The Evolving Landscape of Shareholder Meetings: A Recap of the AGM Season 2023 With Angelika Horstmeier
Explore the dynamic and evolving landscape of shareholder meetings in our in-depth discussion on this episode of Junicorn Talk with seasoned expert Angelika Horstmeier. With over two decades of experience in facilitating dialogue between listed companies and shareholders on vital ESG topics, she offers invaluable insights into the significant changes in company-shareholder communications.
Shareholder meetings have always been a crucial event for listed companies and their shareholders.
However, the way companies communicate with their shareholders and the expectations of investors have changed significantly over the years.
The dialogue between companies and shareholders has changed significantly over the last few years. In the past, companies would engage with shareholders just before the shareholder meeting to discuss agenda items. Today, however, investors expect year-round service and engagement from companies—and the shareholder meeting is just the end of a long process…
A key development signifying the imperative need for companies to communicate with their shareholders regularly to keep them happy.
To better understand what it takes for corporations to successfully adapt to the fast-evolving shareholder meeting landscape, we sat down with Angelika Horstmeier—a shareholder relations expert with over 20 years of experience in bringing listed companies and their shareholders together on current ESG topics. Throughout the recap episode, she shares her insights on the changing landscape of shareholder meetings and enlightens us with practical tips for companies to avoid negative surprises in the upcoming season.
Our discussion with Angelika covers a wide range of topics, spanning from out-of-meeting servicing and evolving shareholder communication to the power of proxy advisors and remunerations. If you’re a corporation owner or an investor relations professional looking to better service shareholders both in and out of annual meetings, then this recap episode can help you get on track.
Here are some of our favorite takeaways from our in-depth conversation with Angelika Horstmeier:
Key Takeaway #1: The communication landscape has changed significantly—and companies need to engage with their shareholders on a regular basis. In our conversation, Angelika notes that there are two ways the communication landscape has changed—companies need to focus on certain agenda items that will always be on the agenda and beneficial owners expect a year-round service from companies:
“One is that in companies, there are certain agenda items that will always be on the agenda, such as the discharge of the management and the supervisory board. You have your dividend, you maybe have your board elections on a more regular cycle than it used to be. You have to ask for capital, this and that. So it's something that is already on the investor's mind and on everybody's mind way before the shareholder meeting. Now, on the other side, if we flip it around to the way that it's changed from the investor perspective, is that the beneficial owners so the money givers that give their money to be managed by somebody like BlackRock. They now stipulate what the agenda is. And they now say, ‘well, with our money, with our assets, we want you to vote in a certain way. We want you to engage with a company, with the investee companies in a certain way.’”
By keeping these two new realities of investor communication at the top of mind, it can be much easier to ensure that future shareholder meetings are structured to better answer the questions of investors.
Key Takeaway #2: Looking to refine your shareholder meeting preparations to better suit the needs of attendees? Pay closer attention to investor letters and study them thoroughly. Angelika emphasizes the need to treat these documents—mainly published by firms such as BlackRock—as vital references because they provide a way for companies to understand what their shareholders need.
Here’s what she had to tell about this key takeaway:
“There's some really cool letters, for example, that are being published by BlackRock and by State Street every year. The Larry Fink letter exactly on ESG especially, and they talk about, this is our topic for this year. This year it's the diversity levels that the company has set and this is what we're going to engage in with you, and we're going to make you responsible for it as well if you don't have it. And that's a very open dialogue and it gives you a lot of warning, but also something that companies have to listen to. If you do, if you just ignore this sort of behavior, you ignore the letters, you ignore the indication in the press and then BlackRock is your number two shareholder. They vote against your nomination committee because you didn't listen to the letter, for example, then, yeah, it's not a good outcome.”
With the help of investor letters, you can better address the needs of your shareholders before, during, and after shareholder meetings while forming stronger relationships with them.
Key Takeaway #3: With the Remuneration Report in full circulation, corporations need to be more proactive about maintaining and communicating transparency to their shareholders. Because of this document, Angelika advises that companies need to disclose the way that the management has reached the bonus payouts because shareholders want to see specific targets in the LTIPs, such as ESG targets—saying:
“I think the biggest one that I've seen so far and not everybody's published their results yet is the Remuneration report. Remuneration has been on everybody's mind for a long time and unsurprisingly—over the years that we've been voting on this in Germany, in the German market—investors have also educated themselves a lot more, and have got much more detailed guidelines on what they want to see from the company. Do they want to see disclosure of the targets before they're reached or after they have been reached? What is the comparison from peer to peer? And so what we've seen this year, you'll see it again in a study that we're also about to publish on the postseason report, is that there's been quite a lot of dissent on the on the remuneration reports and the majority of those that didn't get a 90 or an 80% plus vote are the companies that either have been paying maybe excessively in terms of bonus payouts and not disclosing the way that the management has reached that bonus.”
Once you keep the Remuneration Report as a key reference for shareholder meetings, ensuring investor satisfaction and minimal conflicts will be a much easier experience.
Key Takeaway #4: Knowing your shareholders provides a significant edge in shareholder meetings that will further the impact and productivity of the engagement process while bringing a new sense of familiarity to shareholder concerns. According to Angelika, companies need to identify their shareholders and engage with them on a regular basis if they want to adapt to the new global meeting landscape, saying:
“Know your shareholders. Nowadays there's some great ways of finding out who your shareholders are. If you don't have a shareholder register—especially even if the international shareholders will often be hidden, there will still be, behind the barrier, a nominee name on your register. So have a look at them and try to find out who they are. It's not like I named quite a few names here, but there's hundreds of other investors that could be in your top five and have a look at them. Find out then who they are. If you see the name Vanguard, don't just stop there, but find out who is Vanguard and what do they stand for? What is their philosophy in terms of engagement, in terms of stewardship, in terms of fiduciary duties that they are exercising for their clients? Uber websites out there as well. You can go on their websites. You can also contact the teams and prepare yourself for the engagement process and prepare yourself for the first conversations by educating yourself.”
Familiarizing yourself better with your shareholders and their unique needs will allow your company to refine its agenda and talking points during the meetings you have with them—so make sure to know investors in every way possible.
Key Takeaway #5: When updating shareholders before shareholder meetings, it's ideal to start with bigger investors to get their feedback on potential updates that your company may be implementing in the near future. Doing this simple, yet effective step ensures that you have time to make the necessary changes that will better benefit the entire chain of company shareholders—as Angelika says:
“Don't start small, start with big guys, start with the BlackRocks, et cetera, especially when they have time, when it's not just before the show meeting, but maybe now, in the summer or in the autumn. Reach out to them and try and get a meeting with them and talk to them about where your company is at, at this moment in time and how BlackRock fits into this picture, he will get so many cool ideas and so much feedback from them as well.”
Through a revised order chain of pre-shareholder meeting updates, you can strengthen your shareholder relationships better and raise the level of investor satisfaction surrounding your corporation.
Final Words
The landscape of shareholder meetings is evolving rapidly. Companies and investors alike need to adapt to these changes and develop a proactive and engaging approach—all while being more transparent and engage with their shareholders on a year-round basis and have a crisis management plans in place.
Investors, on the other hand, need to be more engaged and proactive in their engagement with companies. They need to be more independent and not rely solely on the recommendations of proxy advisors.
Angelika Horstmeier's insights provide a useful guide for companies and investors navigating the evolving landscape of shareholder meetings. As she notes, the dialogue between companies and shareholders has changed significantly over the years—and it’s more crucial than ever for corporations to adapt as quickly and as best as possible.
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