The challenges of the SEC’s new universal proxy rules, plus the growing trend of shareholder activism, were the topics driving Mediant’s most-read blog posts in 2022. Mediant audiences, especially issuers, have been eager to understand the regulatory changes and the practical implications for shareholder relations.
In late 2021, the Securities and Exchange Committee (SEC) finalized a rule requiring a universal proxy card for annual meetings where there is a contested election of directors. This came into force from September 2022, with the prediction that shareholder activism would accelerate by making it easy for dissident board candidates to appear on proxy ballots and receive votes. That prediction appears to be on track: Harvard Law School Forum on Corporate Governance suggests that an environment of heightened shareholder activism will shape the 2023 proxy season.
What you need to know about universal proxy
Our blog covering a live discussion between Jean Luther, Mediant Director of Compliance, and Ron Schneider, Director of Corporate Governance Services at DFIN, explored what every company, shareholder and board member should know about the new SEC rules regarding universal proxy cards.
Many issuers are grappling with an increasing number and higher ratio of retail investors. Over the past two years, millions of people became first-time shareholders; most are beneficial holders through their bank or broker. The lack of a direct relationship can be a problem for issuers as they try to understand voting intentions and reach quorums necessary to complete business at the annual meetings.
The concluding advice was that with universal proxy a catalyst for more proxy fights and shareholder proposals, developing true shareholder engagement is more critical than ever for issuers. That means well-designed materials that are easy to digest, communication that meets shareholders where they are, and interactive capabilities that facilitate a two-way dialogue.
Retail investors can be an issuer’s best ally
Developing a cohort of engaged shareholders takes sustained effort. With the new universal proxy rules now in effect and the 2023 proxy season looming, time is not on an issuer’s side. Our blog looking at how retail investors can be a company’s best ally in a proxy fight noted the record number of proxy fights and shareholder proposals launched in the first five months of 2022.
Shareholder engagement is the defense against these challenges. Retail shareholders vote with management 80 percent of the time, so it makes sense to bring them on your side. The problem is that voting among this group is low and the trend is decreasing. This is something issuers must actively counter to increase their degree of certainty over voting outcomes. Our post looked at the variety of strategies and technologies available to issuers to help them engage retail investors and motivate them to vote.
Mediant has the tools issuers need
Launched in 2022, Mediant Engage™ is part of a range of solutions provided by Mediant that are designed to work in concert to grow relationships between retail investors and issuers. Our Q&A with Rich Babineau, Director of Client Success and Business Development at Mediant, focused on Mediant Engage™ and how it assists issuers to achieve quorum and proposal passage.
Rich explained how Mediant works with issuers to examine voting patterns from previous years and make a projection about discretionary votes. If it looks like the numbers will fall short, we can recommend Engage to bring that number up and enable the meeting to go ahead.
The result is proactive communications using formats and channels that will elicit the necessary outcome. This ranges from highly branded messages that inform shareholders of their rights to a video message from the chair of the board and outbound calling with votes taken over the phone.
To find out more about how Mediant can help you increase shareholder engagement, contact us.