The question we would like you to discuss.

The consultation document has seven key questions that need to be addressed.

Below are the seven key questions plus five additional questions.

Question one
Do respondents agree that guidance in this area will help strengthen engagement practices?
If they do not agree that guidance will have that effect, what else do they believe can be introduced to strengthen engagement practices?

 

Question two
Do respondents agree with the need to develop a new conversation. Are there any other considerations that should be included in this new conversation?


Improvements to the process of holding engagement meetings

The Steering Group identified a range of practical measures, which could be taken by both companies and their owners to make meetings more productive for all parties. Appendix E outlines a range of housekeeping measures which, if implemented, would significantly improve the quality of engagement meetings.

 

Question three
Do respondents agree that the measures outlined in Appendix E would significantly improve the quality of engagement meetings, and are there any other steps which could be taken?


Provision of feedback
The Steering Group considered the recommendation that companies and institutional investors should find more ways to seek feedback on the quality of meetings and, over time, use this to identify good stewardship and make improvements to the process. The Steering Group noted that a company’s brokers or other advisers routinely reported back to the executive team following investor presentations, and considered this raised a number of other issues which needed to be addressed (see question 4 under ‘Additional considerations’ below). There remained, however, a first-order question relating to the principle of feedback from investor engagement activities.

 

Question four
Should companies and institutional investors seek feedback on the quality of meetings as an integral part of the engagement experience?

From the dialogues between the Working Party and chairmen, it was possible that direct feedback from investors to the company might lead to more effective engagement rather than receiving such feedback from the company’s brokers or advisers.


Question five
Do respondents consider that receiving feedback on meetings directly from investors might lead to more effective engagement compared to receiving the feedback from the company’s brokers or advisers?

The Working Party had also identified the need for companies to be able and willing to provide feedback to investors. The feedback meeting forms outlines a possible format for a company to provide feedback on investor meetings.

 

Question six
Do respondents consider the questionnaire format, and the content, outlined in the feedback meeting forms would constitute an acceptable basis for providing feedback on investor meetings?

Might any other mechanism be used?

If using the questionnaire format, should any content be added (or removed)?


Additional considerations
The Steering Group considered that additional thought needed to be given to ways in which good practice engagement could be encouraged, including by addressing some of the following question

 

    • Question 1
      The Kay Review recommended the establishment of an Investors’ Forum to allow institutional investors the opportunity to engage more effectively, collectively, with companies. In what circumstances would such a collective approach be appropriate?

  • Question 2
    Some companies organise investor meetings where they present on a particular topic or range of topics – such as sustainability/corporate responsibility, or remuneration – to a group of investors. Should this model be more widely adopted? Might it be helpful to organise such meetings to cover explicitly the company’s strategy? Could such meetings be more effectively facilitated by a shareholder advisory body such as the Association of British Insurers or the National Association of Pension Funds? Might facilitating such meetings form part of the role of the Investors’ Forum proposed by the Kay Review?
    In what circumstances would it make sense for an engagement meeting to be held purely on a one-to-one basis?

 

  • Question 3
    Bearing in mind questions 1 and 2, was there an overall approach towards engagement – in terms of structured topic, and/or structured group – which a company could adopt?

 

  • Question 4
    One of the Supporting Principles under section E.1 of the Financial Reporting Council’s UK Corporate Governance Code4 states that ‘Whilst recognising that most shareholder contact is with the chief executive and finance director, the chairman should ensure that all directors are made aware of their major shareholders issues and concerns. The accompanying Guidance on Board Effectiveness stresses that it is a principal role of the chairman to ensure ‘effective communication with shareholders and other stakeholders and, in particular, that all directors are made aware of the views of those who provide the company’s capital’. What mechanisms are necessary to ensure effective internal coordination of information gathering and communication inside a company?

 

  • Question 5
    Given the emphasis in the consultation paper on the ‘new conversation, what strategy should a company and its investors adopt which ensures that there is a continuing dialogue, and not one focused simply on the results and proxy season?

 

Question seven
Do respondents consider that addressing these key issues will help strengthen good practice engagement?

Question eight
Do respondents have views on what other mechanisms can be used to encourage good practice engagement?



Summary
The Steering Group is firmly of the view that the health of the engagement process is one of the drivers, which increases alignment between a company and its owners, and that transforming the engagement interaction can create value for both parties. It looks forward to analysing the replies to the consultation process in order to be able to identify means by which good practice engagement can be developed.

 

Read the next section: The supporting resources 

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