Kerry Leighton-Bailey, director of shareholder engagement at Lumi
Throughout 2021, shareholders continued to make their voices heard pushing topics like ESG investing and renumeration packages high on the agenda. From the outset of 2022, organisations must continue to monitor the trends that are shaping the investment landscape as a key step to meeting the needs of their investors.
But with fierce competition and many organisations still rebounding from the initial shock of the pandemic, how can businesses go the extra mile to impress and delight and retain shareholders?
One of the obvious ways to delight shareholders is through dividend payments. In fact, we’ve seen Royal Mail and B&M deliver recent packages to investors when both companies announced dividend payments worth over £200million.
However, this is clearly not an option for all businesses. Organisations should prioritise good governance to impress investors, allowing the shareholder voice to remain important for 2022.
Opening the virtual and hybrid door to investors
In the UK and US, all public and trades companies are required to hold an Annual General Meeting (AGM) and it is a legal requirement for businesses to provide shareholders with this opportunity to interact with key executives, vote on key issues, and help shape the future of a business. A clear long-term strategy to empowering and impressing shareholders is through holding engaging, flexible and accessible company meetings and AGMs that provide investors with a voice regardless of their location.
Traditionally, AGMs have taken place as in-person events, but the pandemic resulted in a rapid shift to virtual and hybrid meetings. Before, virtual was seen by some as a way of avoiding shareholders but this idea has been disproven and disregarded. In fact, Lumi has seen record levels of attendance and engagement from shareholders at virtual or hybrid meetings over the past 18 months.
Marks and Spencer have already seen this trend in the virtual and hybrid meetings they delivered throughout 2021, and are reluctant to go back to the old way of doing things. Their new virtual meetings have even seen a 200 per cent increase in shareholder involvement. They reported that just 562 shareholders made the trip to Wembley Stadium in 2019, but at 2021’s digital AGM, 1,650 voted, asked questions or viewed live and there were over 2,500 replays afterwards.
With such fantastic engagement levels on offer, the entire industry needs to rise to the challenge to delight shareholders and ensure that wherever people attend a meeting from – virtual, hybrid or in-person, they are represented, engaged, and given the opportunity to have their voices heard.
Making accessibility and simplicity a top priority
Whilst the hybrid and virtual format is helping to open up AGMs and the world of investor relations, the vast majority of shareholders still do not realise they can easily, and have the right to, attend AGMs. This year, we need to see greater and more proactive strides from businesses to increase communication and let shareholders know when an AGM is happening and how they can attend.
Making information easily accessible can be instrumental to impressing a more informed and educated shareholder base, capable of discussing business matters in a meaningful way during the course of the AGM. Communicating with shareholders post AGM is also key for ensuring investors feel integrated within your organisations.
Without increased channels of communication, shareholders will begin to feel closed off from their own shares and locked out from the chance to have a say on topical issues. We’ve seen improvement this year with more companies providing flexible, hybrid AGM and investment meetings – but there is still significant work needed to simplify the chains of complexity that stand between the underlying owner and the holding company.
Preparing for ESG as a key issue in 2022
Prioritising and preparing for key topics shareholders care about most will be one of the top ways businesses can keep investors on side. The rise of ESG is undeniably here to stay and 77% plan to stop buying non-ESG funds completely by 2022, showing the urgent need for companies to bring ESG to the top of the corporate agenda.
This topic will no doubt be an issue on the table at upcoming AGMs in 2022 and businesses need to be prepared if they want to impress shareholders. Q&A sessions have become such an important aspect of AGMs in recent years (partly driven by digitisation) that managing incoming questions, adding structure to the process and making sure the meeting serves its purpose is now critical. Hybrid meetings will be key to supporting this in 2022, as instead of putting board members on the spot on the day, shareholders are able to ask questions in advance, giving the board crucial time to prepare a considered response.
The onus now falls on businesses to ensure they provide shareholders with a seat at the table, listen to the issues and topics that matter most to them and deliver digital solutions that empower them from wherever they are in the world. Retail shareholders will continue to have their say in 2022 and now is a watershed moment for companies to rethink how all investors can be included in important decision making.