Measuring Shareholder Engagement: Trends and Best Practices

We connected with John Nunziati, IR Partner and Associate Vice President at Q4, who discusses shareholder engagement reporting in company proxies.

“What gets measured gets done” is an expression often used to ensure that objectives have reasonable goals. It is believed that this ensures progress against them can be verified quantitatively.  For investor relations teams, there are a number of activities whose progress is challenging to measure. However, shareholder engagement is one area that lends itself quite well to measurement. 

We have typically advised clients that measurements of shareholder engagement are well-suited for reporting to management as a measure of IR program effectiveness.  Tracking the effective use of time spent by management and IR personnel on investor outreach is a key reason for maintaining a rigorous practice of activity tracking in a CRM platform.  We have been seeing a trend emerge in the use of this reporting as it is being extended to company proxy statements.    

Companies are highlighting their shareholder engagement approach and philosophy along with key statistics. This typically is included as part of their summary of corporate governance, reflecting their commitment to provide investors with opportunities to deliver feedback to management on key topics of corporate interest.  We find that companies are summarizing the topics investors most often discuss with them.  They also provide a variety of measures, including:

• Number of meetings: Companies are sharing how many meetings were conducted.  Some may limit this to only the meetings held with top shareholders, while others may include meetings held with all shareholders.  We have also seen meeting counts, including investors and prospective investors (“targets”).
• Percent of shares: Some firms will report on the total percentage of their outstanding shares, represented in the meetings they held.  This calculation may use a denominator of the total number of shares outstanding. Some approaches base it on a denominator of the total number of shares held by a specific shareholder group, such as the company’s top holders. An example is, “We met with investors representing  75% of the shares held by our Top 20 actively managed investors”.
• Percent of holders: There are approaches to reporting which include the number of shareholders who have been engaged as a percentage of the total number of holders.  This may also be limited to a proportion of top holders. Examples of this include: “We met with 80% of the top 25 active holders” or “We have met with 100% of the holders with a  position size of 5% or more of our outstanding shares.

CRM and Shareholder Engagement

Using CRM activity tracking to generate these metrics requires a consistent, reliable process for tracking activity. It highlights the importance of having standard activity types and determining which will be included in the published metrics.  

For example, a decision should be made whether to include only investor meetings with management participants or those conducted by investor relations personnel. Even the concept of  “engagements” should be evaluated. Companies may want to focus only on meetings with investors, whether in-person or virtual. 

However, they may also want to incorporate other investor interactions such as investors or targeted investors who listen to earnings results webcasts live, or via replay, attendees at analyst days or shareholder meetings, and even consider recipients of email communications sent by the IR team. 

Of course, key topics discussed must be captured using a reliable methodology for summarization and analysis, such as the tagging feature in Q4’s Desktop CRM platform. IR teams should work with their legal and compliance teams to ensure that their methodology is well-documented and reliable. If you are looking for input on getting started, contact your Q4 contact for more information.