Off-season engagement increases proxy backing, say half of US companies
Just over half of US companies – 52 percent – say their off-season engagement activities translate into increased support when it comes to the proxy vote, according to the latest research from IR Magazine.
The Off-Season Governance report shows that almost two thirds of IR teams have a program of activities relating to governance issues outside of the proxy season, with a majority of companies globally saying this strengthens the investor relationship, and a notable minority (43 percent) globally saying it results in greater support come the proxy vote.
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Regionally, US companies are most likely to see off-season engagement as a boost for the ballot, at 52 percent, compared with just 36 percent in Europe and 38 percent in Asia.
Across the cap sizes, largely the same percentage of companies believe this to be a benefit of off-season engagement (ranging from 37 percent to 41 percent), though a massive 72 percent of mega-cap companies say engagement outside of proxy season translates into increased proxy backing.
The more widely held view is that such engagement strengthens the company relationship with investors – something that, globally, more than 80 percent of companies agree with.
This opinion is held most strongly in Asia, where nine in 10 companies believe engaging with investors outside the proxy season builds a stronger relationship – an opinion shared by just 75 percent of companies in Europe, with the US falling between the two. There is little difference across the cap sizes.
There is no ‘off-season’
Thomas Heinzen, vice president of corporate development at Cryoport – a company specializing in cold chain logistics solutions for temperature-sensitive life sciences material covering IVF, biopharma and animal health products – says there really is no ‘off-season’.
‘After we report our financial results each quarter, we line up calls with all of our analysts as well as our top 15 shareholders,’ he tells IR Magazine. We typically follow up with non-deal roadshows and one-on-one calls with new investors that are not yet familiar with our company. Beyond that we usually attend about 10 investor-based conferences each year. We have a constant cadence with investors throughout the year, so we really don’t have an off-season.’
Cryoport is a fast-growing company, going from less than $100 mn in market cap five years ago to more than $2 bn now. It also operates in and supports markets that evolve rapidly, something Heinzen says ‘makes it even more important to keep in touch with the financial community.’
For him, the key benefit of continuous communication is that investors and potential investors are familiar with the company story and stay up to date with the ‘significant changes’ that are rapidly taking place.
‘In the past couple of years, we have raised capital and made major strategic acquisitions,’ he says. ‘It really helps to have informed investors when you go to raise capital or announce acquisitions. If we have done our job ahead of time and communicated our mission and goals effectively, the investors are much more receptive and generally supportive of the actions we take.’
IR Magazine’s report – which is based on the IR Magazine Global Investor Survey, conducted in Q4 2019 and the IR Magazine Global IR Survey in Q1 2020 – finds that governance roadshows and shareholder forums are the most common governance-related activities undertaken by companies outside of proxy season. Jeffrey Goldberger, managing partner at KCSA Strategic Communications, says non-deal roadshows must be ‘at the core’ of the consistent engagement required by companies but adds that the ‘new normal’ has opened up new virtual options, too.
‘We’re finding that during the era of Covid-19, the number and quality of meetings we are able to secure virtually for our clients has increased dramatically as it appears that portfolio managers and analysts have more time to explore new ideas because they are no longer commuting or traveling to meet companies or attend conferences,’ he tells IR Magazine.
Heinzen says this is the biggest change brought about by the pandemic in terms of engagement. ‘All the conferences we would normally attend in person have become virtual,’ he says. ‘Virtual conferences have some benefits: no travel costs, more efficient use of time, the ability to attend more conferences. But we do feel you miss an element of building a relationship with investors when you can’t sit across a table from them.’