TheCorporateCounsel.net

Over on Cooley’s “The Governance Beat” Blog, Broc recently offered some thoughts on how companies should approach their shareholder engagement programs.  This excerpt has some advice for companies that are just getting started:

If you’re just starting your first off-season engagement program, during your initial engagement, you should ask the investor about their engagement preferences (e.g., what time of year, how frequent, what topics and who they like to attend calls).

Some companies start with a list of their top 50 – or maybe it’s only 25 – shareholders. Newly public companies may start with just a handful of institutional investors because founders and venture capitalists still have significant holdings and their investor base hasn’t matured yet. The number will vary at each company – and perhaps over time – depending on the issues that the company faces, as well as the current level of resources at the corporate secretary’s department. If there are important issues on the year’s meeting ballot, the company might hire a proxy solicitor to help bring in the vote.

They look at that group of top shareholders and try to reach out to all of them over the course of the year. Each company will have a smaller subset of important shareholders and prioritize those engagements.

Broc says that the investors are in that smaller subset might include shareholders with a smaller stake who are vocal on issues that are crucial to the company – whether those are issues that management cares deeply about or issues where others are likely to follow the lead of the vocal shareholders.

He also notes the importance of engaging with investors who have reached out to the company on governance or ESG issues, and reminds companies that engagement isn’t only phone calls or online or in-person meetings. Many investors reach out through letters, and smart companies make sure to have a process to direct these to the appropriate person for a response.

– John Jenkins