Fundamental changes have been occurring in shareholder engagement, particularly in the past few years. The number of younger and more diverse investors accustomed to all things digital spiked during the Covid-19 pandemic. At the same time, virtual shareholder meetings transformed from a novelty to a necessity and the norm. This combination, plus several changes in practices impacting investor communications, have resulted in a paradigm shift in shareholder engagement.
First, a passive “audience” experience has now become an active “user/consumer” exchange. Communications have become increasingly interactive due to Wi-Fi, apps on handheld devices, and social media. Instead of passive “audiences” that only receive information, today we have “users” with the power to control, choose, define and comment. They want to hear directly from companies about who they are and what they stand for—and they take the initiative to conduct their own research online, and freely share their opinions and findings on online platforms.
Second, mono-media has evolved into omni- media. Paper-based communication persists in the proxy industry, for reasons of tradition, familiarity and beliefs about best practices. The pandemic showed that digital communication can be more effective at engaging shareholders, especially when issuers embrace multiple media channels and platforms. Omni-media means giving shareholders the information they want, when they want it, on their preferred device.
Third, periodic, non-real-time communication has become continuous and real-time. Issuers that limit communication to traditional documents, whether paper-based or email, will be increasingly ignored by today’s shareholders. Today’s consumers and shareholders are used to live interactions and constant availability; the same is demanded of the proxy industry. Technology is making continuous and real-time shareholder communications easier, more flexible, and more affordable.
Fourth, mediated channels have transitioned to non-mediated. Mediated information still has a place in the proxy world, both for industry and shareholder audiences. However, issuers and shareholders are also active on social media and other forums, sharing news and ideas, voicing opinions, debating and learning, and trying to find an edge. These conversations are non-mediated, fast-paced, and at times can have an outsized impact on share prices and industry responses.
Lastly, generalized communications have become more personalized. We live in an age of choice, and public companies are not immune to this expectation. Traditional printed documents— long, complex and typically mailed to investors by post—are inadequate when the needs and wishes of shareholders are so varied. The same goes for in-person-only shareholder meetings, which now feel restrictive and exclusive after so many investors have experienced digital meetings. Issuers need to provide upfront and transparent communications to increase shareholder engagement.
How can the different players in the industry adjust to this paradigm shift? Mediant recently conducted a survey of public companies examining the evolving nature of retail investor engagement. Here are four ways to adapt to the shift and increase shareholder engagement:
1. Engage shareholders throughout the year: Create year-round opportunities to ask questions, get a sense of proposed resolutions and reactions to them, and take their temperature on issues that might impact your business.
2. Embrace the shift to digital shareholder meetings: Many issuers hosted virtual shareholder meetings (VSMs) during the first two years of the pandemic—nearly half of our survey respondents plan to host a virtual meeting in 2022, with many making this a permanent choice going forward. Alternatively, to satisfy those who want the in-person experience, explore the possibility of hybrid events that combine physical and remote access.
3. Enhance the shareholder experience: For annual meetings, encourage board members and executives to appear on video, use live chat, proxy voting, polls, virtual/physical breakout rooms, and expert operator assistance. For proxy materials, offer digital delivery and add interactive features.
4. Meet shareholders where they are: Allow shareholders to choose how they want to receive information. Investor communications platforms make it easy to deliver documents and interactive services across multiple platforms. For those who still prefer paper documents, print-on-demand makes it quick and cost-effective to deliver tailor-mailed content.
To adapt to this paradigm shift in investor communications, corporate issuers can engage a technology partner with the necessary capabilities for strengthening engagement with retail shareholders all year long.