You’ve Got Mail: The Evolution of Communicating with Retail Shareholders
“You’ve got mail” was the most effective call to action of the digital age. Not long ago internet “surfers” who heard those three simple words rushed to their mailbox to see what might be waiting. Electronic mail was new and exciting, and it made one thing abundantly clear: paper mail was boring.
That same period found corporate issuers struggling to communicate with retail shareholders through physical mailings and telephone call campaigns. It was customary for companies to print elaborate (and expensive) annual reports and proxy material packages, hoping that it would stand out amidst the sea of junk mail. As printing and mailing costs continued to rise, companies that maximized e-delivery of proxy material realized significant savings.
It is no secret that retail shareholders are traditionally poor voters. In a standard proxy solicitation, where a company conducts one mailing to shareholders with no follow-up, we expect to see less than a third of the retail community register a vote. That said, when retail holders DO vote, they most often tend to support the company. For that reason, it has long been a goal of the corporate issuer to cost effectively increase the vote participation from this category. Since the late 90’s several tools have become available to accomplish this goal such as Telephone & Internet voting, direct phone voting, and the ability to conduct Notice & Access campaigns. Many companies took the position that if retail holders are not going to vote, then at least we aren’t paying as much to reach them.
Over the last few years, however, retail solicitation strategies have changed. The extremely close vote, and extensive news coverage, at the Proctor & Gamble proxy fight demonstrated just how vital retail shareholders can be. The retail shareholder needs to be conditioned to vote over time. In order to do that effectively, we’ve seen companies use a portion of the savings from utilizing Notice & Access to reinvest in targeted follow-up mailings and telephone call campaigns to unvoted retail holders. Companies that successfully condition retail shareholders reinvest in these areas year after year and this type of retail engagement also increases awareness from an activism standpoint. If a retail shareholder receives a phone call or voice message from a company over a period of years and then suddenly from an activist in a subsequent year, it raises a red flag that something is different and attention must be paid.
More recently companies and activist shareholders have utilized social media campaigns to support their solicitation effort. While these are important campaigns from the standpoint of doing everything to raise awareness, they are still indirect campaigns. Where they are most useful is in determining which messages resonate with people who are viewing these social media posts. Knowing what material works, or doesn’t work, with individuals is crucial in appealing to retail shareholders. However, the most effective campaign will always be to directly communicate with shareholders, and provide them with an easy way to vote by proxy card, telephone or the internet. Providing that call to action directly, and repeatedly, will result in the shareholder executing their vote.