1
00:00:00,000 --> 00:00:05,380
< Intro >

2
00:00:05,380 --> 00:00:06,834
– Welcome to Count Me In.

3
00:00:06,834 --> 00:00:09,800
I'm your host, Adam Larson,
and in today's episode,

4
00:00:09,800 --> 00:00:11,980
we're diving into the world
of shareholder engagement

5
00:00:11,980 --> 00:00:15,270
with Jonathan Smalley,
co-founder at Proximity.

6
00:00:15,270 --> 00:00:16,500
We'll uncover why strengthening

7
00:00:16,500 --> 00:00:19,140
shareholder engagement
is more crucial than ever,

8
00:00:19,140 --> 00:00:20,530
and why it's imperative for navigating

9
00:00:20,530 --> 00:00:22,700
the upcoming political landscape.

10
00:00:22,700 --> 00:00:26,610
From climate change to the rising
influence of retail shareholders.

11
00:00:26,610 --> 00:00:29,859
We'll explore the global factors
impacting shareholder engagement,

12
00:00:29,859 --> 00:00:32,829
and the shift towards
digitalizing proxy voting.

13
00:00:32,829 --> 00:00:34,380
Jonathan shares valuable insights

14
00:00:34,380 --> 00:00:36,950
on bridging the gap in
shareholder communication,

15
00:00:36,950 --> 00:00:39,760
and the potential benefits
for organizations.

16
00:00:39,760 --> 00:00:41,320
Get ready to gain a deeper understanding

17
00:00:41,320 --> 00:00:42,870
of the challenges and opportunities,

18
00:00:42,870 --> 00:00:44,000
in shareholder engagement.

19
00:00:44,000 --> 00:00:50,333
< Music >

20
00:00:50,333 --> 00:00:52,667
– Well, Jonathan, I'm really excited
to have you on the podcast today.

21
00:00:52,770 --> 00:00:55,079
And we're going to be talking
about shareholder engagement,

22
00:00:55,079 --> 00:00:57,579
which is something not
everybody touches, necessarily,

23
00:00:57,579 --> 00:01:00,167
but it's a very important
part of your organization.

24
00:01:00,167 --> 00:01:02,000
Especially if you have
a board or shareholders,

25
00:01:02,000 --> 00:01:03,030
if you're a public company.

26
00:01:03,030 --> 00:01:06,409
And, so, what makes strengthening
shareholder engagement more critical,

27
00:01:06,409 --> 00:01:09,180
now than ever, for smoother
investor relations.

28
00:01:09,180 --> 00:01:12,000
Especially as we're going into 2024 here,

29
00:01:12,000 --> 00:01:14,150
as we're recording at the end of 2023.

30
00:01:14,150 --> 00:01:16,167
What makes that so important, right now?

31
00:01:16,167 --> 00:01:18,430
– Yes, firstly, thanks for having me, Adam.

32
00:01:18,430 --> 00:01:20,333
Yes, I'd say it's more critical than ever,

33
00:01:20,333 --> 00:01:22,666
but I'd say it's been critical
for quite a long time.

34
00:01:22,666 --> 00:01:27,666
But when we look at what's
behind us and what's ahead,

35
00:01:27,666 --> 00:01:31,166
there are some really big global
factors that are not going away.

36
00:01:31,166 --> 00:01:35,710
That are continuing to
heat things up, I feel like.

37
00:01:35,710 --> 00:01:38,210
I think as we head into 2024,

38
00:01:38,210 --> 00:01:42,909
also, it's the biggest political
election year, globally, ever.

39
00:01:42,909 --> 00:01:47,299
Big elections in the U.S.,
India, South Korea, Mexico,

40
00:01:47,299 --> 00:01:48,829
likely to be one in the United Kingdom.

41
00:01:48,829 --> 00:01:53,833
And a lot of the factors, actually, that 
re going to impact political elections

42
00:01:53,833 --> 00:01:56,333
are going to be considerations
when people go to the ballot box,

43
00:01:56,333 --> 00:01:59,080
are actually also
transferable to the boardroom,

44
00:01:59,080 --> 00:02:01,920
or to the annual general meeting hall.

45
00:02:01,920 --> 00:02:04,360
Things like climate change is
not going to surprise people,

46
00:02:04,360 --> 00:02:07,460
but that is something
that is extremely topical

47
00:02:07,460 --> 00:02:11,840
and is a key part of
issuer-shareholder engagement.

48
00:02:11,840 --> 00:02:15,499
Just this year, both inside
the U.S. and outside,

49
00:02:15,499 --> 00:02:18,099
more shareholding [Indistinct]
climate proposals than last year.

50
00:02:18,099 --> 00:02:21,989
And there are groups that cite
that as financially material

51
00:02:21,989 --> 00:02:23,430
to their investment decisions now.

52
00:02:23,430 --> 00:02:27,629
And not just people on the street,
but powerful, influential,

53
00:02:27,629 --> 00:02:31,300
institutional investor groups have got
together and made that determination.

54
00:02:31,300 --> 00:02:34,340
And they're not just asking issuers

55
00:02:34,340 --> 00:02:36,580
obviously, the regulators
are also calling for disclosures.

56
00:02:36,580 --> 00:02:39,180
It's also their service providers
that are asking to do more.

57
00:02:39,180 --> 00:02:40,569
They want net zero policies.

58
00:02:40,569 --> 00:02:44,480
They want better climate integration
into things like voting policies.

59
00:02:44,480 --> 00:02:47,980
And another one that's
been heating things up

60
00:02:47,980 --> 00:02:50,030
for a long time now is Say-on-Pay,.

61
00:02:50,030 --> 00:02:53,060
94% now of S&P 1500 companies

62
00:02:53,060 --> 00:02:55,140
have a Say-on-Pay vote every single year.

63
00:02:55,140 --> 00:03:00,040
Ten years ago that would have been
about 50%, so it's a big increase.

64
00:03:00,040 --> 00:03:03,499
And, I think, this year they,
against recommendations

65
00:03:03,499 --> 00:03:05,670
from the leading two
vote, advisors went down,

66
00:03:05,670 --> 00:03:07,832
but less against recommendations.

67
00:03:07,832 --> 00:03:11,709
But those resolutions got less
support this year than last year.

68
00:03:11,709 --> 00:03:14,166
So that makes those contests quite frequent.

69
00:03:14,166 --> 00:03:17,370
And, then, I think, kind of linked
to the climate change thing.

70
00:03:17,370 --> 00:03:21,832
You've got ESG versus increasing
anti ESG, pretty polarized,

71
00:03:21,832 --> 00:03:23,499
and I think that's also something.

72
00:03:23,499 --> 00:03:24,569
As I sort of mentioned before,

73
00:03:24,569 --> 00:03:26,910
is going to also play out in
political elections as well,

74
00:03:26,910 --> 00:03:29,110
not just in company elections.

75
00:03:29,110 --> 00:03:31,780
And then I'd say that the
big kicker to all of that

76
00:03:31,780 --> 00:03:35,165
is that we're just seeing
year on year more votes,

77
00:03:35,165 --> 00:03:37,860
particularly, more votes
from retail shareholders.

78
00:03:37,860 --> 00:03:39,620
Institutional shareholder
voting has been quite high

79
00:03:39,620 --> 00:03:42,890
for a number of years now
because of active ownership,

80
00:03:42,890 --> 00:03:45,439
because of stewardship of
codes, because of regulation.

81
00:03:45,439 --> 00:03:50,999
Retail, as a rule of thumb, has always
been 20, 25% maybe in a contest

82
00:03:50,999 --> 00:03:52,460
a little bit higher than that.

83
00:03:52,460 --> 00:03:56,499
So there's clearly much
more room for that to go into.

84
00:03:56,499 --> 00:03:58,165
And we've got some brokers going,

85
00:03:58,165 --> 00:03:59,739
"We're getting 30% a
year on year increase."

86
00:03:59,739 --> 00:04:01,165
Some retail shareholders voting, 

87
00:04:01,165 --> 00:04:04,665
and that's coming at a time where
we're going through millennials

88
00:04:04,665 --> 00:04:08,665
and Gen Z's inheriting anywhere
between $68 to $84 billion.

89
00:04:08,665 --> 00:04:10,170
And millennials, at the moment,

90
00:04:10,170 --> 00:04:12,900
are the most likely
generational group to vote.

91
00:04:12,900 --> 00:04:15,240
So big issues against the backdrop

92
00:04:15,240 --> 00:04:19,498
of a great wealth transfer, heading into
a year that is going to be, probably,

93
00:04:19,498 --> 00:04:21,350
more politically charged
than any we've seen

94
00:04:21,350 --> 00:04:23,665
across all the democratic
countries, in the world, 

95
00:04:23,665 --> 00:04:25,320
that are going to go to the polls.

96
00:04:25,320 --> 00:04:27,498
So I think engaging shareholders

97
00:04:27,498 --> 00:04:30,498
and having an efficient way for
companies and shareholders 

98
00:04:30,498 --> 00:04:31,350
to communicate back and forth

99
00:04:31,350 --> 00:04:32,960
is going to be more
important than ever before,

100
00:04:32,960 --> 00:04:34,580
just because there's
so much more coming.

101
00:04:34,580 --> 00:04:38,380
And I think we'll get on to maybe
the technology a little bit later.

102
00:04:38,380 --> 00:04:40,800
But if you look at the legacy ecosystem

103
00:04:40,800 --> 00:04:43,560
about the way companies
and shareholders communicate,

104
00:04:43,560 --> 00:04:45,870
we urgently need to
upgrade that to deal with this.

105
00:04:45,870 --> 00:04:47,665
Because it's a good thing for
companies and shareholders 

106
00:04:47,665 --> 00:04:48,870
to communicate back and forth.

107
00:04:48,870 --> 00:04:51,120
We should be allowing
it efficiently and digitally.

108
00:04:51,120 --> 00:04:53,498
And if we don't, and we're not
ready for what's coming,

109
00:04:53,498 --> 00:04:55,498
then, there's going to be more
negative headlines, I think,

110
00:04:55,498 --> 00:04:58,050
for companies to be worried about.

111
00:04:58,050 --> 00:05:00,498
As those general meetings debate

112
00:05:00,498 --> 00:05:03,665
and have voted on very important
decisions for the company.

113
00:05:03,665 --> 00:05:07,590
– Yes, it's great how you outline
all the different political factors.

114
00:05:07,590 --> 00:05:09,831
All the things happening around
the world, that are causing

115
00:05:09,831 --> 00:05:12,350
more and more shareholders
to become more engaged.

116
00:05:12,350 --> 00:05:13,930
And before we get to
the technology piece,

117
00:05:13,930 --> 00:05:16,669
maybe, you could elaborate a
little more about the importance

118
00:05:16,669 --> 00:05:20,400
of that communication between
shareholders, in the organization.

119
00:05:20,400 --> 00:05:23,665
How it can impact a company's overall
performance and even reputation?

120
00:05:23,998 --> 00:05:28,998
– Yes, I mean, starting with the
reputational piece, it's probably easier 

121
00:05:28,998 --> 00:05:30,664
to talk about the downside, sometimes, 

122
00:05:30,664 --> 00:05:33,164
because, then, that's the
thing that creates headlines.

123
00:05:33,164 --> 00:05:36,690
It creates headlines
when results are challenged.

124
00:05:36,690 --> 00:05:38,050
When there's uncertainty
about the results.

125
00:05:38,050 --> 00:05:42,370
And we saw a fairly infamous case a
few years ago, at the P&G's meeting,

126
00:05:42,370 --> 00:05:45,550
votes counted three times and it
was a different result every time.

127
00:05:45,550 --> 00:05:47,250
And you're like, "How could that be?"

128
00:05:47,250 --> 00:05:48,250
And that was very expensive,

129
00:05:48,250 --> 00:05:50,331
both for the company,
it was an activist situation.

130
00:05:50,331 --> 00:05:52,180
It was expensive
anyway for the campaign,

131
00:05:52,180 --> 00:05:54,500
as well as casting doubt on
the whole underlying result.

132
00:05:54,500 --> 00:05:57,550
But we also see that where
it's maybe not just a mistake,

133
00:05:57,550 --> 00:06:00,139
but it's the fact that the issuer
has got something wrong.

134
00:06:00,139 --> 00:06:02,498
I mean, the one that comes up in the UK,

135
00:06:02,498 --> 00:06:04,664
has come up several times,
is Sports Direct.

136
00:06:04,664 --> 00:06:08,770
Which is the UK equivalent
to Dick's Sporting Goods.

137
00:06:08,770 --> 00:06:10,290
It's a household name.

138
00:06:10,290 --> 00:06:12,497
It's a consumer business.

139
00:06:12,497 --> 00:06:16,331
But there've been in the headlines
for all sorts of the wrong reasons.

140
00:06:16,331 --> 00:06:20,497
Revolt against the CEO
and the principal owner.

141
00:06:20,497 --> 00:06:22,389
Couldn't appoint an
auditor for a period of time.

142
00:06:22,389 --> 00:06:25,164
So I think that having good
shareholder engagement

143
00:06:25,164 --> 00:06:28,569
can in many ways keep
companies out of the headlines.

144
00:06:28,569 --> 00:06:32,360
I think, going back to the question, though,

145
00:06:32,360 --> 00:06:35,831
how can it positively impact a
company's performance and reputation?

146
00:06:35,880 --> 00:06:39,664
I think it's important to have
a loyal base of shareholders.

147
00:06:39,664 --> 00:06:40,664
I think that's, especially, true

148
00:06:40,664 --> 00:06:44,060
for consumer businesses,
that can be a big plus.

149
00:06:44,060 --> 00:06:48,630
And I think how many people have
invested in crowdfunding scenario,

150
00:06:48,630 --> 00:06:51,330
where they're also using
that product or service,

151
00:06:51,330 --> 00:06:54,639
and that actually seeps into other areas.

152
00:06:54,639 --> 00:06:58,001
You can easily see somebody holding
a stock in their brokerage account

153
00:06:58,001 --> 00:07:00,250
because they like the products
or services they're consuming.

154
00:07:00,250 --> 00:07:03,610
And loyal shareholders, generally,
mean you've got a resilient base.

155
00:07:03,610 --> 00:07:07,289
In the prosperous times, you
could take that for granted.

156
00:07:07,289 --> 00:07:09,470
But when we go through other
parts of the economic cycle,

157
00:07:09,470 --> 00:07:11,000
having a loyal shareholder base

158
00:07:11,000 --> 00:07:14,919
is something that can help make the
underlying share price resilient.

159
00:07:14,919 --> 00:07:17,330
And that's both true
in terms of retail shareholders

160
00:07:17,330 --> 00:07:18,960
and institutional investors.

161
00:07:18,960 --> 00:07:21,830
A lot of the institutional
investors are extremely engaged,

162
00:07:21,830 --> 00:07:24,950
extremely active owners, doing
thousands of engagements a year.

163
00:07:24,950 --> 00:07:26,680
And more likely to make
a positive determination,

164
00:07:26,680 --> 00:07:29,199
on companies that engage shareholders

165
00:07:29,199 --> 00:07:31,330
regularly and in meaningful ways.

166
00:07:31,330 --> 00:07:34,370
And in terms of tracking
that to performance,

167
00:07:34,370 --> 00:07:35,830
it's been proven by lots of studies,

168
00:07:35,830 --> 00:07:39,740
about how the importance of an
outside perspective of active owners,

169
00:07:39,740 --> 00:07:42,389
particularly, active institutional investors,

170
00:07:42,389 --> 00:07:45,997
can be to helping the board
and management deal with

171
00:07:45,997 --> 00:07:48,497
what I'd call moments that matter.

172
00:07:48,497 --> 00:07:51,330
On any given year, what might be
on the slate, for a general meeting, 

173
00:07:51,330 --> 00:07:52,997
might be fairly boilerplate.

174
00:07:52,997 --> 00:07:55,770
But there will be those
big moments that matter.

175
00:07:55,770 --> 00:07:59,163
Those big dilemmas, where
it's important to have a way

176
00:07:59,163 --> 00:08:04,060
to very efficiently engage
your shareholder base

177
00:08:04,060 --> 00:08:07,996
so that you can get the right
outcome for the company.

178
00:08:07,996 --> 00:08:11,250
And, so, I think all those
three things go together.

179
00:08:11,250 --> 00:08:14,650
It's hard to make an argument that
not engaging your shareholders

180
00:08:14,650 --> 00:08:20,496
and having that easy way to access
them, is ever going to be a bad thing.

181
00:08:20,663 --> 00:08:21,870
– Mh-hmm, well, and I imagine

182
00:08:21,870 --> 00:08:24,130
with the shifting of the
wealth, as you mentioned.

183
00:08:24,130 --> 00:08:27,810
It's no longer just a bunch of
very high wealthy people

184
00:08:27,810 --> 00:08:29,512
making their voices heard
because they're a shareholder

185
00:08:29,512 --> 00:08:31,496
and they may have more
shares than others.

186
00:08:31,496 --> 00:08:35,163
But because so many people in
the launch of many different apps,

187
00:08:35,163 --> 00:08:37,310
and it's like the common person

188
00:08:37,310 --> 00:08:40,496
is having that access to those
shares and being able to buy stock.

189
00:08:40,496 --> 00:08:47,100
I think of organizations like,
in the U.S., the Green Bay Packers,

190
00:08:47,100 --> 00:08:48,880
as a fan, you can go buy
a share in the team

191
00:08:48,880 --> 00:08:51,290
and go to the share
meeting at the stadium.

192
00:08:51,290 --> 00:08:53,680
So it's becoming more
common for people.

193
00:08:53,680 --> 00:08:56,329
So when you have that
open communication,

194
00:08:56,329 --> 00:08:57,329
it's going to be a double-edged sword.

195
00:08:57,329 --> 00:08:58,589
People will be excited about things,

196
00:08:58,589 --> 00:09:01,620
but then you'll also hear their voices
when they're not happy about things.

197
00:09:01,620 --> 00:09:04,540
But it helps you grow as an
organization, as well, I imagine.

198
00:09:04,540 --> 00:09:07,496
– Yes, and I think the last
thing any company or organization,

199
00:09:07,496 --> 00:09:12,240
for that matter, wants is for
that dissent to play out publicly.

200
00:09:12,240 --> 00:09:15,880
In either a general meeting or
in the result of a general meeting.

201
00:09:15,880 --> 00:09:18,339
It makes sense to have
those conversations early.

202
00:09:18,339 --> 00:09:20,496
To have those conversations
throughout the year.

203
00:09:20,496 --> 00:09:24,029
And I think as we look to
digitize not just proxy voting,

204
00:09:24,029 --> 00:09:27,329
but investor relations, in general,
it does open up the ability

205
00:09:27,329 --> 00:09:29,496
to not just have a once a year,

206
00:09:29,496 --> 00:09:32,250
en masse engagement
with all your shareholders.

207
00:09:32,250 --> 00:09:36,680
But to, actually, easily, engage the
opinions and views of everybody,

208
00:09:36,680 --> 00:09:40,290
and that's just about risk
management, if you like.

209
00:09:40,290 --> 00:09:43,589
Or, on the flip side, looking for
where they might have input

210
00:09:43,589 --> 00:09:46,329
that you hadn't already thought
about, outside perspectives.

211
00:09:46,329 --> 00:09:48,162
Everybody, I think, appreciates

212
00:09:48,162 --> 00:09:50,996
the power of diverse skills,
diverse opinions.

213
00:09:50,996 --> 00:09:51,996
Well, there can be nothing more diverse

214
00:09:51,996 --> 00:09:54,120
than getting the opinion
of all your shareholders.

215
00:09:54,120 --> 00:09:57,230
Whether it's the biggest, most
powerful asset managers in the world,

216
00:09:57,230 --> 00:10:00,010
down to people with handfuls of stocks

217
00:10:00,010 --> 00:10:02,662
in their brokerage accounts
or pension funds.

218
00:10:02,662 --> 00:10:04,519
– Mh-hmm, yes, that
makes a lot of sense.

219
00:10:04,519 --> 00:10:07,529
So you've been hinting
at things like technology,

220
00:10:07,529 --> 00:10:10,829
and that there's huge gaps
in how people communicate.

221
00:10:10,829 --> 00:10:13,700
I know when I get notices in the mail

222
00:10:13,700 --> 00:10:16,529
for voting for certain shares,
I have in my 401K.

223
00:10:16,529 --> 00:10:18,770
It's this mailer, with this huge booklet,

224
00:10:18,770 --> 00:10:20,162
and you're like looking
through, trying to figure out,

225
00:10:20,162 --> 00:10:21,829
"I don't even know what
I'm looking at here."

226
00:10:21,829 --> 00:10:22,899
So maybe we could talk a little bit about

227
00:10:22,899 --> 00:10:25,029
what are some of the huge gaps
that are happening right now,

228
00:10:25,029 --> 00:10:27,162
that are hampering this engagement.

229
00:10:27,162 --> 00:10:28,662
Then we can get into talking about

230
00:10:28,662 --> 00:10:30,495
what are some solutions
that people can have.

231
00:10:30,495 --> 00:10:33,662
– Yes, sure, I mean,
everybody knows the mail, 

232
00:10:33,662 --> 00:10:34,829
the proxies in the mail.

233
00:10:34,930 --> 00:10:36,495
Almost everybody's got
one of those things,

234
00:10:36,495 --> 00:10:38,779
and it's probably on the
kitchen table somewhere.

235
00:10:38,779 --> 00:10:42,779
The way I think about the
technology gaps is in two big buckets.

236
00:10:42,779 --> 00:10:46,560
Firstly, is structural, and then
secondly is more the modalities.

237
00:10:46,560 --> 00:10:51,130
By structural, and this is where
we initially started out,

238
00:10:51,130 --> 00:10:53,740
several years ago,
on the Proximity journey,

239
00:10:53,740 --> 00:10:57,810
was the way that shares are
held through the ecosystem.

240
00:10:57,810 --> 00:11:00,500
It was not designed, it was not
optimized, for communication.

241
00:11:00,500 --> 00:11:02,690
I mean, it probably
wasn't even an afterthought.

242
00:11:02,690 --> 00:11:05,662
The way shares are held is all
designed to make efficient

243
00:11:05,662 --> 00:11:08,139
things like settlement and
the holding of securities.

244
00:11:08,139 --> 00:11:12,050
So I always describe it like
looking at the layers of an onion.

245
00:11:12,050 --> 00:11:14,995
Right at the center, you've got the
central securities depository.

246
00:11:14,995 --> 00:11:18,662
So in the U.S., the DTCC, but name
any country around the world,

247
00:11:18,662 --> 00:11:20,940
it's a similar type organization.

248
00:11:20,940 --> 00:11:23,210
Who owns what at a central level,

249
00:11:23,210 --> 00:11:25,990
but only who owns what of
the next layer in the onion.

250
00:11:25,990 --> 00:11:27,470
And then the next layer in the onion

251
00:11:27,470 --> 00:11:30,750
knows who the next set
of intermediaries are.

252
00:11:30,750 --> 00:11:35,661
So between any issuer, at the
center of the onion, and an investor, 

253
00:11:35,661 --> 00:11:39,050
there can be six, seven, eight
intermediaries or service providers.

254
00:11:39,050 --> 00:11:42,495
Now, they're all adding value to
each other, that's why it exists,

255
00:11:42,495 --> 00:11:43,760
but it's optimized for something else.

256
00:11:43,760 --> 00:11:45,828
It's not optimized for communication.

257
00:11:45,828 --> 00:11:48,620
And, then, when we go and
try and lay on top of that,

258
00:11:48,620 --> 00:11:52,661
things like proxy voting or any
form of investor communication,

259
00:11:52,661 --> 00:11:53,690
that's when we get problems.

260
00:11:53,690 --> 00:11:56,490
Because they're all having to
communicate through each other,

261
00:11:56,490 --> 00:11:58,720
and that means things like transmission

262
00:11:58,720 --> 00:12:03,161
of information is delayed, it can be
distorted, it erodes decision time.

263
00:12:03,290 --> 00:12:06,161
And it, generally, makes the
whole thing for the two-end users,

264
00:12:06,161 --> 00:12:09,970
the companies and the shareholders,
less transparent than it should be.

265
00:12:09,970 --> 00:12:11,828
So they're not communicating directly,
they're having to communicate

266
00:12:11,828 --> 00:12:16,661
through this quite labyrinth-like
ecosystem, that's the first problem.

267
00:12:16,661 --> 00:12:19,161
We can't do anything about it, our
structure exists for very good reasons

268
00:12:19,170 --> 00:12:20,980
and very technical reasons, as well.

269
00:12:20,980 --> 00:12:24,828
As well as just reasons about trying
to keep the marketplace efficient

270
00:12:24,828 --> 00:12:26,994
and cheap for people
to hold and buy shares.

271
00:12:27,000 --> 00:12:30,828
But we can, with modern technology,
do something to move ourselves out

272
00:12:30,870 --> 00:12:33,510
from having to navigate 
irectly through it.

273
00:12:33,510 --> 00:12:36,494
The second big bucket
is all about modalities,

274
00:12:36,494 --> 00:12:40,161
and there is like a weird and
wonderful mix of the way proxies

275
00:12:40,161 --> 00:12:42,060
get voted throughout the world.

276
00:12:42,060 --> 00:12:44,494
You mentioned mail, but I
think it would surprise people

277
00:12:44,494 --> 00:12:48,230
that at some point in a vote's journey,

278
00:12:48,230 --> 00:12:49,570
from a shareholder to issuer,

279
00:12:49,570 --> 00:12:53,649
it's almost certainly being put on a
spreadsheet and attached in an email,

280
00:12:53,649 --> 00:12:55,661
and sent from one party to another.

281
00:12:55,661 --> 00:12:57,850
Now, you might think there's
nothing particularly wrong with that.

282
00:12:57,850 --> 00:12:59,279
But when you're doing it at scale,

283
00:12:59,279 --> 00:13:02,130
and when you think how
important that vote might be.

284
00:13:02,130 --> 00:13:05,161
To the outcome of a meeting for one
of the biggest companies in the world,

285
00:13:05,161 --> 00:13:07,494
or even a small, medium-sized company

286
00:13:07,494 --> 00:13:10,070
that's contributing
meaningfully to the economy,

287
00:13:10,070 --> 00:13:12,994
in which that company exists.

288
00:13:12,994 --> 00:13:15,827
You can easily appreciate, why they
have as a margin for error there,

289
00:13:15,827 --> 00:13:17,827
and that margin for error means
some votes are not getting counted,

290
00:13:17,827 --> 00:13:20,950
or some votes are just
being cast the wrong way,

291
00:13:20,950 --> 00:13:24,329
and that distortion shouldn't
happen, it's inefficient.

292
00:13:24,329 --> 00:13:25,327
You could take it to extremes,

293
00:13:25,327 --> 00:13:27,760
I remember doing
a project, many years ago,

294
00:13:27,760 --> 00:13:29,199
in an Eastern European country,

295
00:13:29,199 --> 00:13:32,994
and the dominant way shares got
voted was through a paddle board.

296
00:13:33,139 --> 00:13:36,310
So you would have people have
to attend the meeting physically.

297
00:13:36,310 --> 00:13:38,990
They'd have to pre-register
a number of shares,

298
00:13:38,990 --> 00:13:40,730
and they would see the paddle
board with a number on.

299
00:13:40,730 --> 00:13:42,209
And when the chair of the meeting

300
00:13:42,209 --> 00:13:45,839
would call out the resolution, they
would raise the paddle for or against.

301
00:13:45,839 --> 00:13:47,160
And to prepare for the meeting,

302
00:13:47,160 --> 00:13:50,827
they would have to take all the votes
from all of their underlying clients,

303
00:13:50,827 --> 00:13:52,260
whether that be intermediary clients

304
00:13:52,260 --> 00:13:54,327
or, ultimately, directly
from some investors.

305
00:13:54,327 --> 00:13:57,327
They would have to put those
votes into unique sequences.

306
00:13:57,327 --> 00:14:00,660
And then if they had ten unique
sequences across the meeting,

307
00:14:00,660 --> 00:14:02,009
they'd have to send five people

308
00:14:02,009 --> 00:14:04,269
because one person can
only hold two paddle boards

309
00:14:04,269 --> 00:14:05,660
at any one moment in time.

310
00:14:05,660 --> 00:14:06,880
And this wasn't even that long ago.

311
00:14:06,880 --> 00:14:08,494
Now, that's, obviously,
an extreme example.

312
00:14:08,494 --> 00:14:12,449
But all those modalities create
this very complex ecosystem,

313
00:14:12,449 --> 00:14:13,993
that it's hard to get shares voted,

314
00:14:13,993 --> 00:14:15,759
and we're talking Excel, we're talking mail.

315
00:14:15,759 --> 00:14:17,540
In some very developed markets,

316
00:14:17,540 --> 00:14:20,470
we're still talking about some voting
instructions going over fax machines,

317
00:14:20,470 --> 00:14:23,290
we're talking about physical
attendance, powers of attorney.

318
00:14:23,290 --> 00:14:25,160
So if you then take the structure

319
00:14:25,160 --> 00:14:29,949
and the fact that we're using so
many legacy communication tools.

320
00:14:29,949 --> 00:14:32,190
There's a reason why investors

321
00:14:32,190 --> 00:14:35,120
are not having to vote many
days before the real deadline.

322
00:14:35,120 --> 00:14:37,750
There's a reason why it's very
hard for investors to work out—

323
00:14:37,750 --> 00:14:40,190
"Did the vote, get to where it should
have got to, and get counted?"

324
00:14:40,190 --> 00:14:43,029
And there's a reason why issuers
are going, "Where are the votes?"

325
00:14:43,029 --> 00:14:45,827
Until the very last minute
because there's so much friction

326
00:14:45,827 --> 00:14:48,660
in that ecosystem, so many
different people involved.

327
00:14:48,660 --> 00:14:50,827
And, so, many different
communication modalities

328
00:14:50,827 --> 00:14:54,699
or methods, it takes a while to
get that information to them,

329
00:14:54,699 --> 00:14:56,699
so they're the big gaps.

330
00:14:56,699 --> 00:14:58,326
And I think to layer on top of that,

331
00:14:58,326 --> 00:15:00,920
like I said, every country
is slightly different.

332
00:15:00,920 --> 00:15:04,493
And it's also that nuance
that makes it fairly difficult,

333
00:15:04,493 --> 00:15:07,993
then, to make meaningful
progress quickly.

334
00:15:07,993 --> 00:15:10,993
But I'm a big believer
that lots can be done,

335
00:15:10,993 --> 00:15:13,870
and I think we've seen lots of
progress over the last few years.

336
00:15:13,870 --> 00:15:16,660
And, certainly, that's Proximity's
mission is people shouldn't have 

337
00:15:16,660 --> 00:15:18,019
to worry about this stuff.

338
00:15:18,019 --> 00:15:19,993
We should be
optimizing the experience

339
00:15:19,993 --> 00:15:22,160
 for companies and shareholders.

340
00:15:22,160 --> 00:15:25,493
And we should be doing a better job,
as an industry, about making

341
00:15:25,493 --> 00:15:28,326
their experience tangibly and
meaningfully better.

342
00:15:28,493 --> 00:15:32,589
– Yes, I mean, if we can make
affordable glass phones,

343
00:15:32,589 --> 00:15:35,670
like that Samsung phone,
if we can make those things,

344
00:15:35,670 --> 00:15:37,529
we should be able to make
shareholder relations

345
00:15:37,529 --> 00:15:41,259
and proxy voting so
much simpler than it is.

346
00:15:41,259 --> 00:15:43,493
And, so, maybe you can talk a little bit
about that digital transformation 

347
00:15:43,493 --> 00:15:46,659
for proxy voting, and maybe a little
bit of what you guys are doing 

348
00:15:46,659 --> 00:15:49,659
to help bridge that gap,
that you just went over.

349
00:15:49,779 --> 00:15:51,370
Because I think that's
important to understand;

350
00:15:51,370 --> 00:15:55,009
how can that gap be bridged and what
people can do to take the next step?

351
00:15:55,009 --> 00:15:59,826
– Yes, absolutely, and, I think, just
remarking on the experience

352
00:15:59,826 --> 00:16:01,400
for a retail and institutional investor.

353
00:16:01,400 --> 00:16:03,993
I think to link it to our earlier
discussion about how

354
00:16:03,993 --> 00:16:07,360
about how to engage retail
shareholders more meaningfully.

355
00:16:07,360 --> 00:16:09,826
Often, historically, we've given retail
shareholders the same tools

356
00:16:09,826 --> 00:16:13,659
that institutions have had, and
there are institutional investors

357
00:16:13,659 --> 00:16:15,826
that are professional, and resourced,

358
00:16:15,826 --> 00:16:17,826
and have corporate
 governance professionals,

359
00:16:17,826 --> 00:16:19,992
and lawyers look over this stuff.

360
00:16:19,992 --> 00:16:22,610
You and I don't have those
resources, nor do we have that time.

361
00:16:22,610 --> 00:16:24,180
So giving me a proxy in the mail,

362
00:16:24,180 --> 00:16:27,159
is not going to get me to
participate  in the same way

363
00:16:27,159 --> 00:16:30,659
or to the same level as the
institutional investor community does.

364
00:16:30,659 --> 00:16:34,540
So it's all about also thinking about
how do we adapt the experience.

365
00:16:34,540 --> 00:16:36,860
In terms of how can we improve things

366
00:16:36,860 --> 00:16:38,659
and how have we improved things,

367
00:16:38,659 --> 00:16:42,992
for us, it's been, firstly,
about kind of reimagine

368
00:16:42,992 --> 00:16:45,019
the process and turn it around.

369
00:16:45,019 --> 00:16:46,659
So what was happening?

370
00:16:46,659 --> 00:16:48,326
Companies would decide

371
00:16:48,326 --> 00:16:50,159
what the general meeting
agenda was going to be.

372
00:16:50,250 --> 00:16:52,620
They'd send that to their
service provider of choice.

373
00:16:52,620 --> 00:16:55,825
Who'd then send that on
to the first layer of banks.

374
00:16:55,825 --> 00:16:57,492
Who'd send it onto the next layer of banks.

375
00:16:57,492 --> 00:17:00,019
Who'd send it, ultimately,
find its way to the investor.

376
00:17:00,019 --> 00:17:01,159
And then the investor would vote,

377
00:17:01,159 --> 00:17:04,720
and it would have to go back through
the layers, all the way to the issuer.

378
00:17:04,720 --> 00:17:08,330
What we said is let's take out
the layers, as the first step.

379
00:17:08,330 --> 00:17:12,339
Let's take the data we need from
those financial intermediaries,

380
00:17:12,339 --> 00:17:14,310
that we all hold our shares through,

381
00:17:14,310 --> 00:17:17,050
and all institutional investors
hold their investments through,

382
00:17:17,050 --> 00:17:21,230
and figure out the pathway
between an issuer and an investor.

383
00:17:21,230 --> 00:17:23,440
So that as soon as we
handle the information,

384
00:17:23,440 --> 00:17:25,949
it's going all the way to the
shareholder straight away,

385
00:17:25,949 --> 00:17:28,492
with their confirmed
reconciled voting amount.

386
00:17:28,492 --> 00:17:30,992
We're not having to work
that out after the fact.

387
00:17:30,992 --> 00:17:32,710
And there's a split
between some markets,

388
00:17:32,710 --> 00:17:37,330
whereby your right to vote was
crystallized before you got the proxy.

389
00:17:37,330 --> 00:17:38,820
And there's some markets in the world,

390
00:17:38,820 --> 00:17:41,325
where actually you get the votable agenda

391
00:17:41,325 --> 00:17:43,500
before your entitlement is determined.

392
00:17:43,500 --> 00:17:46,559
So our solution is compatible with both.

393
00:17:46,559 --> 00:17:48,580
That means we can get the information

394
00:17:48,580 --> 00:17:50,840
to the shareholder much faster.

395
00:17:50,840 --> 00:17:52,920
So straight away we give
them extra decision time.

396
00:17:52,920 --> 00:17:54,770
And because we're taking the information,

397
00:17:54,770 --> 00:17:57,960
the meeting information, directly from
the company or from their agent,

398
00:17:57,960 --> 00:17:59,992
we're not relying on
third party data vendors.

399
00:17:59,992 --> 00:18:02,440
And we did a survey this year,

400
00:18:02,440 --> 00:18:07,350
25% to 33% of investors were
saying that the meeting agenda

401
00:18:07,350 --> 00:18:11,159
they, ultimately, got was either
distorted or missed data,

402
00:18:11,159 --> 00:18:14,330
and the most common reason
was the detail was stripped away.

403
00:18:14,330 --> 00:18:16,030
So it was very hard for me to figure out,

404
00:18:16,030 --> 00:18:18,169
ultimately, was I voting on the right thing?

405
00:18:18,169 --> 00:18:21,409
I was missing the information
I needed to make a decision.

406
00:18:21,409 --> 00:18:24,200
So our approach means
get the information faster.

407
00:18:24,200 --> 00:18:28,850
We give them golden source data
that nobody else needs to touch.

408
00:18:28,850 --> 00:18:31,158
That means they can then
vote back much sooner.

409
00:18:31,158 --> 00:18:32,669
And because when they vote back,

410
00:18:32,669 --> 00:18:34,110
we can give that directly to the issuer

411
00:18:34,110 --> 00:18:38,039
because we've created that
digital ownership pathway,

412
00:18:38,039 --> 00:18:39,325
we don't have to send the vote 

413
00:18:39,325 --> 00:18:41,158
back through any other
layers in the system.

414
00:18:41,158 --> 00:18:44,991
So the issuer, actually, now has the
potential to get the vote much earlier

415
00:18:45,150 --> 00:18:46,650
than they historically would have got it.

416
00:18:46,650 --> 00:18:49,040
And, therefore, if that doesn't
match what they're expecting,

417
00:18:49,040 --> 00:18:50,990
or their engagement that they'd had prior,

418
00:18:50,990 --> 00:18:53,325
or their investor relations
communications, there's more time

419
00:18:53,325 --> 00:18:54,370
to do something about it.

420
00:18:54,370 --> 00:18:57,658
There's more time to have another
engagement, another conversation.

421
00:18:57,740 --> 00:19:00,824
Which in our opinion, can only be positive.

422
00:19:00,824 --> 00:19:04,491
And a final benefit of that is
because we've simplified the process,

423
00:19:04,491 --> 00:19:05,991
the companies can confirm,

424
00:19:05,991 --> 00:19:08,190
for the first time, to the
shareholders that we got the vote.

425
00:19:08,190 --> 00:19:11,158
The vote got counted, the vote is
going to be confirmed in the meeting.

426
00:19:11,169 --> 00:19:15,340
That missing feedback
is an inherent pain point

427
00:19:15,340 --> 00:19:17,520
inefficiency of the old way of doing it.

428
00:19:17,520 --> 00:19:20,040
Because it was so hard to
communicate through the layers

429
00:19:20,040 --> 00:19:21,824
and through so many different methods,

430
00:19:21,824 --> 00:19:25,491
it was impossible to finally
confirm back the vote got counted.

431
00:19:25,491 --> 00:19:28,530
And the results are important,
kind of, what were the results?

432
00:19:28,530 --> 00:19:29,700
I mean, when we did the very first

433
00:19:29,700 --> 00:19:32,860
Minimum Viable Product of
Proximity, many years ago,

434
00:19:32,860 --> 00:19:36,039
we were able to give nine
extra days decision time.

435
00:19:36,039 --> 00:19:38,280
And the typical calendar
for a general meeting

436
00:19:38,280 --> 00:19:40,930
is about a calendar month, maybe,
maximum, two calendar months,

437
00:19:40,930 --> 00:19:43,049
it depends on the market,
it depends on the company,

438
00:19:43,049 --> 00:19:45,120
so nine days is very meaningful.

439
00:19:45,120 --> 00:19:47,049
For an institutional investor,

440
00:19:47,049 --> 00:19:48,491
they need to get the meeting
information confirmed

441
00:19:48,491 --> 00:19:49,830
before they go off and do the research

442
00:19:49,830 --> 00:19:50,910
and decide how to vote.

443
00:19:50,910 --> 00:19:52,710
Many of them have levels
of automation around that,

444
00:19:52,710 --> 00:19:54,660
but many of them also
have the automation

445
00:19:54,660 --> 00:19:56,010
and have a very diligent review process.

446
00:19:56,010 --> 00:19:57,900
"How are we going
to vote at this company,

447
00:19:57,900 --> 00:19:59,789
that we have a very sizable,
meaningful investment?"

448
00:19:59,789 --> 00:20:00,920
It's a serious business for them.

449
00:20:00,920 --> 00:20:03,991
Give them nine extra days,
they can do a more thorough job.

450
00:20:04,120 --> 00:20:06,157
And for retail investors like you and I,

451
00:20:06,157 --> 00:20:07,870
I don't have a ton of time
to vote my proxies.

452
00:20:07,870 --> 00:20:11,657
But if you can give me more time,
it's surely only going to be helpful

453
00:20:11,657 --> 00:20:12,824
to drive my participation up,

454
00:20:12,824 --> 00:20:14,640
as well as if you can give me
a better experience, as well,

455
00:20:14,640 --> 00:20:18,180
a more tailor-made
kind of retail experience.

456
00:20:18,180 --> 00:20:20,990
And it's not just shareholders
that stand to gain, as I mentioned, 

457
00:20:20,990 --> 00:20:23,657
for issuers, they don't have to wait

458
00:20:23,657 --> 00:20:25,659
until the very last minute to get the votes,

459
00:20:25,659 --> 00:20:28,200
and that's a kind of inherent
inefficiency of the current system.

460
00:20:28,200 --> 00:20:29,990
They can get the votes
as soon as they're cast.

461
00:20:29,990 --> 00:20:31,824
They can see, is that
going to meet quorum?

462
00:20:31,824 --> 00:20:35,657
They can see if that matches their ROI
conversations or their engagements,

463
00:20:35,810 --> 00:20:37,060
and they can see if it spells trouble,

464
00:20:37,060 --> 00:20:38,380
so they've got time to
do something about it.

465
00:20:38,380 --> 00:20:39,720
And trouble is, "Well, my shareholders

466
00:20:39,720 --> 00:20:42,490
don't agree with the decisions
we're making, so I might need to go 

467
00:20:42,490 --> 00:20:43,490
and speak to them."

468
00:20:43,490 --> 00:20:45,460
And, again, I think that
can only be a good thing.

469
00:20:45,460 --> 00:20:49,130
So really simplifying
the process, at its core,

470
00:20:49,130 --> 00:20:51,770
and optimizing the experience
just has benefits for everybody,

471
00:20:51,770 --> 00:20:54,657
and that's kind of speaks to our mission.

472
00:20:54,657 --> 00:20:58,657
– Yes, it allows for more
time to make better decisions

473
00:20:58,657 --> 00:21:01,823
because if you get something in the
last moment because of delays, 

474
00:21:01,823 --> 00:21:04,490
or the mailers, or whatever, you
don't have as much time to make

475
00:21:04,490 --> 00:21:05,760
a more informed decision.

476
00:21:05,760 --> 00:21:08,740
So you're allowing to make
better and informed decisions,

477
00:21:08,740 --> 00:21:11,340
which, in essence, helps the
organization, in the long run,

478
00:21:11,340 --> 00:21:13,580
because you can vote with
a more informed decision.

479
00:21:13,580 --> 00:21:17,640
So have you seen, in your research,
as you've worked with organizations,

480
00:21:17,640 --> 00:21:20,549
is there a direct correlation
between good shareholder relations

481
00:21:20,549 --> 00:21:23,323
and the company's financial
performance or market perception?

482
00:21:23,323 --> 00:21:25,157
Is there a direct correlation
between those things?

483
00:21:25,157 --> 00:21:29,990
– Yes, for Proximity,
it's probably too early.

484
00:21:29,990 --> 00:21:33,157
So we've been in business
for three and a half years now,

485
00:21:33,157 --> 00:21:36,370
progressively scaled up during that time.

486
00:21:36,370 --> 00:21:39,323
We have, in some markets, now,

487
00:21:39,323 --> 00:21:42,550
70% of institutional votes
coming through our platform,

488
00:21:42,550 --> 00:21:45,156
so I think now we have that data

489
00:21:45,156 --> 00:21:47,323
about levels of
engagement, levels of voting.

490
00:21:47,323 --> 00:21:50,656
You can then start to track that
against financial performance.

491
00:21:50,656 --> 00:21:53,360
But, obviously, there are
many different elements

492
00:21:53,360 --> 00:21:54,823
that go into shareholder engagement

493
00:21:54,823 --> 00:21:57,580
over and above proxy, and
obviously, many different things

494
00:21:57,580 --> 00:22:00,323
that can happen to a company's
financial performance.

495
00:22:00,323 --> 00:22:03,919
So it does take a careful
data analysis for us to do.

496
00:22:03,919 --> 00:22:07,156
I think the most comprehensive
study I've read was one

497
00:22:07,156 --> 00:22:10,990
by one of the big consultancy
firms, I think it was Deloitte.

498
00:22:10,990 --> 00:22:13,156
I think it was kind of a study of studies,

499
00:22:13,156 --> 00:22:18,450
and they looked at 60 odd studies
and 120 relationships directly,

500
00:22:18,450 --> 00:22:21,970
and their conclusion
was fairly unanimous.

501
00:22:21,970 --> 00:22:24,409
That good shareholder engagement,

502
00:22:24,409 --> 00:22:28,489
and good governance, particularly
variables like board independence, 

503
00:22:28,489 --> 00:22:33,156
board diversity, oversight,
the ownership structure.

504
00:22:33,320 --> 00:22:34,840
When those things were good,

505
00:22:34,840 --> 00:22:41,489
those companies performed good,
both financially and non-financially.

506
00:22:41,489 --> 00:22:43,160
I think most people can understand

507
00:22:43,160 --> 00:22:46,090
how having active institutional investors,

508
00:22:46,090 --> 00:22:48,823
giving outside perspectives, is
going to be good for a company.

509
00:22:48,823 --> 00:22:51,989
How having a board that's
independent and diverse,

510
00:22:51,989 --> 00:22:53,656
with diverse skills and backgrounds

511
00:22:53,656 --> 00:22:56,656
is going to be good, and how
having a a remuneration policy

512
00:22:56,656 --> 00:23:00,000
that rewards management
and rewards the CEO,

513
00:23:00,000 --> 00:23:03,489
when the company does well, but
also thinks about how to incentivize

514
00:23:03,529 --> 00:23:06,080
in the harder times, as well.

515
00:23:06,080 --> 00:23:09,020
One of the things is when we go
through a diffrent economic cycle,

516
00:23:09,020 --> 00:23:11,010
giving management
stock options all the time

517
00:23:11,010 --> 00:23:12,340
is, obviously, not going to incentivize them

518
00:23:12,340 --> 00:23:14,929
because sometimes there's
just nothing they can do.

519
00:23:14,929 --> 00:23:18,700
So I think levels of engagement
and good governance,

520
00:23:18,700 --> 00:23:22,656
that comprehensive study was,
overwhelmingly, tied, strongly, 

521
00:23:22,656 --> 00:23:25,489
to financial and
non-financial performance.

522
00:23:25,489 --> 00:23:27,789
Isolating that specifically for;

523
00:23:27,789 --> 00:23:29,780
how many people voted
at my general meeting?

524
00:23:29,780 --> 00:23:31,656
How engaged my retail shareholders are?

525
00:23:31,656 --> 00:23:33,656
I think it's too early to say.

526
00:23:33,656 --> 00:23:36,900
But as we get data and
easier access to the data,

527
00:23:36,900 --> 00:23:40,450
as we get rid of some of those
legacy communication modalities,

528
00:23:40,450 --> 00:23:44,155
where it's very hard to then
sort through all that data.

529
00:23:44,155 --> 00:23:49,655
If actually shares were voted and
tabulated from 12 different methods,

530
00:23:49,800 --> 00:23:53,960
I think it will be easier to answer
your question more decisively.

531
00:23:53,960 --> 00:23:58,400
But I think that the underlying
factors speak for themselves,

532
00:23:58,400 --> 00:24:01,669
in terms of should a
company do it or not?

533
00:24:01,669 --> 00:24:04,610
– As we go into an increasingly
technological world,

534
00:24:04,610 --> 00:24:06,500
we're becoming more
and more reliant on it.

535
00:24:06,500 --> 00:24:08,490
Have there been concerns about security,

536
00:24:08,490 --> 00:24:11,989
when it comes to proxy voting in this
manner that you've been discussing?

537
00:24:11,989 --> 00:24:13,630
Obviously, when they're doing the mailers,

538
00:24:13,630 --> 00:24:15,030
they don't know that it's
getting to the right place,

539
00:24:15,030 --> 00:24:16,989
they don't know who's sending it back.

540
00:24:16,989 --> 00:24:18,360
There probably wasn't very much security

541
00:24:18,360 --> 00:24:20,250
in the old way of doing it either.

542
00:24:20,250 --> 00:24:23,330
But have there been concerns
brought up about the security,

543
00:24:23,330 --> 00:24:26,322
when it comes to doing
this type of process?

544
00:24:26,655 --> 00:24:28,822
– I mean, our customers
hold us to a very high bar

545
00:24:28,822 --> 00:24:33,322
in terms of due diligence
in terms of information security

546
00:24:33,322 --> 00:24:37,822
because what we're dealing
with is very important.

547
00:24:37,822 --> 00:24:40,822
But I think you kind of
touched on some of the areas

548
00:24:40,822 --> 00:24:45,399
where, provided we're
serious about what we do,

549
00:24:45,399 --> 00:24:48,322
and we take all the best
practice around that,

550
00:24:48,322 --> 00:24:51,322
around subsequent information security.

551
00:24:51,322 --> 00:24:53,488
We hold ourselves to a high
standard in terms of auditing,

552
00:24:53,488 --> 00:24:54,840
and whoever does it,

553
00:24:54,840 --> 00:24:58,390
whoever's, ultimately, digitizing
proxy voting does the same.

554
00:24:58,390 --> 00:25:01,655
We're infinitely better off than
the world that we've inherited.

555
00:25:01,655 --> 00:25:03,321
People might think
there's a natural resilience

556
00:25:03,321 --> 00:25:07,420
to paper, and Excel, and many
different manual methods,

557
00:25:07,420 --> 00:25:10,488
but actually that's where you're
more likely to have an error,

558
00:25:10,488 --> 00:25:14,488
or an issue, or an oversight, or
something that just doesn't get there.

559
00:25:14,488 --> 00:25:15,655
I think you have many more options

560
00:25:15,655 --> 00:25:19,030
when things are digitized on platforms,

561
00:25:19,030 --> 00:25:21,390
in databases that can be backed up,

562
00:25:21,390 --> 00:25:27,321
that can have several levels of
resiliency to them, built in by design.

563
00:25:27,321 --> 00:25:31,500
But it's like any election,

564
00:25:31,500 --> 00:25:34,155
there is the potential for bad
actors to become involved,

565
00:25:34,155 --> 00:25:37,821
as we've maybe seen in some of the
political elections of years gone by.

566
00:25:37,821 --> 00:25:39,488
– Mh-hmm, yes, that
makes a lot of sense.

567
00:25:39,488 --> 00:25:43,821
I mean, as long as you're taking
up to the highest standards,

568
00:25:43,821 --> 00:25:44,488
you do the best you can.

569
00:25:44,488 --> 00:25:47,679
Because if hackers are hackers,
and there'll be always be hackers,

570
00:25:47,679 --> 00:25:51,154
but you do the best you can with
security in the midst of all that.

571
00:25:51,154 --> 00:25:55,488
– Yes, and I think for
companies, as you would expect,

572
00:25:55,488 --> 00:25:58,321
the general meeting
is a very important event,

573
00:25:58,321 --> 00:26:03,300
and it's a very, I'd say high-risk,
event, in general, for most COSECs,

574
00:26:03,300 --> 00:26:05,154
and most investor relations professionals,

575
00:26:05,154 --> 00:26:08,690
for the CFO, for the directors,
for the CEO, as you'd expect.

576
00:26:08,690 --> 00:26:12,159
So they take it seriously,
we take it seriously,

577
00:26:12,159 --> 00:26:14,140
and I think the rest
of the financial community

578
00:26:14,140 --> 00:26:16,488
takes this bit of the industry
proxy voting very seriously.

579
00:26:16,488 --> 00:26:18,321
But we're in an infinitely better place

580
00:26:18,321 --> 00:26:22,988
if we have things accurately,
digitized in modern systems

581
00:26:22,988 --> 00:26:26,987
than we do by having it
strewn across legacy methods.

582
00:26:26,987 --> 00:26:28,240
There will always be bad actors,

583
00:26:28,240 --> 00:26:31,179
our job is to be resilient against them.

584
00:26:31,179 --> 00:26:34,159
– Yes, so as we wrap up the conversation,

585
00:26:34,159 --> 00:26:35,654
what's some advice you
could give to companies

586
00:26:35,654 --> 00:26:38,320
that they should be doing now
to prepare for future challenges?

587
00:26:38,320 --> 00:26:40,821
And if they're thinking
about switching proxy voting

588
00:26:40,821 --> 00:26:44,487
to this type of platform that
you've been discussing, like yours,

589
00:26:44,487 --> 00:26:45,987
what should they be looking for?

590
00:26:45,987 --> 00:26:50,654
– Yes, I think the first piece of
advice is that it's not a big switch 

591
00:26:50,654 --> 00:26:54,220
that needs to be pressed.

592
00:26:54,220 --> 00:26:57,321
The ecosystem can still support
all of the methods, today,

593
00:26:57,321 --> 00:26:59,690
there is just a new way to do this,

594
00:26:59,690 --> 00:27:03,987
and, over time, the old
methods will slowly fade away,

595
00:27:03,987 --> 00:27:06,539
particularly things like mail,
particularly things like fax,

596
00:27:06,539 --> 00:27:08,200
you're just going to see less of that.

597
00:27:08,200 --> 00:27:11,700
I think the other kind of what
I would call like fake electronic

598
00:27:11,700 --> 00:27:14,154
will be kind of slower to hit the wayside.

599
00:27:14,154 --> 00:27:17,230
But using a platform like Proximity

600
00:27:17,230 --> 00:27:19,987
is completely compatible with
the old way of doing it as well.

601
00:27:19,987 --> 00:27:23,320
It's just that, over time, you're
going to see more votes

602
00:27:23,320 --> 00:27:25,320
coming through a platform like ours

603
00:27:25,320 --> 00:27:27,250
than you do through
some of the old methods,

604
00:27:27,250 --> 00:27:29,820
so it doesn't need to be that big move.

605
00:27:29,820 --> 00:27:32,630
And kind of linked to
my kind of prior comments,

606
00:27:32,630 --> 00:27:34,730
we understand it's a high risk event,

607
00:27:34,730 --> 00:27:37,487
so doing a big bang migration
from one way of doing it,

608
00:27:37,487 --> 00:27:43,654
which, for all of its flaws, has worked
in commerce for the past decades,

609
00:27:43,654 --> 00:27:47,940
to a completely new way is also probably
not the right way for many companies.

610
00:27:47,940 --> 00:27:51,150
So a simple adoption of
a digital voting platform

611
00:27:51,150 --> 00:27:54,429
that can provide a highway
through to your end investors

612
00:27:54,429 --> 00:27:57,510
can start as just a new channel.

613
00:27:57,510 --> 00:28:00,559
And then over the fullness of time
can become the dominant channel,

614
00:28:00,559 --> 00:28:02,153
and that's what we're seeing
in some of the markets

615
00:28:02,153 --> 00:28:03,153
that we're most progressed in.

616
00:28:03,153 --> 00:28:07,153
As soon as we get over that 50%
of share cap voted to our platform,

617
00:28:07,153 --> 00:28:09,500
that is a real tipping
point for many issuers.

618
00:28:09,500 --> 00:28:11,309
So I think that's the first thing,

619
00:28:11,309 --> 00:28:14,590
is it doesn't need to be that big,
scary, big bang migration,

620
00:28:14,590 --> 00:28:18,987
that almost everybody in the corporate
world is slightly apprehensive of,

621
00:28:18,987 --> 00:28:20,140
for understandable reasons.

622
00:28:20,140 --> 00:28:22,820
It can just be about giving
yourself additional optionality,

623
00:28:22,820 --> 00:28:24,860
which immediately brings benefits.

624
00:28:24,860 --> 00:28:28,159
So I think that's the major
thing to navigate through this,

625
00:28:28,159 --> 00:28:32,370
and to do that now, the big factors
at the top of our conversation

626
00:28:32,370 --> 00:28:35,169
I think everyone can
appreciate are not going away.

627
00:28:35,169 --> 00:28:38,750
So it's never been more important
to engage with all the shareholders,

628
00:28:38,750 --> 00:28:41,890
from the biggest institutional
investors, in your companies,

629
00:28:41,890 --> 00:28:43,320
right through to the retail shareholders

630
00:28:43,320 --> 00:28:45,269
that are showing more and more appetite

631
00:28:45,269 --> 00:28:47,986
for engagement than they ever have.

632
00:28:47,986 --> 00:28:49,153
– Well, Jonathan, thank you so much

633
00:28:49,153 --> 00:28:50,653
for coming on the podcast, today.

634
00:28:50,653 --> 00:28:53,486
I encourage our listeners to check
out the links in the show notes,

635
00:28:53,486 --> 00:28:56,320
if you want to learn more about
Proximity or connect with Jonathan.

636
00:28:56,320 --> 00:28:57,986
Thank so much for coming on.

637
00:28:57,986 --> 00:28:58,986
– Thanks, Adam, thanks for having me.

638
00:28:58,986 --> 00:29:01,153
< Outro >

639
00:29:01,153 --> 00:29:02,820
– This has been Count Me In,

640
00:29:02,820 --> 00:29:06,986
IMA's podcast, providing you with the
latest perspectives of thought leaders,

641
00:29:06,986 --> 00:29:08,986
from the accounting
and finance profession.

642
00:29:08,986 --> 00:29:11,486
If you like what you heard,
and you'd like to be counted in

643
00:29:11,486 --> 00:29:13,819
for more relevant accounting
and finance education,

644
00:29:13,819 --> 00:29:20,486
visit IMA's website at www.imanet.org.