From venue selection to drafting the CD&A
For investor relations and governance teams, each proxy season means creating a proxy statement and preparing for an AGM. These tasks involve a range of both traditional and new challenges as investor expectations change and the regulatory landscape evolves.
‘The proxy statement has evolved as a marketing and communications document [in addition to its traditional role], and so it is increasingly important for IR and communications teams to have a seat at the table,’ says Hannah Orowitz, a managing director on Georgeson’s corporate governance advisory team.
Jennifer Warren, CEO of issuer services for North America with Computershare, says areas where IR and governance teams can collaborate in preparing the proxy statement include diversity disclosures, human capital management, succession planning, climate change, compensation practices and board matters such as refreshment and tenure.
At San Jose, California-based HPE, the governance/legal team takes the lead in drafting the company’s proxy statement – as is the case at most, if not all, companies. But Derek Windham, vice president and associate general counsel for corporate, securities and finance, notes that HPE also tries to take advantage of the document as a tool for communicating with shareholders rather than just a regulatory requirement.
Windham says that while his legal team ‘holds the pen’, it works with IR on the messaging to shareholders. His colleague Andrew Simanek, vice president and head of IR at HPE, explains that his team takes note of the shareholder feedback it receives during the year, from both passive and active investors. Although some investors give high-level feedback, others are very specific.
In terms of process, Windham says the legal and IR teams work closely together throughout the year, so there is less of a need for formal arrangements between the two when it comes to preparing the proxy statement. The teams begin to look at the document around November. Although there was more of a governance focus a few years ago, the content of the proxy statement has evolved and the investor relations team also discusses how information is presented, Simanek adds.
Broad benefits In Birmingham, Alabama, Regions Financial Corporation’s Hope Mehlman, executive vice president and chief governance officer, and Dana Nolan, executive vice president and head of IR, have a similarly close working relationship. This involves, among other things, a weekly 11.00 am Monday call – which also includes corporate communications and SEC reporting colleagues – and a quarterly deep-dive meeting for IR and governance. ‘We feel we have a unique relationship,’ Mehlman says. ‘It’s a partnership, not a silo. That benefits all our stakeholders.’
For Regions, the proxy statement process also begins in November and the following month there is a kick-off meeting for all those within the company who are taking part, with governance doing the drafting and heavy lifting, according to Mehlman. During the drafting period, those involved can access the document on an online platform to ask questions and leave comments without the need for multiple separate copies.
Toward the end of the process, all the teams involved hole up in what Mehlman calls a ‘Hotel California’ session to make sure the proxy statement is accurate and complete before it is sent to senior executives and the board. Those in this session include members of the SEC reporting, compensation and benefits, corporate communications, IR and governance groups. ‘When you work as a team you get a better end-product,’ Mehlman comments.
The AGM is another essential aspect of every company's proxy season. At Salesforce.com in San Francisco, investor relations under senior vice president John Cummings takes the lead in preparing for the event. But there is also hefty involvement from legal, explains Scott Siamas, vice president and associate general counsel for corporate, securities and global governance, such that he and Cummings end up talking almost every day in the run-up to the meeting.
Important areas of co-operation between the teams include selecting the venue and its size, physical security, the layout of the room and decisions over the use of colored lanyards to identify individuals with different roles. The level of co-ordination has increased as the teams have switched to using a ‘living document’ based on the company’s own technology.
On the flip side, the legal team under Siamas takes the lead on preparing the proxy statement then sends it for IR to review. The main area of focus for IR is the CD&A section, though it looks at the entire document. IR may be involved in responding if there is a shareholder proposal – for example, one that relates to compensation – but most proposals largely call for a legal response, Siamas notes.