Householding

GENERAL INFORMATION

As a result of the recently released Securities and Exchange Commission regulations, issuers are permitted to send a single annual report and proxy statement to a “household” rather than including annual reports with each proxy sent to registered shareholders living at the same address. Based on our initial analysis, householding savings may reduce the number of annual reports mailed to registered shareholders by as much as 5% to 20%!

UPDATE
In November of 2000, the SEC amended rules to permit the householding of proxy statements and annual reports.

Security And Exchange Commission Regulation

The SEC householding regulation was issued on November 5, 1999. The regulation permits issuers to mail a single annual report and proxy statement to registered stockholders who live at the same address. Eliminating duplicate mailings is permissible with the written consent of the stockholders, or, under specific conditions, with their implied consent.

Written Consent Rules

Under SEC Rule 240.14a-3(e)(i) issuers can suppress the mailing of annual reports and proxy statements to shareholders if the issuer:

1. delivers at least one annual report and proxy statement to the shared address;
2. addresses the annual report and proxy statement to the securityholders as a group (e.g. “The Smith Family”, “Jane Doe and house-hold”, “Jane Doe and Richard Smith”); and,
3. receives written consent from all affected shareholders for the delivery of one annual report and proxy statement.

Implied Consent Procedure

Under the same rule, issuers can suppress mailings using “implied consent” if the following conditions are met:

1. the securityholders have the same last name or can reasonably be assumed to be members of the same family;
2. the issuer has sent a notice to each investor within 60 days before beginning to suppress the annual report mailings;
3. the notice is mailed as a separate written communication;
4. the notice states: that only one annual report and proxy statement will be delivered to the address what duration the consent will cover; how the consent can be revoked; and that within 30 days of revocation, the issuer will commence mailing annual reports.
5. “Important Notice Regarding Delivery of Shareholder Documents” must be printed in bold on the notice or the face of the envelope. The notice must also include a toll-free telephone number or postage-paid return envelope. Under the regulation, “address” is defined as a street address, a post office box, an electronic mail address, a fac-simile telephone number or similar destination. Thus, e-mail householding is permitted.

GUIDE TO HOUSEHOLDING

The Service

R&T provides an easy, inexpensive turn-key solution for householding. Your account executive can assist you in all phases of the process. Here is a step-by-step description of how householding is accomplished:

1. Review the Fees: Notify your account executive at least four months before your annual meeting mailing date that you want to consider householding. The account executive will provide a Householding Fee Schedule. This will list the services and related service fees. All out-of-pocket expenses, such as printing and postage, are billed directly, as incurred.
2. Request a Householding Analysis: If you want to consider householding or would like to have an indication at any time of the potential impact of householding, you should call your executive and request the “Householding Analysis Report”. What does the report provide? The R&T system will automatically analyze your registered shareholder base and produce the Analysis of Householding Potential. The report will indicate the number of accounts identified as eligible for householding (having common addresses), the number of annual reports to be mailed, addressed “To the Shareholders of Your Company Name”, and the total number of accounts not receiving an annual report. The totals will, of course, be reduced if individual shareholders request to override the householding.
   View a sample report
3. Sending the Householding Notice: After reviewing the report, if you proceed with householding, you must sign and return the Householding Fee Schedule. At this time you should notify your account executive that you want to have the Householding Notice mailed to all qualifying accounts. The notice must be mailed at least sixty (60) days in advance of the annual meeting mailing date (although we recommend 90 days if possible). The notice will be sent using first class mail to accounts identified with common addresses.
   View a sample notice
   The Notice informs the shareholder that householding will occur unless they call (or email!) R&T and request that annual reports continue to be mailed specifically for their account.
4. Automatic Householding: After the notice is sent, your account executive will automatically implement the householding option for your next annual meeting mailing unless you direct otherwise. Under the householding procedure, the registered shareholder mailing is divided into 3 distinct mailing groups. One will be to all shareholders receiving the normal annual meeting package (annual report, proxy statement, BRE & proxy). A second group will receive just the proxy statement, proxy card and business reply envelope. The final group will consist of the annual report and proxy statement enclosed in an envelope addressed “To the Shareholders of Your Company Name”. This group represents the single annual report and proxy statement required to be mailed to each “household”.
5. Include a Phone Number: The proxy card format should include the phone number that shareholders can call if they wish to receive an annual report. Issuers wishing to provide this option, must provide the phone number.
6. Householding Results: R&T will provide a report detailing the results of the householding.
   View a sample of the report
   The report is similar in format to the Analysis Report, but will reflect actual results. Actual postage expenses reflecting the full savings will be shown on the R&T invoice.
7. New Accounts: As part of the householding process, and without an additional service fee for participating companies, R&T will make a mailing in November of each year to all accounts that qualify for householding and have not yet been solicited. Only the out-of-pocket expenses of this mailing will be billed to you.

Other Considerations

Accounts that have an invalid address will not be included in the householding population. R&T recommends that issuers not mail annual meeting materials to these accounts. Each issuer must direct their account executive to suppress mailing to accounts with invalid addresses (Note: These accounts will have a Bad Address Waiver, or a BAW, indicating that items mailed first class to the shareholders have been returned as undeliverable.).

Direct savings will be reason enough for many companies to embrace householding. However, there are other reasons you should consider the process. Householding sends a statement to your shareholders that you care about waste, the environment and unnecessary expenditures.