January 24, 2008

Survey Results
Adoption rates are relatively uniform across market cap size.
Slightly more than half of all respondents (56%) indicated that they would be adopting the new notice and access proxy distribution model for the 2008 proxy season. There were small differences based on market cap, with larger companies - those with market capitalizations of greater than $5 billion - showing the highest rates of adoption.

Those who are adopting the new rules are doing so largely because of the anticipated cost savings.
Seventy-nine percent of survey respondents indicated that they expect to save money under the new plan. In point of fact, the greatest proportion of respondents indicated that they expect to spend in 2008 less than half of what they spent in 2007 on hard copy distribution. The vast majority (91%) intend to print fewer meeting materials as a consequence of notice and access. More than half of the remaining respondents plan to adjust their print runs in 2009 after monitoring the request levels for hard copies in 2008. Other major considerations were the SEC requirement to comply (52%) and a low perception of value for the hard copy reports, also at 52%.

Service Providers will play an important role in notice and access adoption.
Ninety percent of survey respondents plan to use a third-party service provider to help meet notice and access requirements. Most indicated that they plan to use a single service provider. Respondents that indicated "other" were in some cases undecided and in other cases were using multiple third parties. A few respondents expressed concern about the fee structures charged by agencies and the possibility that these fees will reduce savings. In any case, 2008 will create opportunity and responsibility in equal measure for the service providers catering to the needs of IROs. For the IRO's part, relationship management and communication skills will be critical components of a successful transition to e-proxy.

Top concerns expressed by IROs include customer satisfaction/service, miscalculating print numbers, a drop in voter participation, inexperience leading to mistakes in compliance, and costs associated with compliance.
Nearly 40% of adopters identified concerns related to the new notice and access requirements. Our respondents consistently mentioned the issues below in the following order of frequency:

• Customer service and satisfaction questions
• Predicting print quantities
• Maintaining vote return levels
• Managing costs and realizing savings
• Errors and inexperience, particularly related to meeting timing requirements
• General uncertainty about engaging in a new process

Conclusion
As suggested by the data, e-proxy represents an opportunity to enhance customer service through technology by providing shareholders with the ability to choose the means by which they access proxy materials, as well as the potential to experience cost-savings from reduced printing, thereby bringing value to the company and its shareholders. Whether or not your company is implementing notice and access for the 2008 proxy season, the coming year will be a period of transition, during which costs and benchmarks will be established and ultimately, refined.

For those organizations planning to implement notice and access for the 2008 proxy season, the trade-off of unproven savings may be offset by the benefits of getting "out in front" of these important changes. Those companies that take a wait-and-see approach need to be certain to apply the lessons of early adopters to ensure that the promise of cost savings becomes a reality. Furthermore, organizations must match their pace of change to that of the needs of their shareholders (i.e. aggressively adopting the notice only model when the shareholder population is not technically adept may prove to be imprudent).