The Convergence of Investor Relations and Corporate Governance
There is a well-established confluence between Corporate Secretary and Investor Relations teams. Whilst the outputs for both teams vary, both departments can help their organization deliver a holistic programme of shareholder events that facilitates greater affinity and better voting outcomes at the AGM.
In resounding criticism of the AGM, Jamie Dimon, Chair and CEO of JP Morgan, called annual shareholder meetings ‘a complete waste of time’ and ‘a joke’ arguing that the AGM no longer presented an opportunity to ratify business decisions and secure progress but rather they had become ‘hijacked by people who have only political interests and don’t have any interest in the future health of the company.’
Historically, corporate secretaries have maintained a laser focus on AGM management, advising the board on matters of governance. However, the role of the AGM is changing, and is being used, more so than ever before, as an opportunity for shareholder voice to make itself heard.
At Lumi, our global client base has seen an explosion in engagement at Virtual and Hybrid AGMs; in the first half of this year 2,756 meetings were conducted by Lumi worldwide, with a total of 180,360 shareholders attending, alongside 80,604 guests. When compared to the same period in 2020, only 982 meetings had been conducted, with 23,785 shareholders in attendance and 60,945 guests. The number of questions being posed to meetings has also sky-rocketed. In 2020, only 6,092 questions were asked throughout the course of the year, in 2021, 33,894 questions were asked, cementing the AGM’s position as an Investor Relations event.
Many of the world’s largest companies have seen increased levels of opposition at their meetings over the past 12 months. The Financial Times reported that: “More than twice as many FTSE 100 companies have faced a shareholder pay revolt this year than last, as investors attacked managements seen to be profiting during a tough 12 months for many in the pandemic.” For many professionals in the Investor Relations space, the correlation between increased resistance to resolutions, alongside better investor turn out cannot be ignored.
How can my organization secure better relationships with shareholders?
Synchronising the work of corporate secretary and investor relations teams is a valuable tool in heightening affinity towards your organization, and in strengthening the bonds between investors that ultimately result in positive, tangible outcomes for your organization.
Ongoing communication plans can transform your relationship with investors. Providing multiple touch points throughout the year ensures that investor relationships aren’t left to fester, only to overspill at critical meetings. Inviting directors to make regular contact with investor strongholds can enhance voting outcomes, thanks to a better perceptions of transparency and a sense of personal connection with board members. If you have a hybrid meeting coming up, consult our AGM planning checklist for more information about how to better engage with investors at your meeting.
Delivering a robust value creation plan can also help safeguard relationships with stakeholders. In findings reported by Gallup, support for big business has diminished over the past two decades: in a survey conducted in 1997 27% of respondents expressed little or no confidence in big business- this has increased to 34% in 2019. With changing perceptions of what it means to be a ‘good’ or ‘trustworthy’ business, creating a definition of value is incredibly important. Rather than emphasising good share prices as an indicator of value, directors should take a more holistic view of value. For example, A strong environmental, social, and governance (ESG) proposition also creates shareholder value and creates a framework through which shareholders can perceive real changes and improvements.
In recent research, it was found that shareholders lodge most opposition on issues of the environment and sustainability. By committing to an ESG value creation plan, and clearly communicating and reporting on those commitments to shareholders, your organization is better equipped to improve investor relations.
Joining up the work between investor relations and corporate secretary teams can be a vital tool in ensuring the productivity of your AGM, not simply in terms of getting business done. Rather than the AGM acting as a vehicle for shareholder ire, thanks to simmering issues being left untouched during the year, instead the discussion can be productive and help directors address the issues that really matter.
Will your organization connect the dots?
Lumi is the leading digital platform facilitating in-room, hybrid and virtual AGMs for the world’s largest corporations and membership organizations. It is the only platform that digitizes the entire lifecycle of an AGM in a single solution that enables sophisticated meeting facilitation before, during and after the live meeting.