Strategic Shareholder Engagement: Practical and Legal Considerations

Boards of directors govern in an environment where large institutional investors expect to actively engage with the companies in which they have invested. Shareholder engagement takes a variety of forms, often in combination. These efforts range from traditional investor relations and earnings calls to meetings with shareholder representatives (a single investor or a group of investors) to surveys of investors to investor-hosted roundtables with participants from several companies. While specific negotiations with shareholder activists and proponents of shareholder proposals are also a type of shareholder engagement, the term is generally used to refer to a more general effort by companies to understand the viewpoints of key shareholders and to seek support for the company’s approach to a particular governance, compensation, or strategic decision.