Engaging with a company’s shareholders is an ever-more important task for governance teams, and one that for a growing number of firms involves extensive work beyond the proxy season and AGM. Hewlett Packard Enterprise (HPE), the winner of this year’s award for best shareholder engagement, shows how far best practices have come.
Typifying that, general counsel Rishi Varma explains that the company views engagement as a year-round process, one that involves close co-ordination with investor relations (IR) and that must constantly evolve.
Directors have traditionally been averse to taking part in meetings with shareholders, but best practice now requires their involvement at some level. HPE’s engagement includes a three-month off-season board outreach program comprising one-on-one, on-site meetings between shareholders and directors.
During fiscal 2018, the company broadened these efforts to holders of more than 60 percent of HPE’s stock. Combined with the participation of investor advisory firms, the program engaged directly with holders or advisers of more than 55 percent of its common stock.
HPE is keen on providing direct shareholder access to the board so investors can hear directors’ thinking, and vice versa, without a management filter. The company’s engagement program includes the board chair, committee chairs and other directors that shareholders have a specific interest in meeting. Varma explains that off-season meetings with shareholders feature board members, himself and the head of IR.
Meetings also take place at HPE’s twice-yearly customer gatherings, with directors often attending and sometimes sitting on panels, Varma says. They frequently attend the company’s annual securities analyst meeting, too, which takes place in the fall. At that meeting, the company’s leadership updates analysts on strategy and the financial outlook. But the event is publicly broadcast live, with videos and transcripts available later on the company’s website, so that shareholders can get insight into HPE’s business, strategy and outlook.
HPE has been broadcasting its AGM online every year since 2015, though it says it is ‘very sensitive’ to concerns that virtual meetings may curb shareholder involvement and company accountability.
As a result, Varma explains, HPE both answers questions live during the meeting and later posts online every question received before or during the AGM, with a corresponding answer, including those the firm does not have time to deal with during the meeting itself. In 2017 and 2018, shareholders registered more than 250 questions and comments that were responded to by HPE directors and management, according to the company.
Engagement also needs to have an impact to be credible. According to HPE, it has made design changes to its compensation structure and programs, and improved its proxy statement compensation disclosures, having received feedback on the links between pay and performance. It has also used investor feedback in its M&A strategy and capital allocation approach.
This article originally appeared in the latest Corporate Secretary special report. Click here to view the full publication.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
