Inside IBM’s year-round
FEB 4, 2020
Why IBM won the 2019 Corporate Governance Award for best
For IBM, shareholder engagement is nothing new. Evan Barth, senior
counsel at the company, says that when he joined IBM in 2008, there
was already a robust proxy season engagement plan in place – long
before the term ‘shareholder engagement’ was mainstream.
In March, once the proxy statement has been filed, IBM’s in-season
engagement efforts kick in. In 2019 the firm engaged with more than
100 institutional investors, representing more than 70 percent of the
company’s institutional ownership, and reached out to more than
250,000 retail investors and registered shareholders.
But it’s outside of proxy season that IBM’s shareholder engagement
efforts really stand out. In 2017 the company began a much more
concerted off-season engagement campaign, run by the corporate
secretary’s office. This year the team started its off-season
engagement in September, just a couple of weeks after the proxy
meeting, and it ran all the way through until February. During this
time, the team met with investors representing more than 30 percent of
shares that voted at the 2018 proxy meeting, and contacted investors
representing more than 50 percent of shares voted.
The longer this off-season engagement goes on, the more sophisticated
it becomes. ‘In the last year we created our own internal database for
feedback from each investor [meeting],’ Barth says. ‘We track whether
it agrees with our positions or not, and also what its perspectives
are. That means we can have a customized approach to our engagement,
where investors can meet with different leaders from IBM.’
For instance, if the team knows an investor is likely to ask questions
about executive compensation, it will ensure the vice president of
compensation and benefits is in the meeting, to enable a deep dive.
This strategy reaches right across IBM’s leadership; the team has
facilitated investor meetings with IBM’s chair and CEO, lead director,
CFO, general counsel, chair of the executive compensation and
management resources committee, vice president of corporate and
environmental affairs, vice president of corporate citizenship and
Natalie Wilmore, senior attorney at IBM, also points out that the team
keeps an eye out for investors’ articles and thought leadership on
certain topics that are published outside of meetings. ‘If we see an
article by one of our top investors explaining its position on
cybersecurity, for example, we will take that to our team to see how
it aligns with what we’re doing,’ she says.
One of the key aspects of shareholder engagement is that companies are
seen to respond to the feedback they receive. In this spirit, Barth
points to an ESG webcast IBM hosted last year for its investors. ‘In
the last year we started getting more E and S questions,’ he says.
‘What we found is that people were interested in a deeper dive than we
were giving in meetings, so we launched the webcast as an even deeper
dive. It’s been wildly successful.’
Wilmore adds that the webcast format allows the team to be flexible
with emerging topics that are on investors’ minds. She cites ethics in
artificial intelligence as one of those topics that has recently
emerged, and that will be addressed in this year’s webcast. Other
examples of recent changes discussed during off-season engagement
include: changing the title of the presiding director to lead director
and adding an IBM revenue metric to the annual incentive program.
Finally, Barth says, it’s important to explain your shareholder
engagement efforts clearly in the proxy statement – articulating why
it’s important, how it’s done and what the outcomes are. ‘Proxy
statements are 90 pages long, but only five pages are read,’ he says.
‘That’s why the shareholder engagement section matters to us.’
This article originally appeared in the latest Corporate
Secretary special report.
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