Over the past few years, there has been a substantial shift in the number of investor stewardship codes which have called for investors to become more active owners. Stewardship codes typically provide a blueprint on how investors can encourage companies to incorporate and maintain good corporate governance, including adopting sustainable business practices. While operating sustainability may have been, at one time, viewed as a non-financial risk it is now being seen as having a considerable bearing on shareholder value. The launch of the Principles of Responsible Investment (PRI) in 2006, has also been a key driver of active ownership.
A consequence of active ownership is the use of proxy voting as a key mechanism for institutional investors to influence companies. Corporates are learning, often through disappointing proxy results, the value of identifying voting instructions in advance of the share registry receiving them. With institutional participation rising to 82% in 2022, the level of detail in FIRST Advisers vote tracking is of significant value to companies. It can provide insights into voting intentions and create opportunities for companies to address negative voting trends before they have an adverse impact.
Increasing time for advanced preparation
Effective vote tracking provides an opportunity for companies to re-open dialogue with key shareholders, enabling them to understand the reasoning behind their vote and to explain their strategic rational in an attempt to change voting decisions. It can also help to identify where Proxy Advisor recommendations may be contributing to adverse voting trends, highlighting if there is a need for a broader investor engagement campaign. Ultimately vote tracking helps ensure executives allocate their valuable time to talking to the right people.
At AGM season it is important for a company to know who its investors are and to have an effective strategy to communicate with them. At FIRST Advisers our IR experts leverage our leading in-house shareholder analytics capabilities to help companies navigate the complexities of engagement around proxy voting and establish an effective dialogue with key investors.