As chief advocacy officer with Trillium Asset Management, Jonas Kron leads the firm’s advocacy program to engage with companies on their environmental and social performance. He spoke to IR Magazine sister site Governance Intelligence about aspects of that work in the run-up to and during AGMs.
Click here to download the Governance Intelligence Playbook: Your AGM, your investors, your engagement for more from Kron and more actionable advice from experts on getting the most from your annual meeting engagement.
Shareholder proposals must be filed at least six months before a company’s AGM. How does that timeframe impact engagement?
Given the current filing deadline, I think everybody has to overfreight the shareholder proposal when it's being filed. But very often those shareholder proposals need to be viewed as just a placeholder. The expectation is that dialog will continue.
I think there’s a tendency to say that shareholder proposals are an extreme form of escalation, and I don’t think they need to be seen as such. There are a lot of companies that have a very mature, reasonable approach to shareholder proposals. And they understand why they’re being filed. They see them as an ongoing part of the dialog [with investors]. If anything, [proposals] can be helpful because they crystallize and reduce into writing the most salient issue, and that’s all part of a productive process.
There are other firms that just shut down when there’s a shareholder proposal. And that closes off progress unnecessarily.
How important is the AGM itself in terms of engagement?
This gets to the question of how the company is running its annual meeting… Even in a virtual meeting, the presentation of the proposal matters. As a lawyer, I think words matter. Those three minutes can be very important for changing people’s minds on the board and letting them hear from you directly – both in terms of the words on the page and the tone.
I think in the context of a virtual meeting, the impact of those words is diminished compared to an in-person meeting. They don’t convey as much as at an in-person presentation… A couple of things happen usually at the in-person annual meetings that is lost, which is that there are opportunities for talking to fellow shareholders that are sitting around you [and] there’s an opportunity to speak with a member of the board of directors or a member of the executive team in those more informal moments during the annual meeting.
How can you respond to the company’s opposition to your proposal after the proxy statement is filed?
The company has to provide its statement of opposition to the proponent 30 days before the proxy goes out. If I read through the company’s statement of opposition and I feel that they have made a statement that can’t be documented, can’t be proven, is false or misleading or excludes a fact that really needs to be presented to make it understandable, I need to have the opportunity to tell them that.
When the opposition statement comes out there are a couple of opportunities for the investor to speak publicly. One is an exempt solicitation… Sometimes companies provide responses to the exempt solicitation. Then at the meeting we have three minutes to make our statement. And you could also throw in a question or two just to make your point one more time.
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