.

Learn more about digital medallions at our upcoming webinar.  Register here.

Lack of uniformity in unclaimed property rulemaking continues to make compliance challenging for service providers and problematic for issuers to ensure proper compliance has been performed. Despite continuing efforts of notable associations, including SSA, local legislators continue to enact laws providing individualized nuances regarding dormancy periods and definitions of contact. Borden Consulting Group, LLC, has consolidated the high-level details of each state's Unclaimed Property Laws, providing two useful tools for our members to use, as needed. These include a listing by state of dormancy triggers and, separately, each state’s definition of an indication of owner interest.

Oftentimes issuers request a list of shareholders identified to receive due diligence notices for their review in advance of the scheduled mailing. This helps issuers perform any individual outreach to shareholders, identify VIPs or employees of the company, and to confirm that service providers are meeting compliance requirements that are ultimately the responsibility of the issuer. These tools can be useful in helping issuers to understand the specific parameters by which property has been identified.

As the unclaimed property auditors become more active, this tool will also be useful in reviewing potential exposure and evaluating business decisions to participate in various Voluntary Disclosure Programs [VDA]. Not only for Shareholder Services professionals to use, but also to share with their internal teams to better describe this complex aspect of our industry.

Until such time as a universal rule is broadly accepted, Shareholder Services professionals will need to understand specific jurisdictional rules because of their responsibility to protect their companies from non-compliance and remain vigilant in protecting their shareholders' assets from premature escheatment. We hope these documents will be useful to issuers in continuing to understand the complexity of these ever-changing rules.

Please note that these documents not intended as legal advice and should not be used to replace the advice of counsel. Given the active legislative schedules within the unclaimed property reporting jurisdictions, please note that the information in these documents may have changed since the effective date of the documents.  

Participants included Marty Flanagan from AST/Equinity; Ann Bowering from Computershare; Piero Falcone from Securitize; and Rob Franz from Broadridge; with moderator Jon Ciciola from the Depository Trust & Clearing Corporation.

With the ongoing movement to eliminate new issuances of physical securities and transition to electronic records, panelists shared what their companies are doing to support dematerialization. View their discussion:

Panelists also discussed:

• How transfer agents can differentiate themselves from brokers, as well as how they are working with brokers to improve the industry.
• Combatting fraud.
• Cybersecurity regulation.
• Blockchain, cryptocurrency and digital assets.
• Unclaimed property audits.
• Industry consolidation.
• How issuers can reduce costs.
• TAs offshoring processes.
• Employee retention.
• Encouraging shareholder engagement.
• Automation and innovation.

SSA members who were unable to attend the Transfer Agent Panel Session can view the entire discussion on demand.

Becoming an SSA member provides access to online and in-person SSA events like the Transfer Agent Panel Session. Learn about becoming a member.

Through her continued vigilance in advocating on behalf of issuers and their shareholders, Sevcik exemplifies the outstanding contributions that an individual can make to this industry.

“Katie has been a true leader, the driving force behind so many initiatives that impacted the stock transfer industry in a positive way, and a role model to many,” said Gay Kaylor, SSA Board member and Nominations and Award Committee Chair. “We are delighted to honor her with this award.”

The Tony Fireman Award is the highest honor SSA awards to shareholder services professionals. Congratulations, Katie, for this well-deserved recognition.

The conference was chock-full of learning sessions and my panel on "Annual Meeting Best Practices" sparked lively discussion on the do’s and don'ts for running a smooth and successful annual meeting.

As a special thank you to SSA and to keep the conversation going on annual meeting best practices, we're happy to share the Q2 Shareholder Service OPTIMIZER advisory letter with our mid-year notes from the 2022 AGM battlefield, plus tips and practical advice for a successful annual meeting in 2023.

Special SSA Member Offer: CLICK HERE for $20 off of your annual OPTIMIZER advisory letter subscription, PLUS two free issues for the balance of 2022, including our annual OPTIMIZER Magazine.

Shareholder Services Association’s Annual Conference returned as an in-person on July 25-27, 2022, at The Guest House at Graceland. Attendees happily reunited with colleagues and met familiar faces in-person for the first time. “It is great to finally meet you face to face” may have been the most commonly uttered statement throughout the event. 

Members of the shareholder services industry gathered together to learn the latest details about important topics and opportunities to advocate on behalf of their shareholders. Topics included shareholder engagement, annual meeting trends, unclaimed property judicial and legislative activity, and SEC updates, to name a few. Service providers shared tips to help issuers prepare and defend unclaimed property audits, and issuers shared recommendations for how to optimize relationships with their transfer agents.

In addition to the stellar educational lineup, attendees took advantage of scheduled and spur-of-the-moment networking opportunities throughout the conference. During a reception at the Lightning Lounge and a Memphis-style barbecue at the Presley Motors Automobile Museum, attendees asked each other questions made recommendations and shared industry best practices. 

Following each day of educational sessions featuring expert panelists, conference attendees dug deeper into the topics that resonated the most with an Open Forum to wrap up the day’s sessions. Following up on important topics and discussing implications of the topics covered was a perfect way to close out the day’s education. 
“The feedback about the daily Open Forum has been overwhelmingly positive, and we look to including this segment during future events,” SSA President Nicole Mauney said. “Thank you to all of the attendees, speakers, volunteers, exhibitors and sponsors for making our in-person return such a great success."

With the conclusion of year’s annual conference, SSA looks forward to continuing to provide insightful educational webinars and returning to New York City in December for the Annual Holiday Luncheon, coupled with an opportunity to hear from industry leaders. Watch for more information in the coming months. We hope to see you there. 

First, it comes dangerously close to – if not represents a clear example of – stifling Q&A that would have happened at an in-person meeting, in the process violating the spirit if not the law when conducting a meeting of and for shareholders. Yes, technically the meeting is just to approve or not approve proxy statement proposals, but giving shareholders “their say” once a year, and management an opportunity to brag about its accomplishments and plans, are ingredients fully baked into U.S. annual meeting protocol.

Second, it insults attending shareholders’ intelligence. Do shareholders really think that, when given a chance, at least one of their number will not press the “I have a question” button and ask a dumb or inappropriate question, at which most people will laugh and frankly enjoy the CEO or CFO squirming a little in answering it? What I am suggesting is at least one, maybe two, such questions should be allowed to “get through,” adding credibility to the meeting without effectively costing management anything. Indeed, it will arguably make management look better.

Third, since VSMs do make sense for the majority of American corporations, saving them money in the long run (despite healthy VSM hosting fees), why put their acceptance by the investing public and their advisors at risk by bluntly and insensitively turning off the less-than-brilliant questions spigot? In fact, why not make the whole Q&A portion of the VSM twice as long as it tends to be now (10 minutes max?), further adding to the credibility of VSMs even if it makes senior management slightly more uncomfortable…once a year?

Companies should treat the VSM “gift” with care. To abuse it, and lose it, would be a silly waste, in my opinion.

This article was originally published by Shareholder Service Solutions and is republished with permission of the author. SSA members are invited to submit blog posts to tguy@shareholderservices.org for review and consideration.

“Shareholders should come first,” said Tameeka Scott, executive director of operations for AST. “The average person doesn’t know what transfer agency is, what a transfer is, the steps to get things done, or even what a dividend is. These things are simple to us because we’re in the industry, but it’s not as simple as we think for those who aren’t dealing with it every day. The best thing we can do is make that information readily available so they don’t have to go through a tedious effort to process a simple transaction.”

To provide clarity for shareholders, AST recently developed a useful guide to help shareholders understand shareholder basics and market complexities. The AST Shareholder Toolkit addresses shareholder concerns and provides much-needed guidance about consistently evolving regulatory requirements. The guide provides insights on common terms and features essential information on shareholder responsibilities and requirements. It also includes guidance on how shareholders can transact, inquire and manage their accounts.

“The AST Shareholder Toolkit is the definitive guide that the industry has been clamoring for,” said Jean Vincent, president of Vincent McCabe. “Comprehensive and easy-to-understand, this wide-ranging primer will serve new and experienced shareholders very well. The text was designed using expert industry feedback plus the all-important infusion of shareholders’ actual informational needs. Jargon is decoded and important facts are explained in a straightforward manner.”

Some the areas covered in the tool kit include:

• Maintaining accurate account information
• Transfer of shares
• Dividend distribution
• Escheatment
• Restricted stock
• Corporate actions
• IRS notices
• Tax forms
• Lost stock certificates

“The Toolkit addresses all aspects of stock ownership and serves as a much-needed, comprehensive, easy-to-understand guide for shareholders, as well as shareholder relations professionals,” said Dru Cessac from Abandoned Property Advisors.

AST has given SSA permission to share this resource with members as a tool they can use to help their shareholders cut through the static and get to the information they really need about what it means to be a shareholder.

Download the AST Shareholder Toolkit

To share the story behind the toolkit’s development and how SSA members can use it to educate your shareholders, SSA is holding the Shareholder Toolkit webinar on April 21 at 2 p.m. EDT, moderated by Tameeka Scott and featuring panelists Bob Carney from AST, Gay Kaylor from Hershey and Jean Vincent from Vincent McCabe. Learn more and register.

The enhanced Universal STAMP, or U-STAMP, signature guarantee program will offer identical protections to the current program in a streamlined, digital format. U-STAMP will eliminate the need for printing, mailing and storing paper documents. That means greater efficiency, cost-effectiveness and security.

“People want to lower costs and want to want things to happen faster,” said Ron Gallagher, president with Hampton Technologies. “Once we all became used to sending and receiving email, nobody wanted to go back to typing a letter and mailing it. This is similar – taking a paper-based process and streamlining it into an electronic based process.”

U-STAMP transforms a manual process that relies on paper documents, shipping services and numerous touchpoints to execute transactions. Instead, everything is handled electronically in a matter of minutes instead of days.

This video provides a demonstration of how the U-STAMP portal works.

U-STAMP features increased security – in part, from fewer interactions throughout the process – increased speed and reduced physical storage needs from eliminating paper documents, and an improved shareholder experience thanks to its ease and efficiency.

In addition, U-STAMP is truly universal, eliminating the need for banks to rely on separate medallions for different types of transactions, and opening up the program beyond North America.

“When we move out of the pilot phase, firms around the world will be able to join the program, so that will increase medallion availability, which is an important step,” said Andrew Weitzman senior vice president with Kemark Companies.

U-STAMP is on track to move out of the pilot phase for greater industry adoption this spring.

Ultimately, shareholder services professionals want to make their shareholders’ lives easier, and U-STAMP helps accomplish that goal. With U-STAMP shareholders will no longer have to wait days for transactions that depend on a signature guarantee to be completed. That ease and speed translates to greater peace of mind.

Learn much more about the new U-STAMP signature guarantee process during SSA’s Universal STAMP and Digital Medallions webinar on Jan. 13, 2022. Andrew Weitzman from Kemark Companies, Ron Gallagher from Hampton Technologies and Melissa Tinker from Community National Bank will outline the new program and how SSA members can participate. Register today.

“I loved that even though it was virtual, there were plenty of opportunities to network. The networking platform was great,” an attendee commented after the conference. “The meeting platform was great too – zooming in on speakers and/or presentations was nice… The topics and speakers were all timely and on point.” 

The conference kicked off with Conference Chair Kim McKiernan and SSA President Kim Hanlon welcoming conference participants and encouraging them to make the most of their time at the virtual event.

“If you’ve participated in SSA’s virtual roundtable events during the past year, you already know how much we can learn from each other through virtual events like this,” Hanlon said. “So, take advantage of every opportunity over the next two days – not only the educational sessions, but the networking events as well.”

Educational Sessions

Educational sessions began with Becoming Aware and Mitigating Hidden Costs session, moderated by Andy Wilcox and featuring Steven Bain from WEC Energy Group, Larry Karp from Brighthouse, Melodie Morin from Thermo Fisher and Matthew Paseka from EQ. They explored how to recognize hidden costs in shareholder servicing and corporate actions and shared strategies for reducing costs without sacrificing service.

Technology is always a hot topic, so the Bridging the Tech Gap session provided a great opportunity for SSA members to learn about attracting the next generation of investors with on-the-go tools and apps while balancing the needs of more veteran investors. The session featured moderator Bill Kennedy from Broadridge and speakers Rich Babineau from Mediant, Julie Silver from ComputerShare and Josh McGinn from AST.

“Shareholders have become more tech savvy over the years,” said Silver. “They expect more immediate responses when they interact with us and overall want things to simply be easy. Our focus recently has been on delivering mobile-friendly experiences for shareholders, whether online, using text message, email or even print communications to launch them into an online experience.”

The DTCC Update session examined the Depository Trust & Clearing Corporation dematerialization and T+1 initiatives. Kevin Burns moderated, and panelists Jon Ciciola and Joyce McCabe from DTCC and Nicole Mauney from Duke Energy discussed how shareholder services member practices are affected by these projects.

The final educational event of the conference’s first day was the Annual Meeting Best Practices session, moderated by Dorothy Flynn from Broadridge and featuring panelists Kristina Veaco from Veago Group, Stephanie Collins from Marathon Oil, Paula Jones from Citigroup, Josh McGinn from AST and Brian Valerio from Alliance Advisors.

“Many of our SSA members who hold their annual shareholder meetings during the first six month of the year are at that moment in time when you’re thinking about next year’s meetings,” Flynn said. “What will you do that’s different? What will you do that’s the same? How much impact with COVID have? Will our boards travel or not travel?”

The Sept. 23 conference educational sessions began with Legal and Regulatory Updates, highlighting updates, changes, impacts and requirements of regulatory bodies that govern the shareholder services industry. Moderated by Katie Sevcik from EQ, the session featured Eric Garvey and Moshe Rothman from the Securities and Exchange Commission, who shared their insights.

The Unclaimed Property Updates session was moderated by Melissa McCarthy Colucci from EQ and featured panelists Jennifer Borden from Borden Consulting Group, Heather Gabell from MarketSphere Unclaimed Property Specialists and Brian McCarthy from Sovos. They discussed legislative and legal updates in the unclaimed property space as well as audit trends.

Pam Wentz from Georgeson moderated the Unclaimed Property State Panel, which featured an expert lineup of state administrators – Kelly Kuracina from New York, Allen Mayer from Illinois and Bryant Clayton from Texas. They shared their perspectives on unclaimed property trends affecting administrators and property holders.

The conference wrapped up with an Open Forum, moderated by Kim McKiernan from The Walt Disney Company and Stacey Betson from Mastercard. This session gave participants a chance to further discuss topics touched on during the panel sessions and share their recent challenges and experiences.

Networking and Social Connections

Woven throughout the event were several opportunities for conference participants to relax, have some fun and connect with other attendees.

Each day included 90 minutes to gather in the Networking Lounge to chat with other shareholder services professionals and service providers. This format gave participants the ability to have one-on-one and small group video chats, move from group to group and invite other attendees to their virtual table.

Another popular networking feature was the Game Day Event, which featured teams of attendees matched against each other in a few friendly competitions.

Thank You

The 2021 SSA Annual Conference wouldn’t have been possible without the planning, support and participation of many SSA members. Thank you to the volunteers, speakers and attendees for sharing your time and knowledge to make the event such a success. Thank you also to our event sponsors for supporting SSA and the shareholder services community:

• Champion Sponsors: EQ and Broadridge
• Corporate Sponsors: ComputerShare/Georgeson and Sovos
• Networking and Patron Sponsors: Donnelley Financial Solutions, Depository Trust & Clearing Corporation, Continental Stock Transfer & Trust Company, and EQ
• Supporter Sponsors: Ellen Philip Associates, Refintiv, The Shareholder Service Optimizer, Shareholder Service Solutions, MarketSphere, and AST

Planning is already underway for SSA’s 2022 Annual Conference at The Guest House at Graceland in Memphis, Tennessee. Mark your calendar today for July 25-27, 2022, and watch for registration details in the months leading up to the event.

With the Shareholder Services Association Annual Conference just days away, SSA offers these tips for getting the most from your virtual conference experience. 

Plan in advance. Spend some time reviewing the agenda a few days before the conference begins. Highlight the sessions and events you plan to attend (hopefully all of them). Consider what you hope to get out of each educational session and make note of any questions you have related to the featured topics.

Decrease distractions. Because you are likely to attend the conference from work or home, you’ll be surrounded by more distractions than you would in a remote conference center. Before the conference starts, block your calendar, set an automatic email responder notifying coworkers and other emails that you’re unavailable during the event, and turn off your phone or use its do-not-disturb settings.

Avoid multitasking. You may be inclined to get some other work done while also participating in conference events. Avoid this temptation. You’ve paid to attend because you know the event holds potential value, but you won’t tap into that value if you’re treating it like background noise. Quit out of other applications on your computer, and fight the impulse to check your social media feeds, news and other websites during conference events.

Go somewhere different. For an in-person conference, the distinct location forces you out of day-to-day work mode, focusing your attention on the event. If possible, participate in the conference from a location different than where you normally work. If at the office, use a meeting room. If at home, use a different room than your usual workspace. If these aren’t viable options, at least consider sitting in a different part of the room than you do during your normal workday. Anything you can do to make the conference location distinct will help put you in “conference mode” rather than “normal work mode.”

Take written notes. The act of writing out notes helps you absorb more information – even if you never refer to them again. It also helps you focus on what presenters are saying and the information you’re learning.

Be engaged. During virtual conferences, speakers typically respond to questions from attendees, and other participants may share valuable information via the conference platform’s chat function. Take advantage of these features. If you need clarification or have questions, ask. The responses will help you and other participants.  

Make connections. In addition to stellar educational sessions, the SSA Annual Conference includes networking events. Participate. You’ll have some fun, make a few connections and add to the knowledge gained in the educational sessions. Make sure to visit with service providers who are sponsoring the event. They’re a great resource and can often provide helpful ideas and perspectives.

Shake off the cobwebs. Between conference events, stand up, stretch out, refresh your coffee and take a bathroom break. These simple acts help you stay focused and refreshed during each event and help you reset for the next session or activity.

Don’t leave it behind. Schedule some time a few days after the conference to review notes and follow up with panelists or other attendees with whom you connected. If there’s something you missed because of an emergency or disruption, view the archived session video.

You’ll get as much out of a virtual conference as you put into it. Make it a valuable experience by actively participating. If you fully engage, you’re more likely to absorb more information, tap into new resources and enjoy the event. We look forward to seeing you at the conference!

1. Convenience. With a virtual conference, participating is as simple as registering and clicking on a link to connect on the day of the event. Join from your home, office or anywhere you can get online with no travel required. Attending is hassle-free.
2. Health and Safety. Unfortunately, we all continue to deal with the ramifications of the COVID-19 pandemic. Virtual conferences eliminate the extra worry that comes with sharing physical space with a large group. They also come free of any uncomfortable handshake scenarios.
3. Comfort. For the roughly 40% of people who are introverts, in-person conferences can be intimidating and uncomfortable. Virtual events make it easier for these more reserved attendees to take part without leaving their “comfort zone.”
4. Budget-friendly. With virtual events, the only cost is the registration fee. There’s no travel, no hotel and no restaurant meals. For professionals who are unable to attend in-person conferences due to budget constraints, virtual events are a welcome solution.
5. Time-effective. Being away from day-to-day work during a conference and trying to keep up with pressing issues between sessions are common challenges. While it’s still ideal to disconnect from email and phone calls while virtual conferences are in session, they offer an easier environment for reconnecting and “putting out fires” quickly when events wrap up for the day. Plus, if you do get pulled away, you often have access to session recordings after the event – 30 days for the upcoming SSA Annual Conference.

If you don’t normally attend the SSA Annual Conference, this year’s virtual format offers a great opportunity to experience it for the first time. If you normally attend but haven’t yet registered because it won’t be the same experience you’re used to, embrace the advantages that come with virtual events and give it a try.

SSA invites you to stay in touch, informed and connected on Sept. 22-23. Register today.

Now that the pandemic conditions have been in place for more than a year, that level of forgiveness is subsiding. Shareholders expect that companies have figured out how run a virtual meeting comparable to an in-person meeting.

As companies continually refine their annual meeting procedures, Rick Hansen, assistant corporate secretary and deputy general counsel for HP, recently shared with SSA several principles for giving shareholders the annual meeting experience they want.

“Don’t be afraid of virtual annual meetings,” Hansen said. “Whether you’re a shareholder, an institution or a service provider, there’s not a whole lot to be afraid of here. The technology may be new and different, or the processes may be a little different, but if the community embraces virtual annual meetings, it will elevate and improve the level of discourse and quality of the annual meeting experience.”

Plan early

Select your service provider and work together closely. Last year, companies had limited time to prepare and may not have had the ability to thoroughly explore and compare their options. With adequate time available for future meetings, it’s important to choose a provider who provides the services needed and a high level of collaboration well in advance, ensuring the event runs smoothly.

Mimic the in-person experience

Consider what shareholders experience at an in-person event and find ways to closely emulate it. This includes:

• Hold the meeting with video, giving shareholders the ability to see the faces of speakers.
• Allow directors and managers to introduce themselves.
• Give shareholder proposal proponents a reasonable opportunity to speak and have their ideas heard.
• Provide shareholders the opportunity to submit questions in advance and during the meeting in writing, and to ask questions live.
• Ensure reasonable time for voting.
  
  

Be transparent

Clearly communicate meeting procedures and rules of conduct, including rules for admission, participation, speaking and asking questions. It’s essential for companies to include clear instructions in their proxy materials, on their websites and on the meeting platform outlining how to participate in the meeting. Shareholders should have easy access to rules for submitting and presenting proposals and questions.

Companies should also clearly present a process for addressing questions that aren’t answered during the meeting. Be transparent upfront that there may not be an opportunity to address all shareholder questions during the meeting but include details about how they will be handled after the meeting.

Rehearse and test

Rehearse your procedures and test your technology before the day of the meeting. That may seem obvious, but some companies wait until it’s too late to test and retest, and the lack of preparation often shows. Shareholders need to have a seamless experience that’s informative, allows them to participate and meets their expectations. Testing and rehearsing multiple times before going live helps ensure that’s what they get.

Have a backup plan

Technology can be fickle, so have a plan in place in case an aspect of the meeting doesn’t go as planned. It’s better to have a contingency option and not need it than to need one and not have it.

Change can be difficult, but virtual meetings are here to stay, and embracing them can improve participation and build greater shareholder engagement.

“The level of attendance and participation in annual meetings has increased markedly with the advent of virtual meetings,” Hansen said. “That is one of the principal benefits of having a virtual meeting – the opportunity to open the doors to a much larger group of individuals and shareholders who, if they can’t be there in person, now have an opportunity to participate.”

To learn more about annual meeting best practices and a myriad of other shareholder services hot topics, register today for the 2021 SSA Annual Conference on Sept. 22-23. Learn more and register today.

• Eliminate new issuances of securities in physical form.
• Establish a streamlined process for the conversion of existing physical securities to electronic form.
• Promote DTCC’s FAST Program by supporting the conversions of non-FAST agents to FAST in order to transition away from high-touch processing.
• Incentivize participation in Direct Registration System.
• Deliver low-touch processing of restricted equities securities.

Collaboration with stakeholders is essential to achieving these goals, and DTCC Senior Relationship Manager Joyce McCabe outlined DTCC’s outreach efforts and subsequent feedback during an SSA webinar in April.

“Our team at DTCC has conducted a lot of outreach to many clients and industry partners,” she said. “We’ve had a lot of positive feedback. We’re also engaging with the exchanges and are quite optimistic that an updated rule filing will be completed in the near future.”

DTCC is hopeful for a mandate of DRS statement-only issuances for all newly listed equities, which would stop paper somewhat for equities going forward. Next, DTCC would develop a plan to address removing existing paper certificates from the marketplace.

“We’re in discussions with broker-dealers, custodians and other transfer agents on the restricted equities,” McCabe said. “We’re hearing that a standardized solution to eliminate all the certificate issuance would be optimal for all. This requires industry collaboration, and we’re going to do all of the outreach and industry meetings to make sure that we come up with a solution that works for everyone.”

Positive signs indicating that the time is right for dematerialization is a recent uptick in applications by transfer agents to become FAST-eligible and feedback from stakeholders as part of DTCC’s other modernization efforts.

“Certificate processing will be an issue if we’re shortening the settlement cycle to T+1,” McCabe said. “There have been a lot of technology advancements, such as electronic signature guarantee and processing options that are making transactions more secure, so it’s an opportune time to address the remaining certificates in the marketplace.”

As the DTCC continues to work toward its dematerialization goals, the organization plans to continue engaging with stakeholders and industry working groups. It will also address the topic when working on electronic medallion, document processing and other current initiatives.

Learn more about DTCC’s dematerialization goals, T+1 initiative and other projects during the Hot Topics with DTCC session at the 2021 SSA Annual Conference on Sept. 22-23. Learn more and register today.  

In addition to the significant work required to complete an audit, the financial liability can be excessive as well. Driven by contingency-fee pay structures, third-party auditors retained by the states are motivated to uncover as much liability as possible and when complete records are unavailable, estimated liability can cover lookback periods of more than 10 years, depending on the states involved.

“Securities audits have increased in volume and breadth over the past several years,” said Jen Borden from Borden Consulting Group. “Although there’s a tendency to rely on transfer agents, shareholder services professionals should be very engaged because it’s their shareholders and their company reputations that are on the line.”

There’s no question that undergoing an audit is intimidating, but unclaimed property holders can take steps to minimize their pain.

Take it seriously. If you receive an audit notification, do not ignore it. Responsiveness is vital.

Form a team. Designate the person who will manage the audit process, interact with the auditors and compile documentation. Make sure legal counsel is involved, as they may identify issues with auditor requests that should be challenged.

Consider seeking help. If an audit will burden employees beyond capacity or they don’t have the experience needed to handle the audit alone, consider retaining a reputable service provider with audit expertise.

Be organized. Auditors will request a multitude of documents to establish the audit’s scope. They may span several departments and multiple property types. Keep careful track of the documents requested, gathered and provided.

Be responsive and communicate. If you are unable to comply with a document request within the designated timeframe, speak with the auditor early. Communication is key to maintaining a respectful, cooperative relationship throughout the process. Auditors are more likely to respond favorably to extension requests if you’re responsive and communicate challenges promptly.

Consider additional exposure. If you identify liability in states that aren’t included in the audit, consider preemptive resolution through participation in a voluntary disclosure agreement program, if available.

Undergoing an unclaimed property audit is not ideal, but companies can make the most of the experience by tightening up their processes, patching holes when additional liability is discovered and decreasing their future risk.

“There was a brief lull in audit activity during the COVID-19 pandemic, but it has picked up again,” Borden said. “There have also been a number of noteworthy court decisions impacting audits. Staying up to date with these developments is important for anyone who could be faced with an unclaimed property audit.”

For more insight into the latest trends and lessons that can help alleviate the audit burden, join SSA at 3 p.m. EDT on June 24, 2021, for the Tips for Surviving Your Unclaimed Property Audit webinar, led by Jen Borden from Borden Consulting Group. Register today.

VDAs provide holders an opportunity to resolve noncompliance issues voluntarily, without the daunting challenges presented by a state-driven audit. Another significant benefit of VDAs is the willingness by states to waive interest and penalties for holders that successfully complete a VDA and agree to comply going forward.

“If in the course of preparing your report you identify one item or a couple items that should have been reported last year – or maybe they should have been reported many years ago – come forward with what are the circumstances around why they weren’t picked up last year or the year before,” said Kelly Kuracina, assistant bureau director, New York Comptroller’s Office of Unclaimed Funds, during a recent SSA webinar. “The voluntary disclosure program is a vehicle we can use when we have different types of circumstances, and we have the ability to say interest may not have to be paid on the account.”

States expect holders entering into a VDA to complete a thorough process and review. They provide specific guidelines and steps for holders to follow. Before entering into a VDA, holders should review the state’s VDA specifications, understand state expectations and consider whether they are realistically able to meet meeting those expectations.

Understanding the process and the deliverables needed by the state is vital to completing the VDA steps successfully.

The VDA process typically requires a review of available records to determine amounts to be escheated. Holders should evaluate whether necessary records are readily available to make these calculations. When they aren’t, estimation may be required by some states.

Also evaluate the availability of employees in all of the departments affected by VDA participation – accounts payable, legal, treasury and marketing, for example.

VDA qualifications vary by state, so holders should determine whether they qualify before applying. States generally don’t allow companies already under audit to participate, and some states don’t admit holders into a VDA if they have previously filed to participate.

Upon establishing that a VDA may be a beneficial and available option, holders should notify the state of their desire to complete the VDA process. This usually requires completing an application and awaiting state verification that the company qualifies. 

Participating in a VDA is a lot of work but, in many cases, it is a preferred option over a state-driven audit. Holders maintain far greater control over the process, generally spend less time and money, and often avoid exorbitant penalties and interest.

“Illinois is generally pretty amenable to waiving interest and penalties to holders who just want to get into compliance,” said Allen Mayer, chief of staff, Illinois State Treasurer, during an SSA webinar. “We don’t give you an agreement not to audit, although the odds are pretty good that if you’re coming forward with a VDA and you’re complying… that you’re not going to be on our audit list.”

Whether your company has been selected for an unclaimed property audit or you want to be prepared in the event it is, join SSA on June 24, 2021, for the Tips for Surviving Your Unclaimed Property Audit webinar with Jen Borden. Register today.

Keeping these lessons of the pandemic era in mind, examining how emerging technologies in other industries may solve problems and improve efficiencies is worthwhile. One such technology you’ve likely heard about is blockchain. Closely associated with bitcoin and similar cryptocurrencies, blockchain technology is also being used beyond the crypto space and has the potential to be widely adopted in many industries.

But what is blockchain, and how might it affect shareholder services professionals?

At its most basic, blockchain is a decentralized ledger. It exists on a peer-to-peer network rather than in a physical form or in a central clearinghouse. When the network receives a transaction request, it automatically verifies that the transaction is valid and, if so, combines it with other incoming transactions as a new block of data, added to the blockchain ledger. The blockchain entry is permanent and unchangeable.

This two-minute video provides a simplified illustration of how blockchain works.

Blockchain benefits include transparency, permanence and accuracy, making it a potential solution for numerous business applications. Among the potential uses that may be most beneficial for companies with shareholders are distributions and proxy voting.

To learn more about blockchain basics and examine their applications in the shareholder services space, join Jeff Bandman from Bandman Advisors and Mas Nakachi from BlockAgent on May 20 at 2 p.m. EDT for SSA’s Blockchain 101 webinar. Register today.

But there’s another side of the story we don’t usually talk about: VSMs generate significantly lower carbon emissions than in-person meetings. This is especially important given that opposition to the VSM format is often grounded in ESG principles – shareholder advocates, however, tend to focus on the governance component of ESG, but don’t typically account for the environmental component.

We believe environmental concerns should be a key consideration. Our data shows that, compared with in-person events, VSMs can help issuers reduce their AGM-related carbon footprint by 99.9 percent.

The climate impact of in-person events

For the past two decades, academics and climate advocates have criticized carbon emissions associated with large conferences and gatherings. In 2016, for example, a landmark study titled Economic Significance of Meetings to the US Economy found that the average three-day, 1,000-person national conference generates about 584 tons of CO2 emissions. To put that in context, a car that gets 25 miles to the gallon of gas emits approximately one pound of CO2 for every mile driven. So, 584 tons is equivalent to a car driving for more than 1.1 mn miles. That’s a lot.

Established frameworks tend to measure conference CO2 emissions across four dimensions:

• Travel – Obviously, getting to a conference typically requires travel, often air travel.  The same is true for shareholder meetings but, because these meetings convene executives and directors, there’s a much higher likelihood that attendees will travel business class or by private jet. Both obviously contribute more CO2 than main cabin seats. Local attendees can compound climate impact, as employees and shareholders travel by car or train
• Hospitality – Depending on the location of the event, issuers will likely require hotel rooms for management and employees. Between energy use for heating, cooling and washing linens, carbon emissions can add up. In fact, a 2016 study by Econometrica found the typical hotel stay produces 50 pounds of CO2 emissions per night
• Event space – The event space itself also carries an environmental burden. There’s significant energy required to heat and cool large venues, but even small ones make carbon impact. Plus, some events cater food, beverages and more
• Materials – Walk into any conference and you’ll see hundreds of swag bags, programs, brochures, booths, and so on. All of these require enormous energy to produce, print and ship. Anything created for in-person attendees will have a carbon impact. 

How much do VSMs minimize carbon impact?

Broadridge recently created a calculator that estimates and measures the potential carbon impact of shareholder meetings. By subtracting the total carbon emissions associated with a VSM from those associated with an in-person meeting, we can approximate the net-carbon reduction of moving to a VSM.

VSMs are not carbon-neutral. There is still some environmental impact owing to the energy required to operate computer servers and data storage. We estimate VSMs produce around .0055 metric tons of CO2 per event. That translates to 11 pounds of carbon emissions, or the equivalent of an 11-mile car ride. No doubt this represents a tiny fraction of the emissions we might expect with any in-person event, no matter how large or small.  

To illustrate the potential carbon reduction associated with a VSM, here is a real-world comparison using Broadridge’s own 2019 and 2020 annual meeting data. Given COVID-19, this past year we elected to have our board participate in the annual shareholder meeting remotely. Even though the Broadridge shareholder meeting has been virtual for several years, we typically fly the board members to the meeting so they can convene in one room for the event. By not flying the board this year, we achieved a 99.9 percent reduction in carbon impact compared with the event last year:

• 2019: 4.66 MtCO2e
• 2020: 0.43 MtCO2e

This reduction in carbon is the equivalent of 11,553 miles driven by an average passenger vehicle, or 524 gallons of gasoline consumed.

The climate-friendly choice

VSMs are not just about convenience and cost-savings. More importantly, they create opportunity for issuers to reduce their overall carbon footprint.

Although the impact of a single shareholder meeting might be relatively small in the scheme of things, taken in the aggregate, universal VSM adoption could yield meaningful carbon reduction across the industry.

It’s a goal worth pursuing and a story worth telling. 

“From Physical to Digital: Advancing the Dematerialization of U.S. Securities” promotes a partnership between the DTCC’s depository subsidiary, the Depository Trust Company, and industry stakeholders, including banks, brokers/dealers, transfer agents, issuers, regulators, industry associations and exchanges. Together, DTCC seeks to achieve several goals within three to four years:

• Eliminate new issuances of securities in physical form.
• Establish a streamlined process for the conversion of existing physical securities to electronic form.
• Promote DTCC’s FAST Program by supporting the conversions of non-FAST agents to FAST in order to transition away from high-touch processing.
• Incentivize participation in Direct Registration System.
• Deliver low-touch processing of restricted equities securities.

“The complete dematerialization of physical securities, fully transitioning away from paper to electronic records, will contribute to a more cost-effective, efficient, transparent, secure, competitive – and above all, resilient – marketplace for all,” said Murray Pozmanter, DTCC managing director and head of clearing agency services. “The world of online – not only cashless but contactless – commerce has accelerated and has forever reshaped every aspect of consumer behavior. Physical securities processing is no different, and it is well past the time we, as an industry, must move forward together toward a better solution that reduces risk to the marketplace.”

According to the DTCC, less than 1% of assets it services through the DTC are still in physical form. However, they represent a significant value of $780 billion.

While most consumers have increasingly embraced digitalization of transactions, some still prefer and depend on physical interactions. In many cases, this preference is generational. For older consumers, physical items, such as stock certificates, seem more real and meaningful than electronic transactions.

For some consumers, buying a single share of stock in popular consumer brands like Apple, Disney or Microsoft as gifts was a tradition. Grandma and grandpa would give grandchildren a single share of stock when they were born, and the children grew up with the framed certificate on their wall. Many of those certificates have sentimental value, or have been lost or discarded.

Replacing physical certificates is expensive for shareholders, who have to pay between 2% and 4% of the stock’s value plus a processing fee to have replacement certificates issued.

“If the industry finally dematerializes completely, it will eliminate the burden for shareholders and transfer agents,” said senior manager of investor relations Kim McKiernan. “Everything will be in book entry form. The shareholder will not need to present that document, and they can sell shares like they would at a brokerage firm – all electronic. It’s 100% positive.”

Companies that have undergone dematerialization as part of corporate actions recognize the long-term benefits require some short-term challenges.

“When we ask shareholders to return stock certificates, it will always be met with challenges,” said Nicole Mauney, senior investor relations analyst with Duke Energy Corporation. “Either shareholders lost their certificates, don’t know they have them, or the fees to replace them are cost-prohibitive.”

Because of these challenges, Mauney supports designating a transition date when stock certificates lose their value rather than requiring shareholders to return them.

“Explaining to shareholders that they need to exchange their original physical certificates and, if they can’t locate the certificates, pay a bond premium to replace them can often be a frustrating conversation for the shareholder,” Mauney said. “The last thing any company wants to do is upset shareholders. It’s a lot easier to explain that physical certificates no longer hold value because of a change in the market’s policies. When every corporation is doing it, it’s very different than doing it on our own.”

McKiernan believes the long-term benefits of dematerialization justify the short-term burdens to issuers and transfer agents of programming needed to move and record the shares.

“It’s going to be so good for the shareholder,” McKiernan said. “They’ll be confused about it at first, but to have everything in book-entry format will be very positive. I can’t wait for it.”

Dematerialization is one of several important DTCC initiatives affecting shareholder services professionals. Join Jon Ciciola and Joyce McCabe from DTCC, along with Kevin Burns from Computershare, on April 29 at 2 p.m. EDT to learn the latest about these initiatives, including dematerialization, the T+1 settlement date transition, system modernization and more. Registrants are invited to submit questions for the panelists to address during the webinar as well. Register today for SSA's Fireside Chat with DTCC webinar.   

Most corporate boards recognize the urgency of environmental, social and governance (ESG) strategy and oversight. They also typically appreciate how social responsibility and governance can impact long-term business risk and growth.

But it’s not always clear how environmental concerns figure into the equation, especially for corporations outside of the oil, materials and manufacturing industries or other sectors in which one might find an obvious relationship between business activity and climate impact.

In short, when it comes to ESG, the “S” and the “G” are relatively straightforward, but sometimes the “E” remains elusive.

How do environmental issues figure into ESG strategy for corporate boards in sectors such as technology, financial services and health care? The following are the core risks and opportunities, as well as actions boards can take to help navigate these environmental issues.

Risks Associated with Climate Change

ESG experts have identified three specific risk areas relating to climate and the environment. First, there is physical risk. Rising temperatures link to wildfires, resource scarcity and flooding around the globe. In concrete terms, these natural phenomena caused by climate change can physically damage or destroy the large real estate footprints of health care providers, data warehouses maintained by technology companies and real estate or other physical assets on the balance sheets of banks and financial institutions.

Inversely, increasingly frigid temperatures in certain parts of the world can lead to power outages and infrastructure breakdowns, which have the potential to affect entire swathes of customers, causing health problems and reducing access to technology. In addition, climate disruption can lead to widespread adverse health effects, including disease from poor air quality and pathogens in food and water. Sudden increased demand for health care offerings could lead to under-capacity and ongoing strain on services.

Next is what experts call transitional risk.There will be disruption as corporations move to green technology and clean energy and as governments apply stricter climate and carbon regulations. Along with cost considerations, some corporations will need to perform more proactive vendor oversight and forge new business relationships. Consider, for example, that tech giants such as Apple or Microsoft Corp. have vast supply chains they will need to monitor and adapt to advance climate goals. Pharmaceutical companies will also need to explore new manufacturing processes.

In addition, technology and health-care companies with multinational operations are exposed to multiple jurisdictions of climate change regulations such as carbon taxes, emissions trading schemes, and other fossil fuel taxes, creating financial risks on several levels. Banks will need to make tradeoffs, too, as they shift commercial lending practices to favor climate-responsible companies. Health-care providers may need to reexamine energy and waste management practices. Taken together, the business and regulatory trend toward environmental responsibility could impact business strategy as much as any other risk.

Finally, there’s reputational risk. Company perception makes a big difference to valuation and long-term growth. Consumers are looking for more a sustainable delivery of products and services. Meanwhile, social media campaigns intensify pressure on perceived climate offenders. From a talent acquisition and retention perspective, companies will need to go beyond platitudes and truly walk the walk to entice workers who increasingly want corporations to get involved in issues outside the traditional scope of business.

Taking a wider lens, climate change will likely impact consumer behavior and economic activity, incite political unrest, and disrupt supply chains and shipping networks. In short, climate change creates uncertainty. And uncertainty—no matter the industry—creates near- and long-term risk for which corporate boards will need to account.

Where There’s Risk, There’s Opportunity

Each of these risk areas also creates incredible opportunities for businesses to capitalize on shifting consumer habits, evolving business models, and industry disruption. Consider the new American Express Green Card, manufactured exclusively from recycled materials. Not only does the card help to concretely reduce the company’s carbon footprint, but it also provides an opportunity to appeal to the next generation of credit consumers.

Of course, potential opportunities stretch far beyond brand perception. For example, Amazon.com recently announced an initiative to achieve carbon neutrality by 2040. To be sure, the pledge has garnered headlines and helps to promote consumer goodwill, but more importantly it reflects the enterprise’s huge investment in clean energy. In the long run, analysts expect the initiative could generate significant savings for the tech giant as solar and wind technologies vastly reduce fuel and energy costs. Companies will continue to find ways to maximize resource productivity and energy efficiency.

In a similar vein, health-care providers are tapping into new business models, making use of remote telemedicine technologies that do not require in-person office visits. This will help reduce overall real estate needs and significantly cut down on travel to and from the doctor’s office. For their part, banks and other financial services companies are directing more investment into clean technology firms. Again, these shifting strategies might be spurred by investor and consumer pressures, but they also embody efforts to drive returns from investments in new technologies and emerging business models.

Implementing "E"-focused ESG Oversight

There is ample evidence that organizations do not take climate issues as seriously as they should. Reviewing recent survey data, the authors found that boards are not asking executives for information about climate risks—and executives are not appointing ownership for climate risk and strategy.

Clearly, there is a need for more urgent and decisive action. Here are five things your board can do right now.  

1. Consult existing frameworks to help conceptualize climate issues and potential impact. Standard frameworks such as those from the Sustainability Accounting Standards Board or the  Task Force for Climate-related Financial Disclosures provide insight into industry- and sector-specific disclosure criteria that can help guide conversations and clarify areas of focus.
2. Assign an environmental sustainability team or subcommittee. This might require the board recruiting for specific sustainability expertise. It might also require creating new leadership roles, up to and including a chief sustainability officer.
3. Establish metrics and goals. Boards will need to prioritize short- and long-term objectives. Consider financial materiality and environmental impact: how will you incorporate your growth strategy into a wider environmental purpose? Common metrics include the sales growth percentage of ESG-friendly products, the number of new ESG products developed, and reduced contribution to Scope 3 emissions.
4. Take stock and benchmark against established frameworks. Look across each metric to find out how you stack up both against internal goals and industry peers. The same frameworks used to conceptualize climate issues should also be used to measure and track progress.
5. Tell your story. Many boards find that their organizations are already doing a lot to advance more sustainable business practices. But companies must consolidate all of that work into a single narrative they can showcase to stakeholders.

Potential for Major Impact on Voting
TD Ameritrade’s elimination of the practice of issuing discretionary voting at meetings of shareholders may have a major impact on the number of shares represented at shareholder meetings in the 2021 proxy season and beyond.

TD Ameritrade (TD) is one of the country’s largest brokerage firms, providing investing and trading services to over 11 million client accounts with more than $1 trillion in assets, according to the company’s website. The shares custodied at TD often represent the largest brokerage position for many issuers, therefore, the loss of the discretionary vote from TD is significant. The change at TD follows the elimination of discretionary voting by Charles Schwab and other brokers and continues a disturbing trend for issuers that rely on the discretionary vote.

What is discretionary voting?
Under the rules of the New York Stock Exchange (NYSE), brokers can vote “in their discretion” on matters that the NYSE deems to be “routine”, such as the appointment of auditors, reverse stock splits, and increases in authorized common stock (with certain exemptions). (See https://www.sec.gov/investor/alerts/votinginannualshareholdersmeetings.pdf)

What this means is that when an issuer has a shareholder meeting, they will send proxy material to all shareholders, including those that hold shares through brokers (in “broker name”). If shareholders holding in broker name (often referred to as “retail holders”) do not return a proxy to their broker, their broker has the right to vote those uninstructed shares using the discretionary voting authority granted by the NYSE. (See https://www.sec.gov/investor/alerts/votinginannualshareholdersmeetings.pdf)

By way of example, if a broker holds 1,000,000 shares on behalf of underlying retail holders, and those retail holders only vote 200,000 shares, the broker can vote the remaining 800,000 in its discretion and will issue a proxy for 1,000,000 shares.

Brokers have the choice of not voting the 800,000 unvoted shares or voting the uninstructed in their discretion. Brokers that issue discretionary voting have the option of voting all uninstructed fully in their discretion (typically in line with the board’s recommendation), or the broker can vote shares in the same proportion (For, Against or Abstain) as the shares voted by retail holders that returned a proxy (proportional voting).

Without discretionary voting, the broker could only issue a proxy for 200,000 shares.

Why is this important?
The decline in discretionary voting, now exacerbated by the loss of TD’s discretionary vote, is a real concern for many issuers that rely on the discretionary vote. This is because, without the discretionary vote, the returns from retail holders often clocks in at under 25% of the shares held by those holders.

For some issuers, especially small cap companies or those in certain sectors, that have a significant number of shares held by retail holders in broker name (often over 50% of the outstanding shares), the decline in the discretionary vote poses problems on two fronts.

The first problem may be obtaining enough votes just to reach a quorum necessary to hold the annual meeting. For most companies, the ability to conduct business at their annual meeting requires that a quorum of 50% of the outstanding shares be represented at the meeting either in person or by proxy.

To ensure a quorum, many companies include the approval of auditors (which, as noted, is routine and allows brokers to issue a discretionary vote) on the agenda solely to trigger the discretionary vote. But with the decline in overall discretionary voting, the dilemma some issuers will face is simply achieving a quorum of 50%.

The second problem is the impact that the loss of the discretionary vote will have on specific proposals, such as reverse splits and increases in authorized. Over the years, many issuers have depended on the broker discretionary vote to pass these proposals. However, as with achieving enough votes for a quorum, the ability to pass these proposals may now be in doubt.

Even companies that are not concerned about achieving a quorum to hold the annual meeting or passing certain proposals, should be cognizant of the fact that the loss of the TD discretionary vote may result in a decline in their overall vote. Alerting senior management and the board to this fact, in advance of the annual meeting, may be prudent.

What to Do?
The elimination of discretionary voting at TD and other brokers means that issuers need to take a hard look at their shareholder profile in advance of a solicitation to determine the number of shares held by brokers; specifically, by those brokers that issue a discretionary vote and those that do not. This analysis is critical to determine how the diminished broker discretionary vote will impact the vote at the 2021 annual meeting and whether additional measures (phone calls, mailings, etc.) may be needed to increase voting.

It is likely that the deterioration of the broker discretionary voting will continue. We will monitor these changes and alert our clients to significant developments that may impact their annual shareholder meetings.

We welcome blog post submissions. Please email articles for review and consideration to tguy@shareholderservices.org.