Making the Most of the Annual Meeting

As the 2024 proxy season moves into full swing, now is the time for boards and management to consider how to make the most of this annual investor engagement opportunity. 

With the advent of virtual annual meetings, meeting attendance and shareholder participation has skyrocketed in recent years. Annual meetings have thus become an important opportunity to communicate with a broader range of shareholders than the company directly engages throughout the year. 

Proxy voting results—both at the company and beyond—also provide a valuable gauge of shareholder sentiment that the company can use to assess how its governance and strategy are perceived and to anticipate potential new areas of investor interest and scrutiny.

To help companies make the most of the annual meeting, directors can encourage management teams to seize the investor communications opportunity and to meaningfully reflect and act on meeting outcomes and broader proxy season trends. 

Approach the meeting as an opportunity for shareholder engagement. 

The annual meeting affords companies the chance to communicate with a broad and engaged segment of its investor base and tell a compelling story about the company’s leadership, governance, and strategy. Including a presentation on the company’s business, key initiatives, and strategy for future growth can maximize this strategic communications opportunity. The company’s investor engagement meetings from the fall and early spring can provide helpful insight into areas where investors are likely to seek more information and topics where additional clarity is warranted. 

Companies should also embrace the annual meeting question and answer (Q&A) session as a chance to understand investors’ focus areas and to reinforce the company’s narrative. For some investors, this may be a unique opportunity to ask direct questions of company management or the board and have their voice heard by both company leaders and other shareholders. Any perception that the company is shutting down that opportunity through inequitable Q&A practices could ultimately invite scrutiny and prompt more public critiques of the company’s governance. 

If the company’s meeting is virtual, boards should ask management to consider leading practices for Q&A sessions, such as allowing shareholders to see all appropriate questions submitted, and posting all questions received and corresponding answers on the company’s website within a reasonable amount of time after the meeting. If the meeting has an in-person component, boards can ask management how it will use the opportunity to connect with key shareholders before or after the meeting and consider whether a director should participate in those connections. 

Seek analysis of the company’s voting results, especially on director votes.

Investor voting decisions have become more nuanced in recent years. In terms of the director vote, investors are evaluating directors using a broader set of factors than they have historically and are now holding board members directly accountable for oversight concerns related to board diversity, climate reporting, executive pay, and various other governance and disclosure practices. Investor voting decisions on many shareholder proposals have also become more complex as proposal requests have become narrower and more specific and investors weigh those requests against the company’s actions, reporting, and record of responsiveness to shareholder concerns. 

These developments can make interpreting proxy voting results both more challenging and more important. Boards can push management to use annual meeting results as a learning and risk mitigation opportunity. Are there any surprises in proposal outcomes, or worrying trend lines in certain votes over recent years? What steps will management take to understand the concerns driving negative votes?

To support this, boards can question management’s understanding of the company’s top shareholders’ proxy voting policies and voting decisions. They can also work with management to monitor rising voting opposition levels, assess the support level of any shareholder proposals, and engage with key shareholders to understand their perspectives. Having certain board members directly participate in those conversations—particularly when the topics under discussion are directly under the board’s purview (e.g., the board’s independent leadership structure) or when significant investors have specifically requested to speak to directors—can give the board valuable insight into investor perspectives and optimize the engagement opportunity.

Understand broader shareholder voting trends and proxy season themes.

Companies should look beyond their four walls and the voting results to understand the broader trends and key contests shaping the proxy season. These developments can help companies prepare for what’s ahead and mitigate related potential risks. 

For example, shareholder proposals can offer valuable insight into investor priorities and related leading and emerging company practices. New proposal topics—which this year include responsible artificial intelligence, nature loss and biodiversity, clean energy financing, and director resignation policies—can also serve as an indicator of what may become future focus areas for companies. 

Boards can ask management what kinds of shareholder proposals were most common in the company’s industry and across the market this year and how that is changing. This can inform a valuable discussion of how the company is positioned against competitors and how the company will respond if it receives a similar proposal. 

Trends related to director votes or executive pay programs can also bring clarity to evolving investor expectations and voting practices. In recent years, those trends include rising voting opposition to directors holding board leadership positions, especially nominating and governance and compensation committee chairs, related to governance and pay practices. High-profile proxy contests, too, offer insights into key points of investor focus that may reverberate more broadly, such as the role succession planning played in a recent closely watched 2024 proxy campaign.

Boards may request insight sessions with external board thought leaders about proxy season trends and developments to help guide and inform their assessments. 

Carry proxy season lessons into strategy sessions and future governance decisions.

Making the most of the annual meeting also means taking its lessons forward into strategy-planning sessions as well as the board’s self-evaluation and governance assessment. What insights from the annual meeting voting results and related engagement should be informative to the strategy-setting process and future stakeholder communications? What proxy season developments should prompt further consideration of current governance practices? Like every investor engagement, the annual meeting and proxy season at large are an important opportunity for learning, reflection, and improvement. 

EY is a NACD partner, providing directors with critical and timely information, and perspectives. EY is a financial supporter of the NACD.

The views reflected in this article are the views of the author and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.