March 5, 2019

ESG Activism: “I Am Retail – Hear Me Roar!”

Big institutional holders seldom have trouble getting management’s ear – but traditionally, retail investors who weren’t willing to play the gadfly game could usually count on a polite brush-off from the IR department. Now, it looks like that situation may be changing. Broc recently blogged about SAY, a New York-based tech startup that provided a platform for retail investors to vote on questions to ask Elon Musk during a recent Tesla earnings call.  But SAY’s not the only entity that’s trying to help retail investors be heard on matters that concern them. Check out ‘Stake’ – which aims to pair retail investors with a small group of socially responsible investment funds that will serve as “Champions” for their issues.

Stake provides a platform for retail shareholders to identify specific “Asks” that they want addressed by the companies in which they invest.  Once an ‘Ask’ gets a critical mass of support, this excerpt from Stake’s website lays out what happens next:

When an Ask reaches its support goal, one of Stake’s Champions will take that Ask directly to company management, advocating on behalf of all those that supported the Ask. Our Champions are experts at persuading companies to improve their social and environmental impact, and they are already connected to the corporate decision-makers. Stake is a tool like none before. By connecting you with a professional Champion, your voice reaches the boardroom.

Investors who supported the specific “Ask” receive progress updates on the company’s response to it.  Stake’s founders are themselves climate change activists & companies have implemented a number of the Asks that Stake’s allied funds championed.

I know it’s easy to be skeptical of efforts like these – and I have my doubts about how much traction Stake’s going to be able to get. But I’m also reminded that it only took David one stone to take down Goliath, & these folks have the potential to muster a lot more firepower than that.

Tomorrow’s Webcast: “Conduct of the Annual Meeting”

Tune in tomorrow for the webcast – “Conduct of the Annual Meeting” – to hear Nu Skin Enterprises’ Greg Belliston, The Brink Company’s Lindsay Blackwood, Foot Locker’s Sheilagh Clarke, Carl Hagberg of the “Shareholder Service Optimizer” and General Motors’ Rick Hansen talk about how to best prepare for your annual shareholders meeting.

Annual Reporting: Don’t Forget to Check On Your Filer Status!

This Akin Gump blog reminds companies to check on their filing status while they’re preparing to file their Form 10-K – many more companies may qualify as “smaller reporting companies” this year due to the SEC’s recent rule changes.  Here’s an excerpt:

As public companies prepare to file their annual reports on Form 10-K for the year ended December 31, 2018, they should consider whether they qualify for smaller reporting company status under the recently amended definition of smaller reporting company, which became effective on September 10, 2018, and the related CDIs updated by Staff of the Division of Corporation Finance  on November 7, 2018.

The amended SRC definition raises the threshold to allow more companies to qualify as an SRC and benefit from the election to use the scaled disclosure accommodations available to SRCs. SRCs may choose compliance with either the SRC scaled disclosure requirements or the larger company disclosure requirements on an item-by-item or “a la carte” basis for each filing as long as disclosures are provided consistently and permit investors to make period-to-period comparisons.

The blog also reminds companies thinking about taking advantage of scaled disclosure that, to the extent an SRC scaled item requirement is more rigorous than the same larger company item requirement, SRCs are required to comply with the more rigorous disclosure.

John Jenkins