Founded Methodology n Conducted from March 16 – 22, 2006 n 579 interviews completed online – Investors represented a mix by: Gender Age Value of investments Number of trades in past 12 months Type of financial institutions used Investment style (rating on 10-point scale; conservative to aggressive)
Founded Key topic areas included in the survey: n Understanding of the stock registration process n Recall of last account opening process and actions concerning the provision of investor contact information n Actions taken when proxy statements received n Proxy voting behaviors and attitudes n Attitudes toward OBO / NOBO issues n Understanding of OBO / NOBO issues n Reaction toward a fee for maintaining OBO status
Founded Key Findings n There is a great deal of confusion about the security registration and proxy voting process – Almost two-thirds of investors believe stocks are either registered in their name or said they weren’t sure how they were registered – Only 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 Directors n Few investors recall being asked if they wished their name to be provided to publicly traded companies as part of the account opening process n NOBO status is clearly preferred by investors
Founded Detailed Findings
Founded Stock Registration Process and Information Dissemination Preferences
Founded Stock Registration Always your name – you have no choice Your name – if you choose it to be this way Not really sure Always the name of your brokerage firm – you have no choice The name of your brokerage firm – if you choose it to be this way In Whose Name is Stock Registered? Investors are generally unaware of details surrounding the stock registration process...
Founded 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 process Publicly traded companies receive the names & addresses of the institution in whose name the stock is registered Publicly traded companies receive the names & addresses of individuals purchasing their stock ONLY Publicly traded companies can receive the names of all individual investors who purchased their stock ONLY by applying I'm not really sure which of these is the most accurate
Founded Remember Being Asked to Provide Contact Information to Company No, was not asked or given form to indicate choice Don’t know Yes, was asked or given form to indicate choice Half don’t remember if they were asked whether they wanted their contact information provided to companies whose stock they purchased.
Founded Decision on Whether to Provide Contact Information Did not provide contact information Decision to Provide Information or Not Why Not Privacy concerns (38%) Avoid solicitations (25%) Security/fraud issues (8%) Why Want 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%) Those who were asked their choice overwhelmingly opted to provide their contact information. No, was not asked or given form to indicate choice Don’t know Yes, was asked or given form to indicate choice Provided contact information
Founded Receiving Guidance on Decision The small proportion who remember being given a choice were not given any advice about how to answer the question. No, was not asked or given form to indicate choice Don’t know Yes, was asked or given form to indicate choice Yes Were You Provided Guidance? Guidance Given Provide contact information (61%) Do not provide contact information (15%) Don’t know (24%) No
Founded 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. No, was not asked or given form to indicate choice Can’t remember Yes, was asked or given form to indicate choice Would not have provided contact information Would have provided contact information Choice if Had Been Asked (Among ‘No’/Can’t Remember) Privacy concerns single biggest issue (46%) Want to receive information single biggest reason (25%)
Founded Choice If Had Been Asked Did not provide the information OR would not have if had been asked Did provide the information OR would have 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.
Founded Proxy Voting
Founded Proxy Voting Open selected proxy statements and read through some or most of the content Open selected proxy statements from a few companies and read some or most of the content Open every statement but read little to none of the content Open every statement and read it thoroughly Open all the statements and read through some or most of the content Throw them out without reading or opening them Proxy 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? Never vote/Don’t recall receiving proxy statements Rarely vote Always vote Sometimes vote and sometimes not
Founded Who Votes? Age is the biggest determinant of the likelihood to cast a proxy vote. Always/ SometimesAlwaysSometimes Total73%43%30% Men79%52%27% Women66%33% %24%37% %37%33% 55+85%64%21% <$300,000 invested67%36%31% $300,000+ invested83%56%27% <20 trades a year73%41%32% 20+ trades a year76%53%23% Do you vote? Who votes? Never vote/Don’t recall receiving proxy statements Rarely vote Always vote Sometimes vote and sometimes not
Founded Is Proxy Voting Important or Not? How important is it to you personally? Most investors say proxy voting is important to them. 57% 27% 16% 10 (Very Important to Me) 1 (Not at All Important to Me)
Founded What Happens If You Don’t Vote? I’m not sure Your shares are voted by your brokerage firm based on their preference Your shares aren’t voted Your shares are voted automatically by your brokerage firm in accordance with the Board of Directors’ or the company’s recommendations Few investors know what actually happens if they don’t send in their proxy vote. In Whose Name is Stock Registered?
Founded OBO/NOBO Preference
Founded Importance of Companies Informing You Directly Importance of Being Informed 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. 54% 31% 14% 10 (Very Important to Me) 1 (Not at All Important to Me)
Founded OBO/NOBO Preference Intensity of NOBO Opinion 33% top 2 box 50% top 3 box Intensity of OBO Opinion 37% top 2 box 55% top 3 box There are no significant differences in opinion by any subgroup. Nearly 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. Given 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. OBO NOBO
Founded OBO Preference Shrinks when Price Tag Is Attached Initial Choice$25 Annual Fee$50 Annual Fee Preference for OBO status collapses when there is a $25 or $50 price tag to maintain it.
Founded Summary n There is a great deal of confusion about the security registration and proxy voting process. – Investor education is likely required to fully address the issue n Few 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. n NOBO status is clearly preferred by investors. – Most investors express a clear preference for knowledge. This should be considered in decisions made.