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Last year, we looked skeptically at three "shareholder engagement" programs (below).

Last week, The Corporate Counsel identified several companies that so engaged with shareholders, including Coca-Cola, GE, Intel, Microsoft, and Pfizer. These luminaries report proudly on their efforts, in their 2015 proxy statements. Directors and executives met with investors representing as much as 30% of outstanding shares to discuss many important corp gov subjects: BoD composition and processes, exec comp, disclosure practices.

This is ok, we suppose, and probably better than no engagement at all. But it badly misses the point. A PM has an hour with a director, and they can only discuss how BoD elections work? What a waste.

Then and now, the engagement these companies glowingly describe avoids real input from investors about the business. How about directors asking investors:
  • What do you think of our strategy, operations, and financial structure?
  • What growth and risk-taking do you want from the company?
  • What do you want the BoD to do?

Alas, we didn't read about engagement like this.

 

Let's see a leading company take up the challenge we posed earlier: follow a simple, direct, and straightforward five-point process for shareholder engagement.

 

MRL

Shareholder Enragement

Why do companies make this so complicated? 

 

The past few weeks have yielded no fewer than three new proposals for "shareholder engagement", from Pricewaterhouse Coopers (PwC), the Shareholder-Director Exchange (SDX), and The Conference Board (TCB). We've read every word of all three, including the 76 page(!) white paper from TCB. We also considered this subject ourselves years ago. 

 

All three disappoint us to varying degrees. Despite appearing to care deeply about investor views, they all represent a kind of triumph of corporate indifference and insularity. We know this because none of them urge BoDs to ask us investors what we really want out of our portfolio companies, and then listen closely to our answers. Each has their own quirks and flaws, as well.

 

We critique these efforts, and set forth a simple (five items!) program for real engagement, in a current blog post.

You can find other useful resources at the TAI website, including our research on "Effective Activism, on the Cheap", our white paper with the basics on activist investing, and our new guides on exempt solicitationconsent solicitation, and special shareholder meetings. 
For further information, or to discuss a specific turnaround situation, please contact:
 
Michael R. Levin
[email protected]
847.830.1479