In 2022 Issuers Will Have To Fight Harder Than Ever For The More-Important-Than-Ever Retail Vote

This year, The OPTIMIZER believes that the battle for the management-friendly retail investor vote will be harder to win than ever before - even while the retail vote will be a bigger decider than ever before. Here’s why:

• Over the past 18 months more than 22 million individual investors have entered, or belatedly re-entered the stock market - and two-thirds of them are in the Millennial and Gen-Z cadre of voters. We’d also bet, based on our longtime observations of retail shareholder records, that they hold at least three stocks each, on average.
• This big and growing cadre of people have very different ideas about making their voices heard - and on the issues themselves - than their overwhelmingly management-friendly but mostly ‘passive voters’ their parents and grandparents mostly were in the past. 
• A very high percentage of Millennial and Gen-Z voters identify social and environmental issues as being “very important” to them as investors - and in making investment decisions - witness the enormous growth in so-called “socially-conscious” funds and EFTs we’ve seen over the past two years.
• While yes, the old estimate that retail investors as a group hold roughly 30% of common stocks - on average - is still mostly correct - at many companies, and particularly at companies that have special appeal for retail investors, the actual percentage of shares held by them has grown dramatically higher. (This development has also been exacerbated, as noted elsewhere in this issue, by big share-repurchases at many of the companies that have high appeal to individual investors.)
• And oops! In case you failed to note it - in 2021 more retail investors than ever before are voting FOR social and environmental proposals - and for “governance proposals” too….and they are increasingly passing.

WHAT ISSUERS SHOULD BE DOING NOW… 

1. Make sure you know exactly how many retail investors you really have in 2022 - and exactly what percentage of the total vote they represent.
2. Carefully consider every “ESG” proposal you receive in light of today’s voter demographics, and try to work out a reasonable compromise, rather than to rack up a loss.
3. If you decide to recommend Votes NO on ESG or other shareholder proposals, work especially hard on making your case to retail investors - in language they can understand - and in an investor-friendly format that will motivate them to read carefully - and act on.