Governance Playbook
Your AGM, your investors, your engagement
In this special report, Governance Intelligence provides actionable advice from experts on engagement before, during and after your AGM
Your company’s AGM is an opportunity each year to share quality time with and hear from your shareholders, particularly those on the retail side who don’t typically get to have meetings with your C-suite and governance teams.
It’s also a chance for concerned investors to put your board and management on the spot, vote against individual directors, support an activist, back a shareholder proposal or make a loud point about executive compensation.
The success of the AGM is not just about the meeting itself – although that plays an important part – but is also about how the company listens to and engages with its shareholders year-round, both in person and through channels such as the proxy statement. All of these elements should feed into each other with information flowing both from and to the company.
In this Governance Playbook, we speak to governance experts on both the corporate and investor sides about what they view as best practices for hosting AGMs, tying them into broader efforts to engage with shareholders and how data is playing an increasingly important role.
‘We view AGMs as another engagement avenue,’ says Michael Yamoah, director of engagement with EOS, the stewardship and engagement team of Federated Hermes which engages with corporate boards on behalf of investors. He describes the AGM as the bedrock of how his team thinks about good governance. ‘The day of the AGM is great,’ he adds, describing it as an important part of the capital markets.
For a growing number of companies, the preparation for the AGM starts – at least from an engagement perspective – the previous fall, when members of their governance and other in-house teams meet with major institutional investors. This ‘off-season’ engagement can often be more wide-ranging than discussions that take place in the run-up to the AGM itself, when investors and companies are in the midst of the proxy season.
We view AGMs as another engagement avenue
Experts say these discussions have an advantage in that companies can solicit feedback on their governance, executive compensation, strategy and other matters in a context where they are not also canvassing for an investor’s vote at an upcoming meeting. The company also has time to try to address any concerns they may discern among investors and communicate around its responses to them in the proxy statement ahead of the AGM.
Companies increasingly include a segment in their proxy statement which specifically explains how their year-round engagement process works, the feedback they have received from investors and the steps it has taken to act on that feedback.
Closer to the AGM, companies file their proxy statements and await reports on those from proxy advisers before launching into a final round of seeking meetings with investors to check if they are happy and if there are any issues yet to be resolved.
Ki Hoon Kim, associate general counsel at Hewlett Packard Enterprise (HPE), describes his firm’s engagement in run-up to the AGM as its ‘board outreach program,’ which involves a narrower range of topics focused on the AGM. The company may make a greater effort to reach certain investors depending on what’s on the ballot for the shareholder meeting, he explains.
Whether it takes place in the fall or the spring, shareholder engagement will be particularly important if, say, there had been a disappointing say-on-pay vote at the previous year’s AGM, if there is an activist in play or if there is a significant shareholder proposal on the ballot. In the case of a disappointing say-on-pay vote, companies are advised to take a lot of time to understand investors’ concerns and make use of their proxy statement to clearly and fully explain changes that have been make to their executive compensation plan and how this relates to company strategy.
The AGM is an integral part of your company’s engagement program, not a separate activity.
It is crucial to listen to investor feedback and address it with action and in the proxy statement ahead of the meeting.
Remember that the window between the proxy statement being filed and the AGM is narrow, so prepare for targeted engagement.
Companies have numerous choices to make when it comes to how their AGM will operate, the most important of which is whether it will be in-person, virtual-only or in a hybrid format that uses both physical and virtual elements.
When the majority of companies switched to virtual-only meetings during the Covid-19 pandemic, concerns were raised that shareholders would be locked out in some way, either unable to ask questions of companies or as easily demand answers as they can in person. Those concerns have not gone away (see ‘The shareholder advocate’ section of this playbook) but they are less pronounced in many instances as companies have taken steps to improve how virtual meetings are conducted.
HPE is a good example of a company aiming to give equal access in a virtual AGM, and it won the Best AGM prize at Governance Intelligence’s Corporate Governance Awards in 2023.
Among other innovations which include delivering the AGM by video, HPE has a microsite devoted to the meeting that uses the same short URL each year and provides in one place all necessary links, materials, proposals being voted on, along with management’s recommendations.
It also provides information on how and where to vote, the Q&A process during the meeting, how to submit pre-meeting questions, how to request replacement materials or change the election of e-delivery or hard copy of the materials, a detailed breakdown of its proxy and Form 10K and post-meeting updates with voting results and all questions submitted by shareholders before and during the AGM.
It also shares a replay of the AGM and a meeting transcript with those who cannot attend.
We don’t want to come across as auctioneers
Linda Epstein, legal project manager at HPE, says thought is also given to the length of the Q&A segment of the meeting. ‘We don’t want to come across as auctioneers’ who are trying to get through the process as quickly as possible, she says. She adds that the company ensures the right experts take part in the meeting to ensure they are available to answer shareholders’ questions.
The Kraft Heinz Company, which won the award for best AGM at the 2024 Corporate Governance Awards, has made great strides in opening up its meeting. According to the company, its AGM has evolved from a short, in-person meeting in 2019 to an under-20-minute, audio-only virtual meeting from 2020 to 2022, to a nearly one-hour virtual video meeting in 2023 and 2024.
Many companies now use their proxy statements as an opportunity to share their corporate narrative around strategy and identity. The Kraft Heinz AGM, for example, is set in the company’s kitchen at its co-headquarters in Chicago. ‘It connects strongly to the Kraft Heinz brand while providing stockholders a window into one place where day-to-day operations happen,’ the company writes. It has a 15-minute time limit for Q&A and in 2024 the company responded to all questions appropriate for the meeting.
The widely held sentiment among in-house governance professionals is that the virtual AGM is a valid and efficient format, provided that shareholders have fair and equal access. ‘I get the sense companies have done it the right way, and if you don’t then you’re open to criticism,’ an in-house governance professional says.
In many ways ‘doing it right’ centers around the ability of investors to submit questions before and during the AGM without being ignored. Some companies commit to answering any questions they didn’t have time to respond to at the AGM after the meeting itself.
Yamoah says EOS always looks for a well-structured AGM where there is opportunity for investors to engage with the company and a corresponding, real interest from the company in this engagement.
Proponents of virtual meetings also point to operational and cost benefits – such as a lack of need for the provision of in-person security – and say they make it easier for a wider range of shareholders to attend. They offer investors ‘a lower barrier to entry,’ says Richard Gluckselig, associate general counsel and assistant corporate secretary at Regeneron Pharmaceuticals.
A senior in-house counsel at another company says her board simply prefers to hold its AGM in person. ‘We’re an in-person company,’ she says. Not only do directors and management like to be together, the format also presents less to worry about, she adds.
Companies say they rarely ask for or receive direct feedback on, say, how the AGM was conducted. ‘No news is good news,’ one says. But governance teams do meet with vendors to review the event and explore improvements that can be made to how it is run the following year.
Regardless of the format of your AGM, good governance – and good shareholder relations – requires there to be open and fair access to ask questions.
Some shareholders continue to regard virtual AGMs as inferior to in-person events where, for example, they can sometimes mingle informally with management and board members.
Using video rather than audio-only for a virtual AGM can help shareholders feel closer to the in-person experience.
Don’t forget that, like the proxy statement, the AGM can go beyond meeting regulatory requirements to offering an opportunity to enhance your brand and share your strategy with investors.
Data is becoming a more important part of the AGM process. Laura Franconi, director of issuer and global solutions, and Chris Nobles, chief technology officer, both at Mediant, a BetaNXT business, explain elsewhere in this playbook that companies can review and analyze data year-on-year to help understand where they are seeing a lot of participation based on a certain demographic.
Gluckselig says that, ahead of their AGM, companies can work with a proxy solicitation firm to try and put together a voting model by looking at factors including who owns the company’s stock or what their voting policies are. This can provide a sense of potential outcomes, though it is not definitive: ‘It’s a combination of art and science,’ he explains.
It’s a combination of art and science
He also notes that some advisory firms have started to offer companies aggregated data about where votes at their last AGM came from, such as by retail versus institutional investor. This can help companies tweak their solicitation efforts, Gluckselig says.
‘Having more [data] analytics is always helpful to the company,’ says Hope Mehlman, who joined Ally Financial as chief legal and corporate affairs officer in December 2024, having previously been chief legal officer, general counsel and corporate secretary with Discover Financial Services. Like Gluckselig, she expects that AI will help improve the collection and use of shareholder data in the future.
Data can be helpful in predicting or understanding how your shareholder will vote or have voted.
Analytics can also help explain participation and analyze demographics.
AI is expected to push forward the ability of firms to analyze data and perhaps improve outcomes.
Laura Franconi, head of issuer and global solutions, and Chris Nobles, division executive, both of BetaNXT's Mediant business, talk to Governance Intelligence about some of the effective and potential uses companies can make of shareholder data around their AGMs
Laura Franconi: One thing we always say is that year-round engagement is best. It shouldn’t just be at your [AGM]. The more you engage with your shareholders, the [less it’s] painful when you’re asking them to vote and participate.The right vendor or partner… can help you consolidate, review and analyze data year over year… so you can start to understand where you see a lot of participation based on a certain demographic. And then you can focus on the off season to try and enhance that for your next meeting if you know you’re going to have a more intense meeting the coming year.
Chris Nobles: AI is changing how you can take demographic data – historical data – and align it with sentiment and some of the political or economic [factors] that might have impacted sentiment [among] a certain demographic or location, [not just nationwide or globally] but also down to the local level.
AI is making it easier to correlate many different data sources that typically would not align natively into something you can digest and make sense out of.
One thing we always say is that year-round engagement is best
CN: When a company has enough history and enough [AGMs], they can go back and look at the instances where these things [such as shareholder proposals and proxy contests] have happened and when they happened, which shareholders voted for them, where they came from. And then align that to what was happening around that time in the market, politically and socially.
You’re [now] not looking at what’s happening politically, you’re looking at data models. It’s easier to find these patterns and then predict things you might want to get ahead of. So, if you start to hear grumblings of a proxy contest or shareholder-submitted proposals, all of a sudden you have the ability to go back and quickly analyze what might be driving that or what you can do to facilitate a better outcome for the company.
LF: I think it definitely does. It can also help you make a decision on if you want to have a digital shareholder meeting versus an in-person [AGM] versus hybrid. I think there are a lot of factors that are being considered as you prep for your AGM based on the data you have about your shareholders.
LF: We can share the location of where your shareholders are and who participated. We could also break down the voting patterns based on how [shareholders] were distributed materials. If somebody is getting paper, but everyone’s voting via the web, that’s an interesting piece to know.CN: Various companies are going to have various things that they care about the most… Some may want to know why did this happened at the meeting or why didn't this thing we expected to occur at the meeting occur? We have the ability, like Laura said, to say, ‘Look, here are your demographics. Here are the people who voted, here are the people who didn’t vote. Here’s how you communicated with them.’ But slicing and dicing that and having a desire to get into that data – there has to be a reason for it.
CN: I believe we’re going to start seeing AI content generated and targeted to users in various streams. Today, annual reports [can be sent] as PDFs in emails. The content that makes it to shareholders might be in an email, but PDFs and emails are probably the least-reviewed media that people get on a daily basis.I think companies will have an opportunity to take smaller, more targeted pieces of information and distribute them through more channels because of AI. I think sentiment will become a much more easily accessible analytic value.
As chief advocacy officer with Trillium Asset Management, Jonas Kron leads the firm’s advocacy program to engage with companies on their environmental and social performance. He spoke to Governance Intelligence about aspects of that work in the run-up to and during AGMs
Jonas Kron: Given the current filing deadline, I think everybody has to overfreight the shareholder proposal when it's being filed. But very often those shareholder proposals need to be viewed as just a placeholder. The expectation is that dialog will continue.
I think there’s a tendency to say that shareholder proposals are an extreme form of escalation, and I don’t think they need to be seen as such. There are a lot of companies that have a very mature, reasonable approach to shareholder proposals. And they understand why they’re being filed. They see them as an ongoing part of the dialog [with investors]. If anything, [proposals] can be helpful because they crystallize and reduce into writing the most salient issue, and that’s all part of a productive process.
There are other firms that just shut down when there’s a shareholder proposal. And that closes off progress unnecessarily.
JK: This gets to the question of how the company is running its annual meeting… Even in a virtual meeting, the presentation of the proposal matters. As a lawyer, I think words matter. Those three minutes can be very important for changing people’s minds on the board and letting them hear from you directly – both in terms of the words on the page and the tone.
I think in the context of a virtual meeting, the impact of those words is diminished compared to an in-person meeting. They don’t convey as much as at an in-person presentation… A couple of things happen usually at the in-person annual meetings that is lost, which is that there are opportunities for talking to fellow shareholders that are sitting around you [and] there’s an opportunity to speak with a member of the board of directors or a member of the executive team in those more informal moments during the annual meeting.
Even in a virtual meeting, the presentation of the proposal matters… Those three minutes can be very important for changing people’s minds
In a virtual AGM the company will often accept questions submitted in advance, either by email or through a portal. You can submit questions, usually, during the meeting. But that’s very different from seeing a line of people standing behind a microphone waiting for their turn to ask a question.
[At a virtual AGM] you have no idea how many people have been asking questions. You don’t know who the question was from or what their tone was. You don’t know if they’ve taken five questions that were the same and reduced them down to one. There’s a lot lost. Everything is flattened. There are hybrid [AGMs] out there and I think that’s a great way to go.
JK: The company has to provide its statement of opposition to the proponent 30 days before the proxy goes out. If I read through the company’s statement of opposition and I feel that they have made a statement that can’t be documented, can’t be proven, is false or misleading or excludes a fact that really needs to be presented to make it understandable, I need to have the opportunity to tell them that.
When the opposition statement comes out there are a couple of opportunities for the investor to speak publicly. One is an exempt solicitation… Sometimes companies provide responses to the exempt solicitation. Then at the meeting we have three minutes to make our statement. And you could also throw in a question or two just to make your point one more time.
