Issuers face a number of challenges when it comes to shareholder engagement. This includes tight timeframes during the voting process, and understanding how investors make their voting decisions.
In my experience, successful AGMs see an issuer engage early with two of the four key stakeholders: Proxy Advisors, Institutional Investors, Retail investors and Employees/Directors and Professional Engagement Firms. Two groups in particular - Institutional Shareholders and Proxy Advisors - need to be communicated with effectively to ensure they vote and are supportive.
The results of your AGM will indicate how well you have communicated and listened to your shareholders. Investors have differing criteria, and satisfying them all is difficult. But staying out of the headlines means you’ve done a good job of communicating your strategy and covering potential issues, such as how your remuneration scheme aligns management to corporate objectives.
Engaging your key shareholders isn’t easy but there are some good basic principles that will help smooth the process:
- Be proactive and clear - It’s important to explain why you are engaging with them and clarify the changes you have made
- Meet with investors and maintain regular contact - Don’t forget the proxy advisors influence how many of the institutional investors will vote
- Engage with stakeholders early - Allow enough time to work through the key issues, avoiding last-minute meetings
- Outline the full story from the start – It’s best that stakeholders aren’t surprised with anything later on
- Be clear and open about remuneration – Make sure stakeholders understand how remuneration ties in with your company’s strategy
- Cover more than just remuneration - Investors want to hear more than this; key issues include board composition, succession planning and diversity
- Provide a summary of consultation to investors – keep communication open so investors know what’s going in the report.
Listen to our recent webinar on shareholder engagement - hear more insight from Cas alongside Will Pomroy from the National Association of Pension Funds and Andrew Ninian from The Investment Association.