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Why Ownership Intelligence Drives Greater Knowledge Per Share 2 900X330

Why Ownership Intelligence Drives Greater Knowledge Per Share

Friday, May 19, 2023

In the current uncertain market, shareholder activists have intensified their actions amidst heightened volatility and reduced investor confidence.

For companies to proactively address shareholder concerns, it is essential to develop and maintain a comprehensive understanding of share ownership. Ownership data plays a crucial role in driving shareholder engagement by facilitating better, targeted communication, enabling shareholder participation and voting, addressing potential activism, and ultimately fostering long-term value for both your company and investors.

Leveraging detailed ownership data, companies can gain deeper insights into their shareholder base, enabling them to tailor their engagement efforts accordingly. Incorporating detailed analytics on shareholder proposal activity, average support levels, institutional voting, and recommendations from proxy advisory firms is an essential part of corporate strategy. Partnering with an experienced trusted advisor to provide regular strategic ownership assessment and proactive outreach to shareholders throughout the year, ultimately places companies in a much stronger position to understand how investors perceive them in the short, medium, and long-term.

Being Intelligent About Your Ownership

Effective shareholder engagement begins with comprehensive ownership information. This data provides a detailed overview of who exactly owns the company, encompassing shareholder sentiment, proxy voting patterns and buying and selling trends.

Beyond basic ownership data, the ownership intelligence process begins with understanding key metrics from institutional, hedge fund, and short or activist ownership to forecast how shareholders will react to market volatility, corporate actions, and ESG trends. Ownership intelligence includes transfer agent registry data (shareholder profile, stock history, including past transfers, sales and records of dividends paid), as well as shareholder type and makeup (retail, employees, institutional, hedge funds, and other investors). Some of the other major areas of focus include ESG matters, board refreshment, diversity issues, and pay disparity. Informational advisory services are critical when stock performance is down, shareholders are making noise, activism is brewing, or companies have corporate governance, executive compensation, or shareholder proposal concerns.

A comprehensive ownership intelligence data strategy empowers companies to understand their shareholder base, tailor their engagement efforts, make informed decisions, and navigate potential risks much more efficiently. By leveraging ownership intelligence data effectively, companies can foster stronger relationships with shareholders, enhance transparency, and ultimately drive long-term value creation for both the company and shareholders.

Comprehensive Ownership Intelligence: Driving Long-Term Value Creation

Detailed information about your shareholders, including their motivations for investing or divesting, builds a better understanding of what is driving share price performance and overall investor satisfaction with company management. Detailed analytics on shareholder trading activity provide valuable insights into investor sentiment. Identifying key shareholders whether retail or institutional, and their recent activity facilitates a better understanding of their expectations of company management and as a result drives more effective communication.

Once you gain a deeper understanding of your shareholders, you can implement targeted and personalized communication plans. This, in turn, leads to enhanced shareholder engagement and increased support. Understanding the ownership of your company assists executives in making strategic decisions aligned with business goals. To enhance strategic planning for a comprehensive shareholder engagement program, it is crucial to continuously monitor and engage shareholders throughout the year. Monitoring institutional voting patterns and proxy advisory firm recommendations helps companies stay informed about influential stakeholders and investor sentiment. Understanding these perspectives enables companies to engage with institutional investors and proxy advisors in a targeted and proactive manner. This process starts with proper shareholder identification analytics and institutional investor analysis. Detailed ownership information, shareholder sentiment, proxy voting patterns, and trends in buying and selling provide valuable insights across all types of investors (employees, institutions, individuals, or retail), helping to identify potential issues and increasing shareholder support levels.

Addressing shareholder activism is also key to why having ownership data matters. Being prepared to address shareholder activism begins with having the right team in place, which includes a market-tested proxy solicitor with proxy fight experience. Effective shareholder engagement promotes trust and transparency, ultimately enhancing a company's reputation. It allows for open dialogue with shareholders, addressing their concerns and aligning corporate actions with their expectations. This proactive approach mitigates risks, reduces the likelihood of shareholder activism and can assist in maximizing support.

Ownership data provides valuable insights into how shareholders may vote on various proposals during shareholder meetings. Understanding voting patterns and the level of support for different initiatives helps companies gauge shareholder sentiment and align their decision-making processes accordingly. This knowledge allows companies to make more informed and strategic choices that resonate with shareholders.

Ownership data becomes particularly important during mergers and acquisitions. It helps to identify significant shareholders in both the acquiring and target companies, facilitating engagement with these shareholders to gather their perspectives and address any concerns. Understanding ownership dynamics can also aid in evaluating potential synergies and the impact of the transaction on existing shareholders.

Proactive Monitoring is Needed for a Stronger Shareholder Engagement Strategy

Proactive monitoring of shareholders is essential for developing a stronger shareholder engagement strategy. By staying abreast of changes and trends in share ownership, companies can anticipate shifts in shareholder dynamics and adapt their strategies accordingly.

Some of the primary reasons proactively monitoring shareholders is crucial are:

  • Early Identification of Shareholder Activism - Mitigating risks and engaging shareholders
  • Understanding Investor Sentiment - Tracking ownership data for informed decision-making
  • Tracking Institutional Investor Behavior - Insights and engagement with key players
  • Identifying Emerging Shareholders - Building relationships and aligning strategies
  • Anticipating Shareholder Proposals
  • Tailoring Engagement Strategies
  • Risk Management - Identifying and mitigating potential risks in shareholder composition

Greater Knowledge Per Share

Managing shareholder engagement is crucial for managing the long-term relationship with the company's owners and investors. By actively managing this relationship throughout the year, companies can stay ahead of shareholder sentiment, proxy vote outcomes, activists, and unforeseen events. Comprehensive ownership intelligence drives this engagement. The importance of knowing and engaging shareholders has increased significantly in recent years, driven by responsible investing, ESG/DEI issues, and heightened activist efforts.

To foster better shareholder engagement, lower risks, and increase support, companies must establish and nurture relationships with their investors. This entails knowing the shareholders' profiles, prioritizing their concerns, understanding their voting history, and anticipating their future voting decisions to align with overall corporate goals. Sustained outreach before, during, and after the annual meeting is crucial for cultivating a strong relationship. Proactive monitoring enables early detection of potential risks or activism, helps gauge investor direction, and facilitates tailored engagement strategies. By staying ahead of changes in ownership dynamics, companies can strengthen their shareholder engagement strategies, build relationships with key stakeholders, and foster long-term value creation for both the company and its shareholders. Comprehensive ownership intelligence ultimately provides companies with greater knowledge per share, fostering long-term value creation for both the company and its shareholders.

EQ are specialists in helping you better understand and manage the ownership of your company through critical events across the corporate lifecycle. As trusted advisors, we provide strategic insight and operations expertise through our core business units in Private Company Services, Transfer Agent Services, Employee Plan Solutions, Proxy Services, and Bankruptcy. Globally we serve 6,700 clients (47% of the FTSE 100 UK and 35% of the S&P 500), with over 30 million shareholders, through 6,500 employees in 5 markets around the world.