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simply wait for contact – but should rather proactively engage investors to understand their concerns.


In-person meetings (most over Zoom or Teams) are obviously important here: the statistics make clear that letter writing won’t get leaders far. Just as crucial is thinking carefully about which stakeholders to approach. While calls with investor  perspective, stewardship or responsible investor teams are the groups which ultimately make proxy voting decisions.


“In a broader sense, companies should rely on their last shareholder meeting results to decide which issues to focus Shareholder Engagement efforts on over the coming year. As a rule of thumb, any resolution receiving below 80% support from shareholders requires a robust corporate response. Shareholder resolutions creeping over the 20% threshold are even more urgent.”


Based on recent experiences, meanwhile, US companies seem destined to have a busy year. As GAM Investments reports, for instance, many resolutions covering environmental disclosure hit that all-important 20% mark over the last two years, with few signs that’ll change through 2024.


Transparency and speed


Once companies have pinpointed the main shareholder worries – and which investor teams to engage – what should they do next? In the     speaking to every stakeholder willing to have a conversation, including those rejecting the company line.


If, moreover, it becomes clear that a majority of respondents are worried about a particular policy, executives should move fast. In reality, of course, implementing changes might take years. Nevertheless, corporations should signpost their intentions in advance, and clearly explain timelines.


Whatever the challenge, leaders would be wise to link change with wider business goals. Beyond       is what investors increasingly expect: 63% across the US prefer that ESG goals connect with shareholder value through quantitative data. The same is true in cyber security. With each major incident sparking a 9% drop in value, there’s clearly space for companies to balance ethics and the bottom line.


Not that a universal approach necessarily works either. Once again, dialogue the watchword here, helping executives determine exactly what shareholders are looking for. When it comes to compensation, for instance, every investor has their own preferred style – and major US corporations, from Apple to Visa, may feel shareholder principles 


One important way to break the deadlock is transparency, ensuring investors can judge companies on their progress. Around environmental concerns, for instance, companies could publish greenhouse gas targets. For cybersecurity, they could pledge to appoint IT experts to the board, especially urgent with those SEC changes, an approach giants like Amazon are increasingly extending to AI.


Openness is doubly important for corporate       data for short-term incentive schemes is one         publishing puts them at a competitive disadvantage, transparency means they can prove their metrics are fair, especially when payouts are higher than expected.


It’s a similar story elsewhere: publishing shareholder feedback and issuing follow-up statements are both ways of keeping investors engaged long after the shareholder meeting season ends. Another tactic is leveraging expert advice, helping busy executives keep abreast of stumbling blocks all year round. Given how many investor challenges US executives now face, getting outside help surely makes sense.


Michael Vogele, Managing Director of Alliance Advisors Global Advisory Group, has 22 years of experience providing consultative services on Shareholder Engagement & ESG topics.


allianceadvisors.com


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