1. Start with a rigorous, numbers-oriented analysis of your company’s shareholder base - ninety days before the record date, and again, as of the record date. Very often, after reviewing only your top 20 shareholders - and their traditional voting habits on the items on your agenda - you will be shocked to realize how very hard you may have to work to get your own proposals to pass - or to defeat proposals you oppose - and how important it will be to start reaching-out to institutional investors ASAP.
2. Make sure you have accurately accounted for your “retail investor base.” Many companies mistakenly think the entire CEDE position is composed of “institutional investors” when, in reality, virtually all of the positions at brokers represent retail investors. The larger your company is, the larger your institutional investor population tends to be - but roughly half of all companies still have 50% or more shares held by retail investors. And even mega-cap companies that are in “retail businesses” - like consumer products companies, and gas and electric utilities - typically have 30% - 40% or more of their shares held by retail investors. Be especially sure that your mailing programs do not “stratify out” the bigger and the steadier voters.
3. Recognize early that if you have 30% or more of your shares held by retail investors, you will almost always have to make “special efforts” to get them to cast their votes - but that “at the margins” they can make a very appreciable 4%-6% difference in your favor. In many cases this is your only shot at turning the tide! There are several articles on our website that describe things that work well to increase the retail vote - and things that don’t work, or worse, that can backfire if executed poorly - like those last-minute, mid-evening calls from high-pressure proxy-chasers…And please note well; all of the effective “special efforts” take careful planning, effort, and TIME in order to work.
4. Accordingly, start tracking the retail and institutional investor voting patterns as soon as Broadridge issues its first report on the voting: Ask yourself every day if any unexpected trends are apparent. Most times, if you have done step-one correctly, you can pretty much predict the institutional vote, even though most such votes won’t be cast until the evening before your meeting. But if any of the unfavorable votes are higher than expected in the “early returns” you need to raise your awareness level at once. Most of the individual investors who actually vote, please note, tend to cast their votes in the first 15 days after the mailing date. So if the retail vote looks lower than usual - or if there is an unexpectedly high percentage of unfavorable votes on one or more items - you need to spring into action right away. Sometimes you may find that mailings to employee investors, or to classes of stock that have voting rights on some or all matters were not made. Other times a “reminder mailing” may be urgently needed. Either way, time is of the essence.
5. Most important to note, it is almost never too late to reach out to institutional investors who you fear may be voting against you on some matters, or that still might be on the fence - and, as noted above, the earlier the better. Every year we see a half-dozen companies who handle this successfully: Tell them about your concerns, and ask if they would consider, or reconsider voting in your favor - and give them a decent rationale for doing so, of course. But only do this if you have reached out to them and developed some kind of relationship with them earlier: If not, you will anger them big-time, and harden rather than soften their resolve.
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