ICSA publish Shareholder Engagement Report

The Institute of Chartered Secretaries and Administrators (ICSA) – the Governance Institute have published in July 2018: Shareholder engagement: The state of play. The research investigated the nature of engagement between issuers and investors, and the extent to which it had changed in the last five years. The research surveyed and interviewed company secretaries or equivalent corporate representatives in listed companies in ten different markets (Australia; Brazil; Chile; Italy; Japan; Hong Kong (China); South Africa; Sweden; United Kingdom; and United States) and across eight business sectors. The markets and sectors selected represent different regions, levels of development, regulatory frameworks and company ownership structures.

The research found clear evidence that the quantity of engagement has increased in the last five years.

  • When issuers initiate engagement, they most frequently target investors with the largest current or potential holdings in the company and those they believe might take a hostile position;
  • When investors initiate engagement, the main considerations are the value of their investment and whether they have concerns about the performance or governance of the company.

Over 70 per cent of issuers responding to the survey considered that the quality of their engagement with investors had improved to some extent compared to five years before.

The majority of engagement is still ‘event-driven’, taking place in advance of the general meeting or around the publication of financial results but there is some evidence that engagement is becoming more of an ongoing process, at least in more developed markets. This was reflected in the reported increased use of emails and face-to-face meetings as methods of engagement.

Issuers reported that the CEO, the CFO, the IR department and the chair were most frequently involved in engagement. Many issuers reported that, on the investor side, ESG teams had emerged during that period as a third point of contact alongside fund managers and analysts. Some raised concerns that this made engagement more complicated, as it was not always clear who would be making the investment or voting decision for the investor.

The most frequently discussed issues with shareholders are:

  • Performance,
  • Strategy,
  • Capital structure,
  • M&A activity
  • Leadership

The report can be downloaded here

http://www.icsaglobal.org

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