Governance professionals see benefits in flexible shareholder engagement
The adoption by companies and their boards of a more flexible and varied approach to shareholder engagement can help improve outcomes, according to governance professionals.
Traditionally, issuers ‘did the rounds’ of talking to investors at certain times of year, but they are increasingly shifting when engagement takes place, Tesla Motors deputy general counsel Philip Rothenberg told delegates at the Society for Corporate Governance’s national conference in San Francisco last week.
Meanwhile, they are bringing investors in to see what the company is doing – Tesla does a lot of factory tours - and using media such as Twitter and emails to communicate with them, he added. ‘Year-round engagement is very important,’ Rothenberg said.
Better shareholder engagement enables companies to explain their long-term plans so that even more controversial ideas – including why the issuer is spending investors’ money on certain projects – are understood, he told delegates. Product demonstrations can help, and internet access is important because most investors are not based within 100 miles of a company, he added.
Fellow panelist William Ultan, senior managing director with Morrow Sodali Global, said that although governance professionals at institutional investors know an industry well, they may not know your company in great detail. Companies are doing more outreach outside the proxy season, he added – noting that it is not ideal to interact with investors only when a proxy adviser has come out against management.
Suzan 'Sam' Miller, corporate vice president and former corporate secretary with Intel, told attendees that modern forms of engagement allow companies to get investors’ views on issues that are a little way down the line so that boards and board committees can start thinking about how to approach them.
Miller’s company recently expanded its shareholder outreach, she said. For example, it has overhauled its web content to make it more accessible and more closely tied to CSR matters, while making its CSR reports searchable. Intel last year also produced a supplemental proxy filing giving a clear summary of the main document that investors can look at throughout the year, she said.
One aspect of the shift is that not only the corporate secretary and general counsel are involved in outreach; so are individuals from a company’s human relations, CSR or other teams, said Jacqueline Condron, senior operations and research analyst on the proxy voting and governance committee at BNY Mellon.