Engagement needs to be both a strategic process and a two-way dialogue, because the investors you’re engaging with have their own goals for your engagement with them. Does each side have certain expectations as to where the engagement ultimately will go? Maybe. Between the company and the investor, there may well be a lack of alignment on the question of “Should this engagement have a particular outcome?”
The company should have a point of view as to why it is doing a particular engagement. Is it just a “check-the-box” exercise? Perhaps the company needs a certain number of engagements to disclose in the proxy so it looks like its engagement program is robust. That’s a valid reason, but be aware going in what your goal for a particular engagement is – even if it’s as simple as that.
Don’t forget the importance of keeping good records and tracking all investor interactions for, among other reasons, purposes of reporting in the proxy statement. If a company doesn’t yet have a full IR department, this tracking responsibility would likely fall to the corporate secretary or the general counsel.
Maybe you’re trying to build a relationship – or you’re repairing one. These also are valid reasons for engaging. Or maybe you genuinely want some input on an issue from a particular investor – or from a broad set of investors – and you’re taking the temperature on the response to your perspective on that issue. Agreement among investors inevitably varies on a topic, although positions tend to be more aligned on sustainability and executive pay compared to other topics.
When deciding on an outcome that you will consider to be a “success,” you should determine whether it is a multi-year goal or something that you want to achieve this year, like procuring a majority vote on a particular meeting agenda item. When it comes to multiyear goals, the ultimate outcomes sometimes are binary – short-term and long-term objectives that you seek. Many of your issues are likely to be multifaceted and textured and not necessarily an easy fix.
So be mindful about “Here’s the message I want to deliver to this particular investor” when you’re having an engagement, and don’t just go into engagements blindly without being strategic.
Authored by
Broc Romanek