All companies should conduct a regular analysis of their shareholder profile to better understand the institutional and retail shareholders holding the company’s stock. In today’s business environment, companies need to know on a regular basis who owns their stock.  Understanding the voting policies and trends of their investors and how best to engage directly with each of those shareholder constituencies is critical.  A shareholder profile analysis is the key to accurately understanding who owns your stock.

Once you know who the true institutional shareholders are, your proxy solicitor will help you understand the level of influence the proxy advisory firms, ISS and Glass Lewis, have on your shareholder base and alongside those investors that maintain their own, independent voting policies.  This knowledge allows you to determine where to focus your efforts, i.e., if someone strictly adheres to ISS, you may decide it is not worth trying to engage with that investor.

You can also determine if the voting decisions are made by the investment team, the stewardship team, or a combination of the two.  In the event of a negative voting recommendation or vote, knowing the right group to target to try and override that voting opposition  is critical.  In many cases your ongoing investor relations relationship can be invaluable, particularly around compensation or corporate action-related proposals.

Conduct a review of your institutional investor’s voting guidelines to determine if a director nominee(s) will run afoul on issues such as gender diversity, being over-boarded, or lacking sufficient disclosure.  By doing so, you will help mitigate potential surprises well before the voting starts.  It will also give you the opportunity to inform your board about any potential concerns.  In addition to proxy policy votes against directors, many shareholders are increasingly using an against vote on directors to affect change.

Communication is key.  Companies who regularly engage with their investors are ultimately the most successful at preventing or navigating voting opposition to their directors and other important ballot items.

Even if retail investors do not represent a sizable percentage of your shareholder base, they can be a source of voting support when  you’re faced with a challenging vote.  Our experience shows that in a close vote, retail shareholders who have been solicited by a proxy solicitor, will be the difference maker that pushes a proposal over the finish line.

It would not be unusual to see a 10 percent against vote on a controversial proposal.  To overcome that 10 percent, you would need about 30 percent (3 to 1 ratio) of the outstanding shares represented in registered and NOBO shares to bridge the gap. When solicited by a proxy solicitation agent, retail votes generally come in supporting management at a 9 to 1 ratio.

Shareholder meetings are no longer a routine, three-month event. Companies need to prepare well in advance with their proxy solicitor to ensure proper shareholder engagement and shareowner analysis campaigns have been conducted.

With the help of a proxy solicitor, it is possible for companies to know their shareholders, understand their voting patterns, and correctly forecast the voting outcome before the proxy statement is even released.