If you think investor engagement is only important in the proxy season, think again! Off-season investor engagement strategies can give issuers distinct advantages and are an important part of any IR arsenal. This article will discuss why it’s worth it to conduct off-season investor engagement, and some of the commonly used strategies to consider.
There are many reasons it’s worthwhile to engage investors outside of proxy season. According to the Off-Season Governance Report conducted by IR Magazine, approximately ⅔ of investor relations teams have a program of investor engagement activities outside of the proxy season.
Some of the main reasons companies benefit from off-season investor engagement are:
According to IR Magazine’s study, more than 4 out of 5 companies and ¾ of investors believe off-season engagement results in strengthened relationships. Naturally, creating opportunities for dialogue and engagement is mutually beneficial for issuers and investors. For issuers, this can help you understand the impetus behind certain investor’s decision-making process and ultimately help you reduce volatility in your stock. Investors benefit too because it gives them a view into the company’s governance approach and allows them to make data-informed decisions.
It’s important to note that you can be strategic with which investors you want to engage in the off-season. Many companies choose to only engage with their top shareholders, but others target specific investors or focus only on their most engaged investors. Only 9% of companies globally report targeting all investors during the off-season, with the practice being most common in Asia.
Lastly, while not every investor will accept your invitation to connect during proxy season, sending an invitation can serve as a gesture of goodwill. In our recent Buy-Side study, we found that 73% of investors reported that they prefer very frequent communications with companies they’ve invested in; this means that a quick update or an invitation to connect can go a long way in fostering strong relationships with your shareholders.
Conducting investor engagement in the off season has many benefits from a governance perspective. Governance roadshows and webcasts are among the most common off-season IR activities globally, with 45% of surveyed IROs in the IR Magazine study reporting either activity.
The type of discussions you have will depend largely on who is invited to participate; buy-side investors tend to focus more on strategy while the sell-side is more likely to discuss company performance and finances. Catering your discussions to your audience can help you ensure your investor engagement activities are productive.
In addition to basic relationship building, off-season investor engagement can sometimes help you build support for the upcoming proxy season. IR Magazine reports that just over one third of investors believe off-season engagement positively impacts their likelihood to support the company in a proxy vote. Additionally, creating a dialogue with investors can decrease the likelihood of a successful activist campaign by demonstrating a willingness to consider investor feedback.
It may be prudent to use the off-season to discuss how current events may affect your company and its shareholders. For example, if regional conflict or supply chain issues will affect your business, transparently discussing business impacts can help increase investors’ trust in management.
Taking a proactive approach to investor engagement in the off-season doesn’t have to be challenging or time consuming. Some ideas for off-season investor engagement include (but are not limited to):
While off-season investor engagement is ultimately optional, it offers many benefits to companies willing to put in the work. Improving relationships with the investors that are important to your business strategy, fine-tuning corporate governance strategies, and getting ahead of proxy season issues can be productive ways to spend your off-season.