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THE NUANCES OF PROXY SOLICITATION FOR AGMs

THOUGHTS AND IDEAS MID-SEASON

It’s almost literally the middle of proxy season for 2025. Last year peak AGM day was Thursday, May 23, when ISS reported the most AGMs (149) in 2024. So, it’s a good time to look at what our experience and expertise tells us how a board and executives can best get through their AGM.

Above all, for a progressive, successful company, an AGM is not merely something to “get through”. It represents a superb opportunity to interact with investors. Of course, some shareholders bring routine gripes, while others rally around one or another ESG proposal that may not have a material impact on the company’s strategy and operations.

For most companies and investors, though, it’s the chance to hear from the actual owners, whether they’re big indexers, aggressive hedge funds, astute institutions, or significant individuals with a substantial block of shares. Boards can listen and respond to their questions, comments, and concerns. Thoughtful boards also ask questions: about shareholder expectations and vision for the investment, and what they think of the business and the management team. Above all, companies should seek to build trust in directors and executives, through positive, confident dialogue with key shareholders.

STRATEGY AND PLANNING

It’s never too late to design a proper approach to the AGM, and how the company intends to solicit proxies from shareholders. Goals for an AGM range from significant to routine, including encouraging turnout, presenting thorough business updates, and seeking support for directors and proposals.

The AGM agenda matters, of course. A company controls much but not all of it, including director nominations, various proposals for voting, business presentations, and shareholder questions. Proposals include routine ones on auditor ratification and significant ones on executive pay. They might also include shareholder proposals on one or more ESG subject. While the company doesn’t control whether the latter appears on the agenda, it can have a positive impact on how shareholders receive them.

Beyond planning the agenda, a suitable strategy includes anticipating shareholder reaction to the agenda. It makes great sense coordinate closely on that agenda. A company should assess the impact the overall agenda and specific agenda items would have on both specific known investors and classes of investors (index funds, hedge funds, institutions, and individuals). Planning diligently for this impact pays off as shareholders vote and participate in the AGM.

A successful AGM strategy meets investors where they are, rather than requiring investors to conform to what the company wants investors to do. It delivers the information that shareholders need and want pursuant to a process that is as straightforward as possible for shareholders to follow.

MESSAGING AND MECHANICS, OR COMMUNICATION AND COORDINATION

We think about the AGM in two dimensions: the themes and messages the company wants to convey, and the channels and process needed to convey them. In our view, a proxy solicitor leads on the channels and processes. While we can and do contribute to the themes and messages based on our knowledge of a company’s shareholder base, we mostly leave those to others with that experience and expertise: investor relations executives, outside public relations advisors, and other similar professionals.

For better or worse, those channels and processes operate in a highly technical, regulated, and somewhat arcane environment. We don’t like it any more than anyone else does, yet that’s what it takes today. So, a company needs to execute on mechanics and coordination in that context.

Naturally, conveying those themes and messages to shareholder requires a company to know who those shareholders are. Well before the AGM, and really year-round, companies that have a successful AGM have a dedicated stockholder surveillance system. They continuously identify new shareholders and significant changes in shareholding. Then, as the AGM approaches, the board and executives know with a high degree of accuracy who the important investors really are.

It's easy to identify many shareholders using the NOBO (non-objecting beneficial owners) list, which a proxy solicitor will obtain immediately after the company sets a record date for the AGM. It should also investigate OBOs (objecting beneficial owners), which are represented only by their custodian (bank, broker/dealer). We’ve seen companies identify significant shareholders that they otherwise would not know through diligent research into which shareholders hold shares at a given custodian.

Strategy, messages, and coordination culminate in shareholder outreach for the AGM. A thorough approach uses all available channels: traditional postal mail, email, and phone calls. More recent innovations include company investor relations websites and social media. Meeting shareholders where they are, and importantly which communication channels they prefer, helps convey the critical messages and build trust.

Most of all, a company should make it simple and easy for investors: to find information, ask questions of the board and management, and execute proxies and vote. The current structure for AGMs imposes regulations and procedures that make this harder than it needs to be. Yet, we’ve seen companies navigate this well, and “get through” the AGM positively and confidently.

GLASS LEWIS CONSIDERS SCALING BACK PROXY RECOMMENDATIONS

Glass Lewis, once a vocal proponent of diversity and ESG initiatives in corporate governance, now appears to be veering in the opposite direction. Facing intensifying political pressure—particularly from conservative critics of its ESG-focused recommendations—and signals a broader shift in how proxy advisers may operate going forward. The firm is reportedly considering eliminating standardized voting guidance on corporate ballots altogether. According to a recent Semafor report, the firm may instead offer investors research and data tools to develop their own custom proxy voting policies. 

As Glass Lewis evaluates its role, the conversation underscores a broader need to reassess the proxy process in a way that balances transparency, regulatory clarity, and the diverse interests of institutional and retail investors alike. Stakeholders across the corporate, regulatory, and investment communities are encouraged to engage in this dialogue and advocate for reforms that support fair, efficient, and transparent governance practices.

As proxy dynamics continue to evolve, companies must be prepared to navigate a more complex and uncertain landscape.

BUSINESS ROUNDTABLE CALLS FOR BOLD PROXY PROCESS REFORM

In a recent statement, the Business Roundtable highlighted ongoing concerns about the current proxy system, calling for bold reforms at the Securities and Exchange Commission (SEC). The organization emphasized that public companies face a regulatory process that has become increasingly inconsistent, opaque, and unpredictable—raising compliance burdens and creating new risks for issuers. These inefficiencies, they argue, ultimately weakens investor confidence in U.S. capital markets.

As these issues come under greater scrutiny, now is the time for public companies to strengthen their shareholder communications and prepare for heightened governance challenges. 

STAY AHEAD IN A CHANGING PROXY LANDSCAPE

As the proxy landscape grows more nuanced, issuers are encouraged to stay ahead of evolving trends in shareholder engagement. Investorcom provides tailored proxy solicitation, proactive stock surveillance, and strategic governance advisory services designed to keep you informed, engage effectively with shareholders, and anticipate key voting trends. We help clients navigate this changing proxy environment. Contact us to learn how we can support your next vote!

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