Tyson Rose and Thomas Hingel are sleuthing in the dark corners of the world of shareholder proxy voting.
The duo have launched a new company, NovaShare Solutions Ltd., to provide data to public companies in Canada and the U.S. on the proxy voting track records of their institutional shareholders.
The idea was born from their prior work at proxy solicitation firms, where they helped companies organize voting on key proxy matters at shareholder meetings. Mr. Rose said companies would frequently ask how different large shareholders had voted on their resolutions, or how they had previously voted on similar issues at rival companies, but the data were not easily available.
"We just decided to go out and try to get all of this data for ourselves and supply it to the market," he said.
NovaShare has compiled seven years of past voting data by gleaning information on voting records from a variety of public disclosure filings made by mutual funds, pension funds and other investors on their voting decisions on corporate matters. It also collects information on share ownership from public sources and has gathered custodial data to track where large institutions house their shares, making it easier to track their voting on key issues before meetings.
"It's extremely difficult to source it, so it's one of those big data projects that no one has really undertaken, but it's something we saw tons of value in because clients were asking," Mr. Rose said in a recent interview.
"They say, 'We know people voted at the last [annual meeting], but we don't know specifically which institutions voted which way.' It was kind of a guess."
The goal, he said, is to be able to give companies enough data on voting patterns of their large shareholders that they can predict the outcome of votes on major issues, such as how their shareholders would likely respond to stock option plan amendments or executive compensation plan changes.
NovaShare, which began operating last year, has attracted investment from compensation consulting firm Global Governance Advisors (GGA), which announced last year it was creating a $5-million fund to invest in young companies developing software in the field of corporate governance and compensation.
GGA invited companies to compete for initial funding under the program, and recently announced NovaShare as its first investment from the fund, taking a 25 per cent ownership stake as part of the deal. NovaShare is sharing space in GGA's office in Mississauga, Ont.
GGA managing partner Paul Gryglewicz said his firm was impressed by NovaShare's founders, who learned the business of gathering shareholder voting data "from the grassroots" of the proxy industry to create a technology-based service.
"They took all the intelligence that the old-style firm would do and applied it to technology," he said. "So it's got quite an opportunity to be an impactful change in the governance realm."
Mr. Hingel previously worked at proxy firm Kingsdale Shareholder Services, and Mr. Rose began his career at share custodial company CDS Clearing and Depository Services Inc. and later worked at proxy firms Laurel Hill Advisory Group and Kingsdale.
The partners have ambitious plans to expand their services, and are developing a database that will be available to companies, large investors or other market professionals who want to track, sort and manipulate data on voting, executive compensation and corporate governance trends at public companies in North America.
Mr. Rose said NovaShare is also building a tool that will allow companies and investors to monitor discussions about a company on social media sites, including comments posted by investors or employees on Twitter or LinkedIn, and creating a "social media sentiment" to measure how the market feels about a company based on comments about it.
Mr. Gryglewicz said NovaShare has attracted some of Canada's largest corporations in the S&P/TSX60 index as customers because of the pent-up demand for more information on major shareholders.
"It's a whole other level of governance and intelligence that they're starting to develop," he said.