Investor Update is busy on several mandates across the UK and Europe as we enter the busiest part of the preparation phase for the 2021 Proxy Season. As highlighted in our last newsletter, the 2020 season was very busy with multiple revolts against remuneration, ESG and board appointments as investors increase scrutiny on their investments. 2021 will see a continuation of this trend, especially around ESG activism, as well as remuneration votes becoming mandatory in Germany under SRD II regulation.
So how can a corporate maximise shareholder support at this year’s AGM. There are distinct phases (for a May/June AGM): Preparation (Nov-Mar), Execution (Mar-June) and Follow-up (May-Aug).
Preparation: Investor Update will assess your draft AGM resolutions against Proxy Advisory Agency (“PAA”) policies (ISS, Glass-Lewis, etc) to flag potential risks or concerns as well as analysing the voting strategies and histories of your top investors (e.g. which PAAs they follow, voting likelihood, previous behaviour, etc). We may also recommendation a Corporate Governance roadshow, where the board and management presents the company strategy, key governance themes and increasingly ESG to Corporate Governance teams at your larger investors, as well as to the PAAs (early engagement recommended, to ensure no misunderstandings of resolutions and minimise the risk of them opining against you). This much valued interaction is becoming increasingly commonplace as Corporate Governance teams grow in size and importance at many asset managers.
Execution: Execution activities commence before the AGM notice is published. Investor Update will proactively liaise closely with key shareholders (top 50/100) throughout the process, including notification and clarification of resolutions, solicitation and chasing of votes, vote tracking and reconciliation, daily reporting, etc. Investor Update will also provide reactive information agent services where required. A detailed Shareholder ID (ideally from Investor Update!) will facilitate vote reconciliation through the custodial chain and ensure no votes are lost or forgotten. Investor Update will also ensure the PAA reports, which many investors base their voting decisions on, are accurate (and will rectify if not).
Follow-up: Investor Update will review the AGM, including observations of voting behaviour, identify issues or concerns and make recommendations for future AGM preparations.
2 key points to remember: Corporate Governance teams at larger investors will set internal governance policies and carry out the voting, often without the Portfolio Manager’s influence; and Passive investors are unable to sell or buy their holdings, so voting is the only real way of influencing their investments, so they are regular, active AGM participants. Don’t forget about them!
The Investor Update Proxy Solicitation team has worked on thousands of AGMs and EGMs, and with its unparalleled corporate governance experience and network will be able to help you successfully navigate the increased investor scrutiny in 2021.