Retail Investors Take Center Stage
New research reinforces the importance of retail investor engagement and loyalty in today's capital markets
Welcome to another edition of The Roundtable Roundup! In this week's issue, we examine the findings of the 14th Global Annual IR Survey by Citigate Dewe Rogerson, focusing on the growing role of retail investors and the evolving tactics for engaging with them. We also take a closer look at the Antavo Global Customer Loyalty Report 2024, which highlights the remarkable benefits and investments in global loyalty programs. Additionally, we highlight the increasing influence of shareholder activism, emphasizing the significance of continuous engagement strategies to boost AGM attendance and increase proxy voting participation.
The 14th Global Annual IR Survey (Citigate Dewe Rogerson)
The 14th Global Annual IR Survey by Citigate Dewe Rogerson, a leading international financial communications consultancy, offers in-depth insights into the evolving landscape of investor relations. The survey's methodology involves collecting data from senior-level respondents across various industries, providing a comprehensive perspective on current IR practices and challenges. Key highlights include:
Increased Retail Investor Activity: 43% of respondents have noticed an increase in retail investors over the past three years, indicating a significant shift in the investor landscape.
Engagement with Passive Investors: 35% of companies have increased engagement with passive investors, reflecting a diversification in investor outreach efforts.
Adapting IR Strategies for Retail Investors: Companies are adapting their investor relations strategies to cater to the unique needs and behaviors of retail investors. This includes simplifying communication materials, utilizing social media, and hosting dedicated webinars.
Challenges in Investor Engagement: Many companies (37%) find it challenging to engage effectively with their desired investor groups, including retail investors, underlining the need for innovative and adaptable communication strategies.
Global Consumer Loyalty Report (Antavo)
The Antavo Global Customer Loyalty Report 2024, produced by Antavo, a loyalty cloud platform, offers a comprehensive analysis of current trends in customer loyalty programs. The report is based on a survey of over 600 senior business professionals involved in their companies' loyalty strategies. It also includes analysis of more than 30.5 million customer interactions on Antavo's platform during 2023, along with qualitative interviews with 50 experts. This approach provides a multi-faceted view of the loyalty landscape, combining quantitative data with expert insights.
Key Insights from the Report:
Strong ROI from Loyalty Programs: 90% of businesses with loyalty programs report a significant return on investment, averaging 4.8 times their initial investment.
Emphasis on Investment in Loyalty Technologies: There's a trend towards investing in new loyalty technologies, with 89% of businesses planning such investments to enhance customer experience.
Rethinking Existing Loyalty Programs: A significant number of companies (90%) are planning to revamp their loyalty programs within the next three years, with 44% not satisfied with their current programs.
Shift to Advanced Loyalty Platforms: About 65% of businesses are considering replatforming their loyalty technology as part of their investment plans, indicating a shift towards more sophisticated loyalty solutions.
Activism: Collective voting power of retail shareholders could sway contested votes (IR Magazine)
Investors' Rising Influence: The 'meme-stock phenomenon' highlighted the power of retail shareholders, a group traditionally overlooked by companies and institutional investors.
Growing Stock Ownership: As of 2022, approximately 58% of U.S. households owned stocks, a significant increase from previous years, indicating a larger base of potential retail investors.
Effective Communication Strategies: Companies need to develop targeted digital campaigns and persuasive messaging to engage retail shareholders, especially during proxy fights or contested corporate elections.
Importance of Stock Surveillance: Sophisticated stock surveillance programs are crucial for companies to understand their shareholder composition, enabling them to effectively target and engage retail investors.
IR teams still need to get their hands dirty (IR Magazine)
Rising Outsourcing in IR: The average IR budget spent on outsourcing rose from 28% in 2022 to 34% in 2023.
Common Outsourced Activities: Shareholder registration, investor perception studies, annual report design, and proxy solicitation are frequently outsourced.
Keeping Core Activities In-House: IR strategy, corporate communications, and financial PR are usually kept in-house to maintain control over the company narrative.
Balancing Technology and Human Insight: New tools, especially AI, are streamlining time-intensive tasks, but there's caution against over-reliance on technology to maintain market understanding.
Pulte Family Acquires Bed Bath & Beyond Bonds on Behalf of BBBYQ Shareholders (The Street)
Pulte's Interest in BBBY Community: Inspired by the retail investor community, William J. Pulte Jr. purchased Bed Bath & Beyond bonds to investigate potential Wall Street irregularities contributing to the company's bankruptcy.
Donation of Profits: The Pulte family committed to donating all profits from their Bed Bath & Beyond bond position to the BBBY community.
Bed Bath & Beyond's Bankruptcy and Retail Investor Optimism: Despite the company's bankruptcy and the worthlessness of BBBYQ shares, a group of retail investors on social media remained hopeful for a rescue.
Speculations Among Retail Investors: Discussions on platforms like Reddit fueled speculation about potential interventions by figures like Ryan Cohen and entities like Teddy Holdings.
Annual Review of Shareholder Activism 2023 (Harvard Law School Forum on Corporate Governance / Lazard)
Lazard's 2023 review of shareholder activism reveals several key trends:
Record Global Campaign Activity: 2023 saw an all-time high in shareholder activism, especially in Europe and APAC, with a 7% increase in new campaigns compared to 2022.
Diverse Range of Activists: The year featured a broad range of activists, including a record number of first-time campaigners, particularly in Europe.
Growth in Board Seats Won: Activists increasingly succeeded in gaining board seats, with a significant rise in seats won through proxy contests, notably in Europe and APAC.
Regional Differences: While Europe and APAC saw increased activism, North America experienced a slight pullback from its 2022 post-COVID surge.
Are Virtual AGMs Too ‘Boring’? (Agenda Week)
Decline in Virtual AGM Attendance: Attendance at virtual AGMs has seen a significant decline. The average attendance at virtual meetings for clients in 2023 was 151, down from 513 in 2022, indicating a substantial drop in participation.
Lack of Engagement: Critics argue that virtual AGMs have become routine check-the-box exercises, often running short on time for shareholder Q+A and failing to provide adequate face time with management and the board.
Preference for Hybrid Meetings Internationally: While virtual-only AGMs are prevalent in the U.S., hybrid meetings, combining virtual and in-person formats, are preferred internationally. Hybrid meetings saw a 9% increase globally in the first six months of 2023 compared to 2022.
Institutional Investor Support: Major institutional investors like Vanguard, BlackRock, and State Street Global Advisors generally support virtual-only AGMs, provided they maintain shareholder rights, emphasizing the importance of not limiting shareholders' ability to ask questions.