INTERVIEW WITH:
DAN SHELDON, CHIEF FINANCIAL OFFICER

Q: Give me a sense of how Wall Street has changed over the past 30 years or so.

DS: The biggest change I've seen on Wall Street over the last few decades is that larger multi-national firms keep getting bigger, and there are fewer mid-sized regional firms. What hasn't changed is that when Wall Street is in a bull environment, it's exciting and fun as there's a lot of positive energy. When we see Wall Street go through a bear market, it's still high energy, but the focus of the firms is more towards cost savings. What's been interesting is, no matter what, whether we're in bull or bear markets, there's still a lot of activity and there are always very important discussions about what we, Broadridge, need to do to better serve our clients. That's why Wall Street has been around for a long time and why we, as a business, have been around for a long time.

Q: You mentioned the bull and the bear markets…In your role as Broadridge's chief financial officer, do you think there's a different skill set or approach you need to take, dependent upon which part of the cycle the market is in?

DS: On the finance side of the CFO role there's no difference in approach. Whether a bull or bear market, there's always going to be a lot of activity. In a bear market, I'm more focused on what the financial conditions of our clients look like and are they going to be able to continue to be financially healthy institutions. Fortunately, we're usually with very financially sound clients. Though when Lehman was going into bankruptcy, there were concerns of whether we were going to get paid or not. In the end we did.

Q: Some people say that the CFO is the financial watchdog within the company, while other people say that the CFO is a key person in corporate development, building and rebuilding the company. Do you think there's a difference in the mindset of those particular CFOs? Second, which role do you play?

DS: I absolutely believe in strategy, development and keeping the business focused. I share with our finance team, which includes our collections and billing associates, that we need to be the navigators for the business. Meaning: finance sees the numbers, but how do you turn those numbers into real information for the company to help execute the strategy and reach the company's key objectives?

Q: Can you give me an example?

DS: Let's say you've closed the books for the month and got all the results to all the people. It's valuable, but it's routine and recurring. But when you take the results and align them with market data or activity, then you can really bring value to those trying to drive strategy, build business cases or execute on key initiatives. You can assist in determining what kind of profits you can expect, how much of the market you would have to gain to get that, and what it's going to take in investments to make it happen.

Helping management put together a five-year plan, for example, is very important. Helping people to prioritize what investments we should make across the company is also important.

Q: When you look at today's environment there are different challenges than a year ago or certainly five years ago during the bull market. What do you think will be the three biggest challenges CFOs will face in the next, let's say 90 days to a year?

DS: The top challenge CFOs face in the near term is forecasting sales and then how fast can you turn those sales into revenue and profits. Another challenge many companies still have in the markets today is obtaining financing. Fortunately, if you're an investment grade company like Broadridge, you can get financing even in tough times. No one's ever said we won't lend to an investment grade company.

The final challenge is around our associates. All CFOs, including me, require good finance people and associates across the board. Retaining associates, keeping them highly engaged is paramount to the success of any company. And it's absolutely one of my top responsibilities.

Q: I'd like you to expand on that last point. If you ask the typical employee "is the CFO one of the key people worrying about retaining you?" most would say, "No, the CFO probably wants to cut my job and save money." Explain to me a little more, why you mentioned that as one of your key roles.

DS: A lot of people think that when you go through tough times, the first thing that needs to happen is cutting heads. But I would tell you as the CFO especially, I know those heads are driving our business forward, so it may be a short-term fix to someone, but you are really taking away the number one investment you've made. If you look at our associate retention rates, the people we have stay a very long time. Those people have key knowledge of how our business runs, how our clients operate and how management wants to move forward.

What sounds easy in the short term would never be my first choice of finding a way to save money. It's funny, a lot of people think CFOs think that way, but for the majority of CFOs today that's not the case. They absolutely look at people being a huge investment inside the company. When you do have to make cuts or should you have to make cuts, it's one of the most painful things you go through.

Q: You were with Broadridge's predecessor ADP for a long time, in finance roles. In a way you went from being in finance, for a lack of a better description, in a private division of a public company. And now all of a sudden you're on the firing line as a CFO for a public company. What were the challenges you faced in that transition?

DS: The biggest challenge was knowing I'm now going to be dealing with the investors of the company. Exciting, absolutely, but I also didn't want to make any mistakes. I spent a lot of time, and still do, meeting with and understanding what our investors were interested in, how they thought about our company, and how they thought about investing in companies in general. By doing this, I learned a great deal and had fun in doing it as well.

Another challenge was determining what kind of company we wanted to be -- how we thought about our growth opportunities, how we thought about our investments, and how we think about returns to the shareholders. In the beginning, this took a lot of time for the entire executive team working with our Board of Directors. Now it's become one of my favorite parts of the job.

Q: Broadridge is the premier communicator to shareholders. Do you think that puts additional pressure on the company to be a state of the art, best-of-breed, communicator with your own investors?

DS: I absolutely do, but in a way that's the culture of the company. No matter what the company does, no matter what business unit of the company you're in, we're always looking to be best-of-breed. So, I think if we're talking about the proxy or investor communications businesses or our securities processing and outsourcing businesses, we are always challenging ourselves to be best-of-breed. This focus allows us to bring high quality and good service to our clients.

Q: Best-of-breed, how do you inculcate that? What are the steps? What are the guidelines to be best-of-breed across the board?

DS: I know in my past people would ask, "What is your competition doing and how do you know you can do it better?" One of the things I've learned here, especially working throughout my career with Rich [Daly, Broadridge chief executive officer] and John [Hogan, Broadridge president and chief operating officer] is, first and foremost, find out what the client wants, like with the client steering committees we have in all our businesses. Learning what clients want and delivering it is truly going to put you best-of-breed versus always wondering how you are going to be one step ahead of the competition. By focusing on client needs first and then understanding what the competition is doing, I believe is the best approach to staying best-of-breed.

Q: That suggests that the best-of -breed companies listen more than they speak.

DS: I would totally agree with that and again, as I mentioned before, all of our groups have steering committees where they bring in the clients to understand what they are looking for.

Part of the enjoyment I get is not just with the investors. I enjoy going out to the field and meeting with our business heads. One of the more exciting examples would be where one of the business heads was sharing with me how they went in, outlined the client's entire back office operation, front to back, diagrammed it all out, and said, "how do we fit in here and what are all the other things that go on?" In working with the client, looking at additional things we would be able to do, that is truly getting involved with the strategy of the client and bringing it back to us and now saying, "What new products or services should we look to deliver?" I think it's excellent.

Q: So, what you're suggesting is that best-of-breed equals a win/win for the company and the client.

DS: Absolutely, yes.

Q: Thinking about Broadridge, what do you think have been the high points for the company over the last 12 to 18 months? And more recently, what do you think are the three best things that have happened?

DS: I think two of three best things that have happened are that we've been able to retain our clients and continue to have very good quality survey scores. And second, our sales results have shown even in these tough times for clients or prospective clients, they are still buying. We've had good solid sales results for the last few years.

The third piece I would point out is we've been able to use our strong cash flows to invest in the company and increase our returns to shareholders in the form of dividend increases and share buybacks.

Q: We talked a moment ago about when Broadridge spun-off from ADP. What do you think was the company's biggest challenge on day one?

DS: I think the biggest challenge at the time was people all had heard about this new change to the proxy rules called Notice and Access. It was a big cloud over our heads. So, there we are, out there trying to bring in investors and get people really excited about Broadridge and we had to spend a fair amount of our time educating people on why Notice and Access was not a big issue for us financially. Although it was a challenge, it was also an important lesson in learning how to communicate with credibility our view to other parties in a way that was easy for them to understand.

Q: What's the challenge today?

DS: The challenge today is that even though Notice and Access is behind us, interestingly enough we still have the SEC's proxy concept release out there. People are talking about whether they should change the way things are done in the proxy process. Whenever you have people talking about change, it usually has investors thinking there's additional risk and they don't like that. Another challenge today is that there still will be more consolidations of our clients in the securities processing world. There will be consolidations, both coming into us and possibly away from us, but what we feel good about is where we're at now. Ensuring people understand that is key.

Q: I've asked the challenge question. Now flip the coin over and talk to me briefly about what's the big opportunity?

DS: This is one where you'll get the big smile out of me because we are not lacking for opportunities at Broadridge. We have products out there today, but we also have what we call "summits." These focus on very large opportunities that can become very big for the company. We have people dedicated to those summits and we have people highly focused and engaged on executing them.

The challenge is how do you prioritize to ensure that you can deliver on those and not necessarily overextend yourself or you try to do too much with too little.

You know it's funny, people ask me about investing in the business. They're worrying that in bad times, are we really investing in the business? And what I always share with people is, okay, let's take a step back. The first thing is that since becoming an independent public company, we have spent just over $350 million on acquisitions. We still spend 10% of our fee revenue or approximately $140 million on systems and programs. When we spun-off we said, "We're going to spend money on even newer, smaller products, call them acorns and grow them." Those have continued out in the field. I feel good about what we're investing in. And by the way, even in the tough times, we still find ways to invest in our associates with increases in our total rewards package and training.

Q: Tell me a little more about the summits?

DS: Great. We look at them as the summit of a mountain, it means that high peak, but there's already a base that's very strong, as a foundation. From that base foundation there are areas we can go into, to really push it up to a summit, above and beyond. I'll give some examples, because we've publicly talked about these things. We've said, "You know what, we have really serviced the mutual funds in the proxy area, as well as their interim communications and other communications, but there is a very large opportunity to take what we do very well today -- with people in our organization who are very familiar with how mutual funds operate -- and take on more opportunities for the problems they are faced with." We said, "We can do part of that on our own, which is build from what we have, but then we have also acquired Access Data, Matrix, and Forefield, to bring us to a new level inside of the mutual funds."

We also moved into the transfer agency business with the acquisition of StockTrans. Our focus here was to extend our services to public companies.

And we're growing internationally, both from an organic point of view as well as with the addition of City Networks and from an acquisition we made a while back called Dataphile.

Q: You've been successful throughout your career. You're CFO for a major, multi-billion dollar company. I'd like to ask you another three-part question. What do you think is the two, three, however many attributes one needs to be successful as a business person? Second, what does a person have to have to be successful in finance or as a CFO? And third, as a business person, what are the attributes they need to be successful in the 21st Century?

DS: I'll start by addressing all three with one. You have to have a passion for what you do and you have to look forward to coming in every day, whatever you do. I'm not saying we don't have a bad day. I'm not saying there aren't things that disappoint us, but that passion will keep you highly engaged and enjoying what you're doing. Now we'll start off with the business.

What does it take to be successful in business? I think you absolutely have to be the kind of person that gets out there, wants to meet with your clients and always looking to find a better way to do something that makes the client's life better or easier.

Now you move to the finance person or CFO. That finance person needs to attach himself or herself to that very passionate entrepreneur or business head and want to be part of how that person finances their business. I think for an associate, again we started with the passion. If you want to move up, you've got to be willing to take risks. As I said, I had a great career at ADP. Rich Daly approached me and said, "I'd really like to have you come on over to Broadridge and be the CFO." I was thrilled, but in doing so I knew there would be risks.

You also have to want to work with a group of people every day; not just be a sole contributor for the company. You've really got to want to be a contributor to the team. And by the way, that is another reason why I came over to Broadridge. When you meet the executives -- how they want to run the company -- it's all about team and how does a team collectively really pull itself together to get to the end result.

Q: Where will Broadridge be, or what will it be, in five years?

DS: I believe that today we're looked at and classified as a technology processor for the global markets. I believe, as we move forward, Broadridge is not going to just be looked at as a major processor, but as a company that provides solutions and is a trusted advisor on how to best accomplish what the client is looking to achieve.