After T. Rowe Price Group Inc. announced that it would pay $194 million to eligible account holders after a proxy vote mistake, the Baltimore firm will not fire anyone in connection to the incident, a company spokesman said Tuesday.
The firm announced that it would make a one-time payment in the second quarter to make up for a technology error during a proxy vote associated with the 2013 leveraged buyout of Dell Inc. The company’s stock was held in various portfolios in T. Rowe Price Mutual funds with about 31 million shares.
T. Rowe spokesman Brian Lewbart said in an email Tuesday that the firm is taking steps to prevent future mistakes.
“We have enhanced our procedures to help ensure that a voting discrepancy like this does not occur again,” said Lewbart.
T. Rowe’s issue highlights the problems that arise as technology takes on a bigger role in the financial services industry, said Karyl Leggio, finance professor at the Loyola University Sellinger School of Business.
“Technology is moving so quickly and proxy votes don’t happen all that frequently,” said Leggio. “It’s checked and ordinarily an effort is made to avoid technology issues, but unfortunately they happen.”
The mishap was attributed to a complex system that handles proxy votes for numerous funds the company manages. The system had a computer error that caused T. Rowe Price to vote in favor of a deal it actually opposed. At the time of the buyout, the company had concluded that the $13.75 per share consideration being offered by Dell was too low and opposed the deal.
This isn’t the first time a technical glitch has come out in the proxy voting process. During its 2008 annual meeting, Yahoo had to do a recount during a contentious board of directors vote and found that it has made a “truncation error” where 200 million shares that has actually been cast against some Yahoo directors were cast for them, the New York Times reported.
In general, voting errors like T. Rowe’s are unusual. The company is not worried about potential client loss over the incident, Lewbart said.
“We have a long history of putting our clients’ interests first. We believe clients appreciate and value what we do and how we do it, and they have been extremely receptive of our plan to resolve the issue,” Lewbart said.
News of T. Rowe’s error broke late Thursday and a compensation plan was announced Monday afternoon. While the turnaround was fast, it was in line with how T. Rowe operates, said Leggio.
“Yes it was quick, but it was consistent,” she said. “The positive in all of this is the company is taking responsibility.”