- Our number-one tip is simply to understand exactly what kind of voters OWN your stock as of the record date, along with the percentage of the total voting power that each segment owns and how each “segment” voted…or failed to vote at your last meeting. The key segments to start with are (i) the true “Institutional Investor” owners – by type – like mutual funds, pure index funds, hedge funds, state, union and other pension funds (all of which have very different voting characteristics and hot-button “voting issues”) …(ii) ”Retail Owners” – which include both the registered owners and the “retail” portion of the broker and bank positions, please remember…and (iii) “Employee Owners” who, increasingly, hold their shares in an increasing number of places. (You can and probably should take the first crack at this on your own; Go to www.optimizeronline.com, click on The Basics, then on “Analyzing and Understanding Your Shareholder Base” - a two-part primer). If you already use a proxy solicitation firm, or whenever you feel you are in over your head, get a trusted proxy firm to help you.
- Using the information you’ve gathered in step-one, con- duct a thorough, numbers-intensive “post mortem” of your 2011 voting…now…while the information is still fresh and where any “puzzle pieces” you uncover can still be found and filled-in: This is especially important to do if your quorum was below 80%…OR if you had 20% or more of the votes cast either withheld from one or more directors, or voted-no…OR if 20% or more of the votes cast were voted against any of the management recommendations. Key facts to obtain are the significant sources of voting support…and of votes-no…down to the actual voter’s name if you can find it, which usually you can, with perseverance, and the right help.
- Develop a very specific game-plan to reach out to voters who voted against any of your proposals…Most impor- tant, we think, is to decide on the best possible per- son to do the reaching out - to make sure you’ll come away with an understanding of exactly why they voted as they did…and whether there are misconceptions or misperceptions you might correct…or if, indeed, they have issues that need to be brought to the attention ofsenior management and the Board. At the very least, you will want to develop a better working relationship, and ideally a better mutual rapport with the voting decision-makers.
- If, like most companies this season, you have 25% or more of your shares held by retail investors – and they actually voted only 10-15% of their holdings in total (remembering to analyze both the street and registered voting results combined) – come up with a game-plan to improve these results: Remember; individual investors typically support the company positions by 80-90% or better. Among our top tips are (i) writing your proxy materials in Plain English; (ii) keeping them as short and simple as possible; (iii) putting the info that’s needed to understand what the issues are - and what the management position is - as close to the front of your proxy statement as humanly possible; (iv) doing a bet- ter-than average job of explaining to people that their vote IS important (v) sending hard-copy materials from the get-go to all of your larger holders and to all inves- tors who voted last year…a really major vote-improver… (vi) doing a better job of explaining HOW to vote…and the various merits and demerits of mail, phone, internet, mobile…and in-person, where, son of a gun, there has been a lot of confusion too of late…with people showing up with VIFs…or without the Legal Proxy street-name voters need; (vii) offering some tips on making up one’s mind…or why one or more issues on the ballot really de- serves their particular attention and support; (viii) using an email link on your “electronic deliveries” that recipi- ents directly to a user-friendly voting site, with, maybe, a special short video message from the Chairman; (ix) considering some sort of reward for voting one’s proxy… like Prudential Financial’s “trees or totes for votes” (which in 2010 induced 63,000 new voters to vote – a 23% increase – followed in year two by another 20,000 new voters…for a 9% increase in the overall quorum!)… or maybe making a small contribution to a financial lit- eracy project for each vote cast… and now…ta-da …(x) using a prominent QR code to get those new Mobile vot- ers to the voting site, simply by scanning the code with their phones…
- Count up and analyze your “employee votes” with par- ticular care: We never cease to be amazed at what a big trove of basically friendly votes this usually uncovers… and by how little most companies do to round up these vote…AND by the big results that can be achieved if you do this correctly: Amazingly (?) we have been finding that some of the biggest “forgetters” are the company’s top officers…and directors…who almost always have big positions in the aggregate. The increasing number of places where such shares are “parked” – like some at brokers, some with various Plan trustees and some on the registered-holder file – has contributed to the problem… – so do your inventory carefully…and make sure that offi- cers and directors vote their shares well before the morn- ing of the meeting - when it’s simply too late to vote Plan or street-name shares.
- Develop a plan to increase the participation of regular employees, who often have significant numbers of shares in the aggregate - also parked in various places. At the recent SSA conference, Dannette Smith, Board Secretary at United Healthcare, described the special efforts they made this season to get out the employee vote: advance notice that meeting materials would be coming their way, and that their votes were important…followed by emailed materials that needed no password to access, and that came with a simple, click-through voting site…followed by reminders to the non voters…and assurances all along that no one would be peeking at the way they voted. Em- ployee voting went from 7% of the employee shares to 28% - and they expect to build on this in future years.
- While individual investor votes are indeed important to round up, please be sure you don’t throw good money into the garbage can, and maybe make some enemies besides, with ill-designed outreach and response programs: At the SSA conference at least three companies bemoaned the angry calls they got from shareholders – almost all of them tiny ones - who’d been interrupted at dinner by hun- gry proxy solicitors. A major retail broker cited similar complaints from street-name holders…many of whom were concerned that their private info and phone numbers had been “hacked.” One of the biggest money-wasters we saw all season was the Eli Lilly proxy package…which enclosed a postage-prepaid reply envelope addressed to the Inspector of Election (at $.44 per pop just for the postage) with all of the packages that were mailed to in- dividual investors, regardless of size: Your editor got one for an account with less than one full share – addressed to him as custodian for #-3 son…no longer a minor, and someone who thought he’d sold all his shares…But a tiny dividend that was paid on the fractional-share that re- mained in the DRP after the sale is still out there…and it’s been impossible to liquidate without doing more pa- perwork than the still-fractional share is worth.
- Be sure to review the Notice Provisions in your Company’s Bylaws and amend them if you can, so that NO “other business” – other than what is in your official Proxy Statement – can be brought before the meeting “from the floor.”
- And while you’re at it, make sure your Charter and By- laws are clear on what it takes to adjourn the Annual Meeting if the need arises…and…
- Bone up on whether or not you might be able to “recess” your meeting in a pinch.
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