Creating A Proactive "Shareholder Engagement" Plan
Having A Proactive “Shareholder Engagement” Plan Seems To Be The Top Priority Of Smart Companies Going Forward: A Great Job-Booster – When Done Right – So Start Preparing Now
Let’s be sure to note that at many companies that sniffed potential trouble in the wings and reacted smart- ly, the Shareholder Meetings turned out to be close to “love feasts”…
Like at Goldman Sachs, for example, where they man- aged to negotiate away proposals from three usually formidable opponents, AFSCME (split the CEO and Chairman posts), NYC Comptroller John Liu (more clawbacks) and the inimitable Father Seamus Finn (a priest straight from Central Casting if ever there was one…calling for yet another Board Report). And they handily beat back calls from the $5.7 billion Sequoia Fund to Vote No on director candidate James A. John- son, a former Fannie Mae CEO, whom Barron’s dubbed “Mr. Generosity” for his record on comp committees and “whose history” Sequoia Fund managers asserted, “should disqualify him from serving on the board of any public company.”
AOL managed to handily win an out-and-out proxy contest launched by Starboard Value, LP, by quickly launching a five-point program – including a big fat share-buyback plan. And rather amazingly, the Chesa- peake A-M was a love feast too - after the board agreed to a near-total board overhaul – and to make majority voting effective immediately, effectively dooming two more directors to defeat – and to strip CEO Aubrye McClendon of the Chairman’s role…and to strip away much of his sweetheart investment deals too. Accord- ing to an eyewitness, the ever charming and charismatic McClendon carried on the meeting as if it was a total triumph for Chesapeake, and for him. The Oklahoma City crowd, at least, still loves the hell out of him.
But back to “shareholder engagement”; Yes, there have been 56 or so NOs on Pay so far…and many more com-panies where the NO Votes on pay – and on some in- dividual directors too – are at levels that should have company staff on high alert – and where more and bet- ter “engagement” with shareholders is clearly required.
The best guidance on effective engagement that we have read to date – with lots of specific tips on what to do…and NOT to do… comes from Stephen Brown, Associate General Counsel at TIAA-CREF – and it can be found on our website too – www.optimizeronline.com in the form of an interview he gave in out 2010 magazine.
Stephen also had some fresh new advice this year, on what not to do (i.e. file a lot of supplementary proxy materials, then lobby for them) when ISS advises a vote against the company position: “Saying [the proxy advisors] calculated something wrong really irks us because we’ve just now read two more pages than we wanted to read” he told a WSJ reporter, in a story that noted that ISS reversed its position in response to only four of the 106 supplemental filings on pay plans that were made so far this season.
This prompts us to offer our own number-one tip for ef- fective shareholder engagement and that is to LISTEN about 90% of the time…and to TALK no more than 10% of the time when you try to “engage” a sharehold- er, whether in person or on the phone.
We also want to remind readers – for the umptee- umph time – to review this year’s voting results with care: We personally witnessed over 40 companies this season that could have improved their Say On Pay and/or FOR Director votes by double-digit numbers with just a tiny bit of effort to round up the votes of “friendly investors.”