As we approach the busiest time of year for those of us involved in share voting, it will come as little comfort that the current round of PRI reporting is weighing heavily in investor in-boxes.

It includes requirements relating to vote confirmations and seeks to identify whether investors have:

• obtained confirmation that votes have been lodged;
• participated in project(s) to improve the voting trail and/or obtain vote confirmation; and
• any other information about their vote confirmation efforts.

We totally agree that investors should expect better standards of vote transparency (including those for whom voting is primarily only a compliance issue, alas). However, the idea of concentrating on how to obtain vote confirmations as a means to resolve the problems with the vote plumbing is akin to debating the effectiveness of overflow flood defences instead of the more important debate about preventative actions to enable channels to deal with greater volumes of water in the future.

Furthermore, the PRI questions as they stand hardly scratch the surface of what’s needed to uncover meaningful information. For the uninitiated it’s far from obvious that a vote confirmation may mean different things to different people, let alone what a vote confirmation actually is (and, let’s face it, for such a technically complex and dry topic, there are very few who are sufficiently “initiated”).

What does lodgement mean? If lodgement means arrival at the vote tabulator does that mean the votes will actually be used? Does a confirmation from your appointed voting service provider count? If not, who’s does and does it relate directly and only to me? What proof do I get of the confirmation? How many steps in the chain need to provide the confirmation and, very importantly, who is going to pay for the confirmation system?

It’s laudable that the PRI have tried to put the questions on investor’s radar, but what’s really needed are the tools, expertise and most importantly the will to turn debate into constructive action. And the problem is the usual suspects for that job are too conflicted to see change happen.

We hope to be proved wrong in our fear that that not enough investors are incentivised enough to see effective change happen, so much so that we thought we’d make it our latest poll:

When it comes to stewardship, which matters more, a non-transparent “confirmation” or clear ownership structures which enable companies to identify its owners?

Do investors care enough about voting to welcome a radical, root and branch change of approach to try something different rather than tinker with the broken system?

[poll id=”17″]

We’re not the only ones to ask these questions and pushing for a better approach. Paul Conn, Computershare’s President of Global Markets put it quite eloquently in his letter to the FT in September 2011, vote confirmations are “like putting lipstick on a pig“.

Re-building the broken flood defences of the voting system, complete with elaborate barriers and alerts is actually very costly, only deals with the symptoms not the problems and creates more problems than it solves. Dredging the voting system with built-for-purpose equipment so the channels can deal better with direct transmission of high volumes of information flows is a more sustainable solution for everyone. Who’s interested? If you are, get in touch with us: info@manifest.co.uk.

Last Updated: 7 March 2014