Keeping Shareholders and Directors Informed Year-Round

What better way to kick off ALM’s 24th annual Corporate Counsel General Counsel Conference in New York City than with a session on corporate governance? On a panel led by moderator Francis Byrd, the corporate governance risk practice leader at Laurel Hill Advisory Group, in-house counsel imparted their secrets to keeping both shareholders and board members satisfied with the level of information they receive from the company throughout the year.

Shareholder Engagement

“Proxy season really is never over,” said Ronald Gieseke, managing associate general counsel at energy provider Ameren Services Company.

Ameren owns a nuclear power plant and the largest electric utility in Missouri, along with the second largest electric utility in Illinois.

To stay engaged with shareholders, first make sure the company website is regularly updated with information that investors would be seeking. “Reviewing the website prior to receiving the proposal is certainly a must,” according to Gieseke.
 
At the same time, companies should be aware of who own the firm’s stock, particularly active institutional investors. “You want to know them, know who the inside folks are in that group,” as well as what kinds of resolutions they’ve proposed at other companies in the past, Gieseke said.

Once a shareholder proposal has been received, Gieseke recommends assembling two teams: oftentimes, in-house subject matter experts examine the content of the proposal, while an external team of outside counsel identify similar proposals that have been submitted to other companies, and study how those other companies have responded. A draft response should then be prepared and sent to the board, Gieseke said.

Gieseke also suggests developing “a good one-on-one relationship” with Institutional Shareholders Services Inc, the largest proxy advisory firm in the country. He said that having a conference call with ISS to discuss shareholder issues was “very helpful” for Ameren.

Reaching out to investors on the phone and in writing are key parts of the engagement strategy at National Financial Partners Corp., said associate general counsel Malika Hinkson. And while the company has not been on the receiving end of any shareholder proposals thus far, “I don’t think that means the company can relax,” she said.

More than 90 percent of NFP’s stock is held by institutional investors, so the company periodically reaches out to its top 20 investors to discuss executive compensation and governance issues. Hinkson said they have also asked shareholders: How will we find out if you have an issue with us? Will it be through a proposal, or will you reach out to someone at the company first?

“I think those conversations went really well,” she said.

Whether describing succession planning or the company’s risk management approach, “we focus on concise, clear disclosure,” Hinkson said. NFP will often incorporate summaries, bullet points, and tables in its disclosures—“anything that can make the disclosure easier to understand for shareholders,” she said.

Keeping the Board Informed