As the debate regarding the future of sell-side research and corporate access continues, investors are becoming less reliant on the sell-side and generally more proactive when it comes to identifying investment opportunities. Within our sample, 49% of companies have noticed an increase in buy-side research over the past 12 months and 69% report an increase in direct requests for meetings from fund managers.
Investors around the world are also becoming more vocal in demanding change when it comes to company strategy or other issues affecting performance, such as board diversity. Having in many cases spent significant resources on devising alternative strategic plans, activist investors expect to be heard by the management team and the board. However, they are not the only ones expecting such treatment. Institutions that were historically more passive shareholders are also becoming more vocal.
Our research shows that more public companies are expecting to encounter activism in some shape or form, and are taking action to prepare: 73% are monitoring their shareholder base for activist investors, 63% have evaluated their vulnerability to an activist approach and 52% have formulated a response strategy in case of an activist investor approach.
In this context, boards are increasingly finding themselves at the centre of the action. Our research shows that 62% of chairmen and 59% of board directors (excl. chairman, CEO and CFO) now meet investors outside the AGM. Access to independent directors can be critical for avoiding escalation into hostilities in the event of an activist investor approach or a takeover attempt. Given their responsibility for company oversight, investors expect independent directors to be less defensive than executive management when it comes to discussions regarding company strategy or transaction rationale.
Further research highlights
- Companies are increasing engagement with investors through:
- Enhanced roadshow activity: 45% of companies are planning to intensify roadshow activity over the coming 12 months. One third will visit new financial centres with second tier cities particularly in Europe and the US among the key focus areas for the coming year
- Taking greater control over investor targeting: 63% of IR teams are calling the shots on who they see when it comes to the majority of their roadshow meetings
- Proactively approaching potential investors: 79% of companies proactively approach potential investors to arrange meetings
- Insufficient dialogue with institutional Corporate Governance teams as part of AGM preparation
- 65% of companies do not engage at all with Corporate Governance teams ahead of AGMs
- 44% are unaware of their shareholders' voting policies
Board diversity and cyber security among key issues on the agenda
- 40% of companies have taken action to improve board gender diversity over the past 12 months
- 30% state that cyber security is an increasing area of concern among their shareholders
- 79% have introduced new measures over the past 12 months to mitigate the risk of a cyber-attack
- Greater use of virtual events and video content, but continued decline in use of social media
- The convenience of virtual AGMs, roadshows and investor conferences is winning over an increasing number of companies
- Apart from Twitter and LinkedIn accounts, our research shows a decline in popularity of all other social media channels in Europe compared to 2015
- 41% of IROs believe that increased use of video content on their IR websites is shaping the way they communicate with investors
- Moving away from quarterly reporting remains a challenge
- Only 11% of EU companies have taken advantage of new regulation allowing them to reduce the frequency of their reporting
- The remainder are continuing to report quarterly, mainly due to concerns over a potential adverse reaction from shareholders
To view the full report, please click here.
About the survey
Citigate Dewe Rogerson first started investigating trends in investor relations in 2009 to gain insight into how companies were adapting to the uncertain times brought about by the 2008 financial crisis. Our first survey was based on responses from 80 IROs representing companies from a wide range of European markets, sectors and company size. Since then, our annual IR survey has gained a growing number of supporters, not least from IR societies across Europe including the UK IR Society, Germany's Deutscher Investor Relations Verband ('DIRK') and IR Club. This has led to a decision to include companies outside of Europe in the research for the first time in 2016. As a result, a record number of 258 IROs from leading companies across the world participated in this year's survey to provide the most comprehensive insight to date into changing attitudes and practices from objective-setting, reporting and guidance to analyst coverage, investor and activist engagement to the changing use of technology.
About Citigate Dewe Rogerson
Founded in 1969, Citigate Dewe Rogerson is one of the most respected names in strategic financial and corporate communications. Our dedicated investor relations team has a track record of more than 20 years in advising boards, senior executives and IROs worldwide to build their profiles amongst the investment community and nurture relationships with key decision makers.
For further information, please contact:
Director, Investor Relations
Citigate Dewe Rogerson
SOURCE Citigate Dewe Rogerson