January 7, 2004

U.S. Postal Service Hinders Proxy

If you have read our January E-Minders, you already know about this action that I consider as the early favorite for “craziest action by a regulatory agency” for 2004. ADP Investor Communication Services has been informing companies of a new issue that could affect the ability to deliver proxy materials via bulk mail. According to ADP, the U.S. Postal Service recently changed its interpretation of its rules that determine if mail qualifies for Standard Mail (formerly known as “3rd class bulk”). This change revolves around the inclusion of what is considered personal information when using Standard Mail.

ADP provides telephone/Internet voting and householding services by the use of unique control numbers. Apparently, the Postal Service challenged ADP on documents containing instructional language for voting and enrollment processes that referred to these control numbers and deemed this information as personal – thereby disqualifying the materials from being processed as Standard Mail. As a result, ADP is changing its forms to conform to the new interpretations.

However, the Postal Service is applying its new interpretations to any reference to personal information contained in any enclosure in the mailing, including the proxy statement. This results in a conflict with the SEC’s plain English movement. For example, the common statement in proxy statements that a shareholder should vote via the telephone or Internet by entering “your” control number on the enclosed form may preclude the mailing from qualifying as Standard Mail. This potentially could force a company to deliver its proxy materials via First Class which would be much more expensive.

ADP recently met with John Nolan, Deputy Postmaster General, to address this personal information issue and Mr. Nolan assured ADP that the Postal Service would work with ADP to make them aware of any issues and arrive at a cure. I suspect we will be hearing more on this issue as the proxy season unfolds.