How Boards can Prepare for Next Year
Analyze your vote, but also investor sentiment
The first few weeks after your annual meeting are prime time to take stock of annual meeting votes and outcomes while everything is fresh in the minds of the board and management team. One common mistake made during this period is to focus only on vote totals. Well-prepared companies look beyond raw numbers to understand the factors that drove the level of shareholder support and examine any misalignment between what investors said during engagement efforts leading up to the annual meeting and their vote.
If your company received very high votes against management on any items, it may be helpful to reach out to major investors to reassure them that the board has heard investors’ perspectives and will have more to share in the coming months. But if this year’s meeting went well, forgo any additional calls to governance teams while they continue to vote on hundreds more meetings before the end of June. Instead, use this time to reflect on feedback received before the meeting and any nuances that may be embedded in the vote results.
Recognize that the off-season is becoming the new busy season
As more and more companies see the benefits of engaging with their largest investors throughout the year, securing meetings during the off-season has become nearly as competitive as it is in-season. Major institutional investors have increased the size of their governance teams, but demand for engagement is still outstripping capacity.
Companies need to be thoughtful and focused not just about engagement meeting topics, but also how they approach getting those meetings in the first place. Advance planning is essential to ensure that conversations are productive and valuable for both companies and investors. An effective off-season engagement cycle can set a positive tone for 2018 and decrease the chances you’ll be surprised at your next annual meeting.
For companies that experienced low levels of support or opposition to management at this year’s annual meeting, the period immediately thereafter can feel like starting at the bottom of a mountain. While this may be your company’s first time facing an investor challenge, your advisers have likely seen this situation before and can help you formulate a response. Now is the time to huddle with your internal teams to start discussing next steps and engage with your advisers to help find the most effective path forward.
A version of this article was originally published by Corporate Secretary magazine