A new wind is blowing through corporations’ annual meetings, as retail shareholders are having an increasingly large impact. Peter Fowler of Lumi Global argues that making space for this new wave could mean rethinking shareholder engagement altogether.
Editor’s note: The author of this article, Peter Fowler, is COO of Lumi Global, a provider of technology to enable hybrid shareholder meetings.
Retail shareholders have exploded onto the investment scene. With the introduction of DIY investment platforms in recent years, access to shares has never been easier, and a new breed of investors is grasping the opportunity.
Despite making up a relatively small portion of overall shareholders (the global average is 14%), this group is growing in number and becoming more vocal than ever.
As the 2024 AGM season commences, companies must listen to this voice as it emerges on contentious issues like the environment and executive pay and open the floor to more engagement at their annual general meetings.
Welcome a new diverse breed of investors
Gone are the days of a uniform investor group with identical interests. Today’s landscape is far more varied, and their interests are more complex. Two thirds of women (67%) now invest in shares outside of their retirement accounts, and nearly one in three young Black shareholders say they’ve begun investing since 2020, according to a recent Lumi Global study. Meanwhile, other research shows that 37% of Gen Z now invest in stocks — more than ever before.
One of the fundamental shifts fueling the retail investor boom is the growth of DIY trading platforms and the rollout of new products and services across brokerage firms that help make investing more accessible to markets. These DIY platforms are now paving the way for a younger generation to enter the investment landscape, and this is also translating into shareholder meetings. Four in five (80%) Gen-Z shareholders say they have already voted in an AGM, and another 9% say that they have an interest in doing so, Lumi Global’s study indicates. Whether they are passionate about sustainability, executive pay or other ESG considerations, this group is engaged and making an impact on wider society is a key priority for them.
With this new diversity brings a new level of responsibility for companies to explore how they will engage shareholders. If businesses don’t prioritize this group, they miss an opportunity to listen to diverse voices.
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Read moreMany shareholders, regardless of age, have been excluded from AGMs in the past by logistics with meetings hosted in major cities during the day, and prior commitments making it impossible for investors to attend. Once you remove these barriers posed by physical attendance, AGMs are open to a wider demographic and become far more welcoming allowing for inclusivity and accessibility.
Last year, hybrid AGMs made up 40% of all meetings worldwide, and this year the majority of UK meetings are expected to be hybrid. The ability to engage with attendees virtually promotes a more democratic and accessible AGM that not only accommodates diverse preferences but also addresses logistical challenges, enabling broader shareholder participation.
Including retail investors in conversations
Engaging retail investors not only means businesses can hear from the voices of their engaged stakeholders, but it also means they can capture the rumble of a potential revolt. This means companies should avoid treating the AGM as the sole moment of the calendar year to engage with their shareholders. If companies take this approach, they risk investors being less engaged, as well as the possibility that they will not understand shareholders’ voting intentions when the day comes. This in turn opens the floor to potential opposition.
Instead, it’s important to maintain open dialogue with investors throughout the year. Shareholders are demanding this, with 85% saying they want to see more advance information from the companies they invest in on the issues being discussed at the AGM, according to Lumi Global’s research.
One way this could be done is through frequent investor relations meetings throughout the year that all can attend. This approach enhances transparency and builds personal connections with board members. Instead of separating investor relations and corporate governance, businesses should look to adopt a holistic approach to AGM planning and stakeholder relations. Effectively preventing issues from escalating means boards can gauge shareholder sentiment prior to the main AGM, as well as to provide more information to their investors.
Peter Fowler is chief operating officer of Lumi Global, a provider of hybrid shareholder meeting software. Before joining Lumi Global in 2013, he served in a variety of roles at IML Worldwide.
