Shearman & Sterling LLP Shareholder Engagement | 17
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FAST FACTS
62 of the Top 100 Companies disclosed in their annual
proxy statement the extent of their outreach to / contact
with shareholders.
The Spectrum of Shareholders
A finely tuned engagement program recognizes that there is a wide
variety of shareholder types. These include:
§ Pension Funds
§ Mutual Funds
§ Hedge Funds
§ Labor Funds
§ Index Funds
Even within a particular category of investor, there are differences in
viewpoints and perspectives. A company's engagement strategy should
be tailored based on the profile of its shareholder base. About half of the
Top 100 Companies disclosed why they engage with shareholders.
§ Socially Responsible
Investment Funds
§ Insurance Companies
§ Endowments / Foundations
§ Individual Investors
Note: 16 companies fall into both of
the first two categories
The percentage of outstanding
shares held by such shareholders
ranged from approximately
25% to 60% (with the average
being 38%). 30 of the Top 100
Companies reported that they
engaged with between 30% and
45% of their shareholders.
Percent of the outstanding
shares held by shareholders they
engaged with
Number of shareholders they
engaged with
Only described their engagement
in qualitative terms
The Commonsense Principles of
Corporate Governance devote an
entire subsection to "Director
communication with third
parties." Among other things,
these Principles state that:
§ Robust communication of
a board's thinking to the
company's shareholders is
important. There are multiple
ways of going about it.
For example, companies
may wish to designate
certain directors — as
and when appropriate
and in coordination
with management — to
communicate directly with
shareholders on governance
and key shareholder issues,
such as CEO compensation.
§ The CEO should actively
engage on corporate
governance and key
shareholder issues
(other than the CEO's
own compensation) when
meeting with shareholders.
