1 Methodology Conducted from March 16 – 22, 2006 579 interviews completed onlineInvestors represented a mix by:GenderAgeValue of investmentsNumber of trades in past 12 monthsType of financial institutions usedInvestment style (rating on 10-point scale; conservative to aggressive)
2 Key topic areas included in the survey: Understanding of the stock registration processRecall of last account opening process and actions concerning the provision of investor contact informationActions taken when proxy statements receivedProxy voting behaviors and attitudesAttitudes toward OBO / NOBO issuesUnderstanding of OBO / NOBO issuesReaction toward a fee for maintaining OBO status
3 Key FindingsThere is a great deal of confusion about the security registration and proxy voting processAlmost two-thirds of investors believe stocks are either registered in their name or said they weren’t sure how they were registeredOnly one in four are aware that if they don’t vote their proxy, their shares are voted by the brokerage firm in accordance with the wishes of the Board of DirectorsFew investors recall being asked if they wished their name to be provided to publicly traded companies as part of the account opening processNOBO status is clearly preferred by investors
5 Stock Registration Process and Information Dissemination Preferences
6 Stock RegistrationInvestors are generally unaware of details surrounding the stock registration process . . .Always your name – you have no choiceYour name – if you choose it to be this wayNot really sureAlways the name of your brokerage firm – you have no choiceThe name of your brokerage firm – if you choose it to be this wayIn Whose Name is Stock Registered?
7 Publicly Traded Companies Receive... Stock Registration. . . and the information that publicly traded companies receive.Publicly Traded Companies Receive...Publicly traded companies automatically receive the names & addresses of all individuals purchasing their stock at part of the normal stock transaction processPublicly traded companies receive the names & addresses of the institution in whose name the stock is registeredPublicly traded companies receive the names & addresses of individuals purchasing their stock ONLYPublicly traded companies can receive the names of all individual investors who purchased their stock ONLY by applyingI'm not really sure which of these is the most accurate
8 Remember Being Asked to Provide Contact Information to CompanyHalf don’t remember if they were asked whether they wanted their contact information provided to companies whose stock they purchased.No, was not asked or given form to indicate choiceDon’t knowYes, was asked or given form to indicate choice
9 Decision on Whether to Provide Contact InformationThose who were asked their choice overwhelmingly opted to provide their contact information.Decision to Provide Information or NotProvided contact informationYes, was asked or given form to indicate choiceDon’t knowDid not provide contact informationNo, was not asked or given form to indicate choiceWhyWant to receive information/keep up to date/informed (24%)Thought it was a good idea (11%)Gives me more control/ownership (9%)Being upfront/have nothing to hide/no reason not to provide it (8%)For proxy voting (8%)Why NotPrivacy concerns (38%)Avoid solicitations (25%)Security/fraud issues (8%)
10 Receiving Guidance on Decision The small proportion who remember being given a choice were not given any advice about how to answer the question.Were You Provided Guidance?Yes, was asked or given form to indicate choiceNoDon’t knowYesNo, was not asked or given form to indicate choiceGuidance GivenProvide contact information (61%)Do not provide contact information (15%)Don’t know (24%)
11 Choice If Had Been Asked By more than a 2-1 margin, those who were not asked their preference would have provided their contact information if they had been asked.Choice if Had Been Asked(Among ‘No’/Can’t Remember)Would have provided contact informationCan’t rememberYes, was asked or given form to indicate choiceNo, was not asked or given form to indicate choiceWould not have provided contact informationWant to receive information single biggest reason (25%)Privacy concerns single biggest issue (46%)
12 Choice If Had Been Asked In total, nearly three in four investors either provided their contact information or would have if they had been asked their preference.Did not provide the information OR would not have if had been askedDid provide the information OR would have if had been asked
14 Proxy VotingProxy statements are read to various degrees. Most investors vote at least part of the time.What do you do when you receive them?Do you vote?Throw them out without reading or opening themOpen every statement and read it thoroughlyNever vote/Don’t recall receiving proxy statementsOpen every statement but read little to none of the contentAlways voteRarely voteOpen selected proxy statements from a few companies and read some or most of the contentOpen all the statements and read through some or most of the contentOpen selected proxy statements and read through some or most of the contentSometimes vote and sometimes not
15 Who Votes?Age is the biggest determinant of the likelihood to cast a proxy vote.Do you vote?Who votes?Always/ SometimesAlwaysSometimesTotal73%43%30%Men79%52%27%Women66%33%18-3461%24%37%35-5470%55+85%64%21%<$300,000 invested67%36%31%$300,000+ invested83%56%<20 trades a year41%32%20+ trades a year76%53%23%Never vote/Don’t recall receiving proxy statementsAlways voteRarely voteSometimes vote and sometimes not
16 Is Proxy Voting Important or Not? Most investors say proxy voting is important to them.How important is it to you personally?10 (Very Important to Me)1 (Not at All Important to Me)6789452357%27%16%
17 What Happens If You Don’t Vote? Few investors know what actually happens if they don’t send in their proxy vote.In Whose Name is Stock Registered?Your shares aren’t votedI’m not sureYour shares are voted by your brokerage firm based on their preferenceYour shares are voted automatically by your brokerage firm in accordance with the Board of Directors’ or the company’s recommendations
19 Importance of Companies Informing You Directly More than half of investors say it is important to them that they be informed directly, not via a third party, about matters deemed important to shareholders.Importance of Being Informed Directly10 (Very Important to Me)954%87631%543214%1 (Not at All Important to Me)
20 Intensity of OBO Opinion Intensity of NOBO Opinion OBO/NOBO PreferenceGiven a comprehensive explanation of the difference between OBO and NOBO status, by nearly a 2-1 margin investors choose NOBO status. Those who pick OBO and NOBO are about equally strong in their opinions.Intensity of OBO OpinionIntensity of NOBO Opinion37% top 2 box55% top 3 box33% top 2 box50% top 3 boxOBONOBONearly half (44%) aren’t sure whether most of their accounts are OBO or NOBO; 37% think most are NOBO, while 18% think most are OBO.There are no significant differences in opinion by any subgroup.
21 OBO Preference Shrinks when Price Tag Is Attached Preference for OBO status collapses when there is a $25 or $50 price tag to maintain it.Initial Choice$25 Annual Fee$50 Annual Fee
22 SummaryThere is a great deal of confusion about the security registration and proxy voting process.Investor education is likely required to fully address the issueFew investors recall being asked if they wished their name to be provided to publicly traded companies as part of the account opening process.The account opening event involves many activities. OBO/NOBO status issues do not standout as part of the process. This may also need to be addressed.NOBO status is clearly preferred by investors.Most investors express a clear preference for knowledge. This should be considered in decisions made.