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Slow-starting E-Proxies Help Governance, Ecology

Voting via electronic proxies could be be a way to both encourage shareholder democracy and save the environment. The process seems to be off to a slow start, however.

This is the first proxy season since the U.S. Securities & Exchange Commission put rules into effect last July that allow voluntary viewing and voting through the Internet. Pushing forward with electronic proxies is part of SEC Chairman Christopher Cox's plan to make routine filings digital and thus speed up and make more efficient corporate governance.

On the bright side, doing so could help with corporate transparency. Former SEC Commissioner Annette Nazareth noted when the measure to allow e-voting was passsed that e-proxies "might encourage companies to present more streamlined reports." Although there have been concerns that going too fast to e-proxies might disenfranchise lower-income shareholders who might not have acccess to computers, the overall effect would give shareholder access an immediacy not offered by traditional paper proxies that tend to be stuffed with impenetrable boilerplate.

There's the environment to think about as well. Environmental groups has testified before the SEC that paperless e-proxies could save 800,000 trees a year and prevent 100,000 tons of paper from being dumped in public landfills.

Sounds great, but news accounts show that less than 5 percent of shareholders have taken to e-proxies, at least this season. There still seems to be considerable confusion as to e-proxies and more than a view shareholders end up printing out their e-proxies and then sending them in via snail-mail with hand-written address on enveleopes.

One firm that helps is New York-based Broadridge Technologies that started dealing with software systems for e-proxies in 1995. So far, companies have saved $29 million using electronic proxy forms.

Under Cox, the SEC has pushed forward with digital filings for forms such as 10-Ks and 10-Qs in pilot projects embraced by such big firms as IBM and Pepsi. The SEC's new system allows shareholders, CEOs and directors, among others, to identify and extract wheat information they want -- such as CEO compensation -- and compare it to similar filings from competing companies. As for e-proxies, despite the light turnout this year, the time may come when it is mandatory.