With proxy season well underway in the US, IR teams are advised to play an active role in structuring the message that goes into the proxy statement, according to one expert.
Speaking to IR Magazine at the NIRI national conference, Ron Schneider, director of corporate governance services at Donnelley Financial Solutions, highlights why significant input from the IR team can make for a better proxy statement.
‘At leading companies, IROs have been involved in the proxy for decades,’ Schneider says. ‘If you think about the audience [for the proxy statement], the message you want to convey, who is great with engaging investors and who is great with the company story, it’s the IRO.’
Schneider says the proxy statement should be of particular interest to IR teams to ensure a consistency of messaging. ‘I’ve heard from [investors] who say, I was just on your earnings call and that sounded great, but then I read the proxy and the metrics don’t tie in,’ he comments. For this reason, it’s increasingly common to see a large number of functions coming together to work on the proxy statement – including legal, IR, human resources, CSR and corporate communications.
Schneider also notes that the proxy statement should be viewed as a powerful tool to counter the influence of proxy advisory firms. There continue to be concerns about the influence proxy advisory firms such as ISS and Glass Lewis have over voting decisions, with NIRI, Nasdaq, the NYSE and the US Chamber of Commerce all calling on the SEC to regulate these advisory firms.
Schneider relays the comments of the governance head at a large institutional investor: ‘When the proxy talks about strategy and why the board skills are right, why the compensation is right and what the company’s sustainability approach is, we are less dependent on the proxy advisory firms… if they flag something and we go to the proxy for information and it’s dry, boilerplate or not informative, then we have nothing else to go on.’
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