About 35% of US public companies are held by retail investors, but they’re fragmented and hardly vote. In fact, less than a third of retail shareholders currently vote in a corporate election - a percentage that’s stayed fairly consistent over the years.
As a result, the traditional investor relations role has remained focused on meeting with institutional investors. However, the retail shareholder base is becoming increasingly influential in corporate elections - driven by 2 factors.
Firstly, there are a growing number of issues that are driving interest and participation of retail shareholders. This includes social and diversity issues like gun control, environmental stewardship, gender equality and cybersecurity as well as more common ballot issues like say on pay. These topics are now being frequently covered in the press and trending on social media. Not only is this resulting in higher retail shareholder engagement but also putting the pressure (however subconscious) on institutional investor and proxy advisors to act accordingly or feel the public backlash.
Secondly, innovations in technology are changing how retail shareholders behave and IR teams operate.
A group that was once dispersed and ignored can now quickly assemble online and build momentum. Whether it’s simply through an online opinion that bears more weight than their actual voting position or by assembling in small shareholder committees. In the UK, small shareholder committees are growing in frequency and have even been advocated by members of parliament. Marks and Spencer as well as the Royal Bank of Scotland have both since formed small shareholders’ committees too.
Luckily, technology also makes it easier than ever for an IR team to engage ALL of their shareholders. From our client experience, we’re actually seeing this role evolve into a cross between data scientist and digital marketer.
Combining public and internal data, IR teams are now able to develop comprehensive profiles of their current and prospective shareholders. This goes beyond looking at market data and institutional profiles but leverage machine learning for things like shareholder sentiment, deviations from expected behaviours and predicting actions. Using these insights, IR teams are now able to not only build targeted outreach strategies for each segment of their shareholder base but also be prompted when actions are required. Again - not just of institutional shareholders but ALL shareholders.
BHRD (“Be Heard”) has played an increasing role with IR teams as the industry shifts towards analytical solutions. With a cost-effective shareholder management and engagement platform, BHRD empowers companies to find and keep the right shareholders. Learn more at www.bhrdglobal.com/platform
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