The Advisors' Blog

Over on The Proxy Season blog on TheCorporateCounsel.net, I recently shared that investors are taking a range of approaches to engagement meetings following the February Corp Fin Staff guidance on Schedule 13G eligibility. Based on a recent episode of the “Timely Takes” podcast featuring Brian Breheny of Skadden, Rick Hansen of HP, and Allie Rutherford of PJT Camberview, Skadden’s memo and this FW Cook blog, those approaches include one or more of the following, which investors may apply to engagement with all their portfolio companies or only some portfolio companies (where they hold 5%):

– Not engaging at all (i.e., not taking meetings)

– Engaging but not participating (i.e., taking meetings but taking a “listen only” approach)

– Participating with a “listen first” approach, asking open-ended or less specific questions and not providing transparency around voting intentions

– Communicating that they prefer the company to do the outreach, set the agenda items and stick to the preset agenda topics

– Starting some or all meetings with a disclaimer

– Continuing as they always have (some smaller investors)

Here are some tips the above-mentioned resources shared for navigating the shifting dynamics of investor meetings this proxy season:

– Be prepared for many different styles of meetings, and know how each investor is approaching engagement meetings before you engage. HP’s Rick Hansen says this is exactly the type of information you should be leaning on your proxy solicitor to provide.

– Know that silence is not acceptance. FW Cook notes that no questions or comments from an investor doesn’t mean they are supportive of a practice.

– Address the “elephant in the room.” Both the podcast participants and the FW Cook blog stress the importance of knowing pain points (specific to your company and also specific to the investor based on their policies) and addressing them proactively since they’re still likely to impact their vote, given the bullet above. Skadden’s Brian Breheny stresses that companies need to be more proactive than ever — to get the meeting and set the agenda, already knowing the investor’s perspectives.

– The differing approaches might mean that some investor voices and positions are much “louder” than others. PJT Camberview’s Allie Rutherford reminded us that there are many perspectives you’re not hearing in meetings.

– Consider affirmatively responding to any investor disclaimer. Brian noted that saying something like, “we understand and we realize that’s not your intent” might make the investor more comfortable engaging.

– Make sure your proxy and communication materials preemptively address concerns, including those specific to certain investor’s policies.

Allie noted that investors are in “get-through season” mode, and there may be another pause before offseason engagement, during which investors will reassess and possibly make changes. In the meantime, keep calm and engage on. They also stressed that building long-term relationships through engagement remains very important.

– Meredith Ervine