The initial obvious answer is to engage on issues that the investors you’re meeting want to talk about. That’s the primary purpose of engagement – to find out what investors want to know and give them that information.
But you should be proactive if you know there are issues that you should be engaging on. Don’t let it always be shareholder driven. Obviously, if you had a low say-on-pay vote, that’s an issue you would want to engage on. Maybe the lead director or a board committee chair got a lower level of votes than normal. Find out why. Issues raised in proxy advisor reports often make sense to address proactively during engagements – and be prepared for those topics in your annual meeting’s Q&A session.
Most corporate secretaries have the same motto when it comes to voting outcomes at annual meetings: “No surprises.” You should view engagement as an opportunity to not be surprised. To uncover any seemingly minor issues that could grow into a real problem by the time the annual meeting rolls around. Be frank and ask your shareholders to be honest and let you know of any issues that could be sticky this upcoming proxy season.
“No surprises” works both ways. You don’t want to be surprised. And you don’t want to surprise your shareholders – because they might then surprise you in response.
If you know you have something on the ballot that is sticky, sometimes you’ll want to do a quick call in-season – if you can get someone on the phone – about “hey, remember we talked about this six months ago. I want to check in and see if you have any questions that have arisen since then for which I can be helpful.” That can help to curtail surprises.
Authored by
Broc Romanek