More companies today are taking a proactive approach when it comes to engaging their shareholders. After all, when done right, this can result in a number of positive factors such as the giving shareholders a bigger voice or say in the many activities of the company.
In 2015 alone, almost three-quarters of numerous large companies in North America stated that they had to deal with shareholder activism. Often, this is in the form of how management communicates with the board and there were instances where it was in the form of proposals that were directly sent to the company’s shareholders. About half of these CFOs made mention too that as a result of this activism, they have also had to make at least one major change to the business including leadership changes, share repurchase, or divestitures.
There are activist campaigns that can get public and aggressive. This can include proxy contests and some even attempt to get a major company to transform forcefully of get their composition of management or board changed. However, there are also hedge funds activists that have become more passive when it comes to their company positions. This is often considered as a signal to the market through their investment that they now see the company to be on the right path as far as its change of direction is concerned while maintaining a position where they can still be capable of stepping in in the event that the company suddenly changes it redirection course or will falter along the way.
Companies that take the time to engage their shareholders proactively can get the upper hand against shareholder activism. This is because they will be able to ensure that their shareholders will have the necessary information needed to successfully build credibility and trust between them and the company. When good engagement practices are implemented, the board and the company will learn to value shareholder feedback about their concerns and priorities.
Management, traditionally, provides education on the company performance for the shareholders, along with the long-term strategies, operating results, competitive positioning, principal business risks, and other matters. However, there are instances when the investor relations may not be properly positioned to get the shareholders engaged on governance issues. Some companies implement governance functions that will help lead in the governance matter engagements. These days, boards are also increasingly taking heightened roles in engaging their shareholders directly. This is especially true on such topics that include board composition or executive compensation.
In many cases, companies take advantage of the services of consultancy providers such as Boudicca Proxy that can take on the role of engaging their shareholders and maximising communication. These providers will take on the role of ensuring that proxy voting is going to be successful through the shareholder engagement strategies that they will implement. With the means and the network that these providers have, keeping the activists at bay while making sure that positive outcomes can be expected from proxy votes is going to be easy. Learn more about the need for proper shareholder engagement by reading about Boudicca Proxy Consultants online.