Companies and directors need to do more to engage shareholders. This was the underlying message from Richard Daly, CEO of Broadridge Financial Solutions, in an address earlier this week to the National Press Club in Washington, D.C.
According to Daly, retail shareholder engagement is down significantly and despite a rash of regulatory changes designed to empower investors and increase transparency, only a very small percentage of shareholders actually vote. “In 2010, just one in 20 individual retail investors voiced their opinions about the companies they invested in by exercising their fundamental shareholder right. That compares to recent historical levels four to five times as high.”
Daly called on corporate CEOs and directors to address this decline in voting and examine ways to bring shareholders—especially employee shareholders—back into the fold. “Public companies need to understand the seriousness of this issue and act to reverse this troubling decline to get each of their individual investors—and all individual investors generally—engaged with their companies,” he said.
Broadridge and Daly have been pushing investors and companies to increase individual shareholders voting and he encouraged public company CEOs to “join with us in launching a nationwide effort to encourage their employees—numbering in the tens of millions—to exercise a fundamental shareholder right, and need, to vote their proxy ballots, whether it be proxies relating to their employer or proxies relating to other companies in which they invest.”
As part of the effort, Daly said he is contacting the chief executives of America’s top 1,000 public companies to encourage them to motivate their employee shareholders to vote their shares.
In order to increase engagement and to reverse the decline in individual voter participation companies may need to realize greater efficiency in the distribution and collection of proxy voting materials. To this end, Broadridge is informing shareholders, within the constraints of regulatory boundaries, of the ability to receive and act on communications through digital channels. Investors are now able to, in many cases, access proxy and annual meeting materials online and even cast votes through electronic methods including the internet, mobile devices and cell phones.
With increased disclosure requirements on director skills and compensation, communicating with investors and telling the company story is more important than ever. Beyond securing the vote for the board, there are other, strategic reasons to advance shareholder participation.
“Companies that can distinguish their investors’ opinions from others’ will more easily have the strength and confidence to stay on course and create value. There is no greater show of support than the ballot, or in this case, the proxy,” Daly concluded.