Episode 3 - The convergence of IR and governance functions

In this podcast Peter Fowler, Managing Director at Lumi UK, talks about how the relationship between the investor relations and governance teams has evolved.

In this podcast Peter Fowler, Managing Director at Lumi UK, talks about how the relationship between the investor relations and governance teams has evolved. He looks at how the investor relations team can enhance the corporate governance of an organisation through its strategy and events. Peter also discusses how the AGM as an event is changing, with the return to in-person meetings putting hybrid options fully on the table. He considers what the company secretarial and investor relations teams should be thinking about in the run up to the AGM and how technology can support the event.


RJ: In this podcast, I'm talking to Peter Fowler, Managing Director at Lumi UK, about the convergence of the investor relations and governance functions. Peter, could you introduce yourself and let us know why you think this is an important area of focus for governance professionals.

PF: Thank you so much, Rachael, and it's great to be here. Firstly, I just want to introduce myself and Lumi as an organisation to those of you that don't know Lumi. We are a very well-established organisation that's been supporting Annual General Meetings (AGM), general meetings and court meetings for at least 20 years now in the UK, and principally supporting the registration services behind an Annual General Meeting, as well as implementing our technology to the meetings as well.

You probably best know us for the electronic voting devices that we've been supporting to many FTSE 100 companies over the years. But of course, the last few years have been very much focused on hybrid and virtual meetings.

With our well established solution, we've been supporting lots of FTSE 100 and FTSE 250 companies in delivering AGMs during what has been quite a challenging time using our technology and services. That is not just something that we service here in the UK as we are a global organisation with 11 offices supporting a good 50-plus jurisdictions around the world.

A great example of where we were, to where we are right now, in supporting meetings with this type of technology is that back in 2019, we probably supported about 90 virtual or hybrid meetings. Obviously, we had principally physical meetings only, but 90 used that remote technology. In 2020, we supported 3,500 meetings, and then in 2021, we moved to 4,500.

This year, of course, looks somewhat different. We hope and we feel very positive about the world and where we are right now, and we hope to be on the upside of that. And that comes with a different challenge, of course, for organisations that have now more of a focus on a hybrid meeting, a hybrid annual general meeting. And I think this topic is so interesting because this is what we're really finding now is that organisations and issuers have seen the huge benefits in supporting a meeting in a virtual capacity. And as we come back to hybrid now, it's introducing that annual general meeting that has the physical elements, that has the online elements. And obviously, of course, the combination of the two.

Now what I'm seeing is a big convergence between corporate governance and investor relations (IR). And I think, because of the much wider nature in which you can now target your shareholder base, and because they can participate and be part of your Annual General Meeting, it means that the IR team is being much more involved with the corporate governance team. It’s something I'm seeing an awful lot of, and there's huge benefits that this technology can bring to the Q&A aspects of the meeting.

RJ: Well, thank you very much. It's so interesting how the pandemic has changed so many aspects of work. And this sounds like it's another area where a lot of change has happened.

So thinking about how the investor relations teams are now becoming more involved in the AGM, why do you think a long-term investor relations strategy is important ahead of the Annual General Meeting?

PF: Yeah, absolutely. I think that's a huge focus that the investor relations teams are putting on this.

The nature of an Annual General Meeting historically, as we know it very well, has been one which takes place during the middle of the week, 11am, in a central London location, where only a select number of shareholders of a particular demographic, maybe, could attend. And this Annual General Meeting has always been a very large meeting, of course; it's one of the most important meetings of the calendar year for an organisation.

Now, even more so I think the investors are participating in the Annual General Meeting, not just in the quarterlies and the half-year or the full-year results, but more and more so in the Annual General Meeting, because they have the ability to participate in a number of means. Voting, of course, is one key element of this. But equally, I think it's this concept that you are able to be heard and you can speak, and you can either deliver your question in a written form that will be addressed by the organisation. But also, you can do that in audio form. So I think what the hybrid meeting has really brought to the table is bringing what is a physical meeting and all of the benefits of the physical meeting, but much more in a virtual or remote world. And that's why I think the IR teams have the AGM as very much part of their strategy. I'm sure it always has been for obvious reasons, but even more so now. I think it holds a really strong significance within their calendar.

But what I will say is that the questions that are being received online are much more to the business of the meeting, to the heart of what’s happening within an organisation in that given moment.

But also, the current political environment that we find ourselves in now means that there are more and more diverse questions, but also very, very appropriate and key questions that IR teams are obviously very involved in.

RJ: Yes. And so, do you think that having that greater involvement of the investor relations team, and developing that long-term strategic investor relations strategy, helps to manage those questions that are now coming in this new type of annual general meeting?

PF: Oh, without a doubt, and I've been delivering AGMs for 16 plus years now. I've seen what goes into a Q&A piece and the planning of Q&A in a standard physical meeting. There's Q&A documents, there's Q&A booklets, where you've got many, many, many pages separated by subject areas.

I think now, that's become so much more of a digital form, in the sense that what comes with the technology is the capability for the IR teams to be online behind the scenes categorising and providing that supported answer to the board in that given moment in time. It's also very interesting as well that we are at a place with Annual General Meetings where a lot has been reviewed over the last couple of years, and where general meetings really sat, and whether they were really fulfilling what an Annual General Meeting should be. And now, we have this concept that the quality of questions, because we've had a virtual environment, has been so much better and so much greater; it's really to the heart of what the business is doing. And in that moment, and those are the questions we're receiving. And that's what we're really seeing.

But I think also, what's also interesting in this evolvement of an Annual General Meeting, we hear more and more around this concept of a shareholder engagement event, perhaps being introduced prior to the Annual General Meeting, to help shareholders and investors be more informed about the vote and the voting that they are obviously partaking in as well. But also, I'm seeing more and more Investor Relations meetings following on from the Annual General Meeting. So the use of the technology is not only in that moment at the Annual General Meeting, but it's being extended into a follow-up meeting that is more IR-related.

RJ: So what function do you think these sorts of investor relations events serve in an overall corporate governance strategy?

PF: I think they’re a huge part, aren’t they, of the calendar. What's really happening now is that not only are we probably looking at more of a domestic audience, from an IR perspective, who are attending these meetings but also much more of a global nature to the attendance. And I think what comes with the advancements of technology is, we're very used to these telephone dial-in IR updates, that are effective, but what I'm seeing now much more of is that the IR meeting is becoming much more of an event. It’s much more of an opportunity to showcase and therefore, we are seeing many more webcasting opportunities in a much more formal setting, with cameras on-site filming the directors and the CEO and the chair delivering these IR meetings. And I think, therefore, organisations are trying to step up to the plate. And obviously, it's a great opportunity, as I say, to showcase.

RJ: Yeah, absolutely. Do you think then that corporate governance is enhanced by these kinds of investor relations activities?

PF: I'm sure of that. And I do see that on a regular basis. And I think it's a very well-received platform. It's always been somewhat challenging for investors to be in attendance at all of these meetings that are occurring in an AGM season, but for now, they have a platform in which they can attend multiple meetings in a calendar year or during the AGM season, as we know it, I think is of great benefit to the corporate governance element.

RJ: Yes. And what impact do you think the investor relations events can have on the AGM itself in terms of, I suppose, easing the build-up to the meeting, perhaps?

PF: I think that's a really good point. And I think that's definitely one benefit. I think it's identifying from an issuer’s point of view those critical topics of questions that you're likely to see at the Annual General Meeting [and those questions] being dealt with upfront in these IR meetings can sometimes take the weight out of the Annual General Meeting by having such an inclusive Investor Relations meeting ahead of time. So, yeah, there's a great benefit to the one single platform being used across the entire calendar year.

But I think what we've really struggled with in the two years of the pandemic, especially in that first year in the UK season, was these behind-closed-doors meetings that were occurring, especially in the UK, for reasons beyond an issuer's ability to deal with, because that was the legislation that was in place. And that's all they could ever do at that moment in time.

We saw many markets around the world, especially Lumi, in how we operate globally, we saw many markets adapting much more quickly; for example, Australia adapted to this technology, this virtual environment very, very quickly. So I think there was a real period of time in the UK where investors were somewhat neglected, as I say, it wasn't the issuer’s fault at that time. But I think there was a moment where companies lost touch a little bit with the shareholders, and the investors. And now, on the flip side, what I'm seeing as we live today, is actually the engagement with investors and shareholders is probably stronger than ever and more frequent than ever due to the forms of communication that obviously are available to them. What's really then coming through is that these engaged investors and shareholders are really, obviously participating in these meetings.

RJ: So do you think, from the perspective of our audience of governance professionals, the greater involvement of the investor relations team and their activities can they help to enhance their corporate governance objectives?

PF: I think so. I sit in many, many different planning meetings because it's quite daunting, somewhat in delivering an AGM of this nature. It was daunting, I think, for the issuers when it was more of a virtual capacity, and we will never use the word fully virtual because of legislation reasons, and we can't, but the way in which we were in lockdown meant organisations were effectively hosting these virtual meetings, that was very daunting. You know, that was very challenging.

There was a challenging moment in time where we did everything we could to step up to the plate and support organisations in delivering these meetings. And we did. The premise of this technology, and the premise in which it was developed, was actually always with hybrid in mind. Now we're in an interesting space where hybrid has now become very daunting; the return of physical has become more daunting, actually, than hosting a virtual meeting. So I think the involvement now of the IR teams and group comms teams, supporting the company secretaries and the company secretary teams, is incredibly important. I think I'm seeing it more and more frequently now in the planning meetings that everybody is collectively and collaboratively working together to deliver these Annual General Meetings.

RJ: You talk about this new hybrid world, the first year that this has been a genuine possibility to consider. So what do you think company secretarial teams should be thinking about in the run-up to this year's AGM? And how are they going to approach the challenge of hybrid?

PF: Yeah, it's such a good question and one I could speak to for some time. I think what's really interesting in seeing the notices of meetings that are getting out right now, ahead of the main part of the season; I think there's a fairly common theme in the approach that a lot of organisations are taking. They're almost leading with the online electronic participation first and then suggesting that there is also a physical presence in a physical room that shareholders can come to. I think that's one important thing, and I'm not going to go too much into the advantages of hybrid because I think there are many, but one of the greatest advantages is this inclusivity of all, but also this ability to pivot for the unknown that may surround us. We are living in some unknown times right now, in the build-up to an Annual General Meeting. And that's adding its challenges in itself to organisations, but having this technology that you could pivot to, in a sole capacity, if you had to, is really, really important.

The main focus that the issuers are having in preparing for an Annual General Meeting this year is probably very much surrounding the Q&A period, as it often is. And that's the crux of an AGM sometimes, when we do have shareholders who are physically present, and we do have shareholders who are joining online, how do we take those questions in? How do we moderate those questions in the moment? How do we manage the potential volume? That's never been an issue. It's always been a concern, but it's never an issue. But I think this concept of, you've got a shareholder who's in the room, you've got a question in written form, and you've also got a shareholder who's waiting on the line to verbally address their question.

I think many issuers are thinking, well, how do we deal with this? Do we take one question in the room first, we then go online, in a written form, we then go online in an audio form, and I think conceptually, that works really well, I think that ticks a few boxes. It means you are not disenfranchising one or the other; you are inclusive to all of your audience, no matter where they may be. What helps as well is, one big advantage of the written questions, actually, is being able to hear from shareholders who perhaps don't necessarily have the confidence to speak. Companies are getting early sight of those questions because it was commonly these questions coming in 20 minutes prior to the AGM or during the CEO’s presentation. And companies can take those questions, they can categorise them, they can put them in order. And they can also append some suggested answers, any technical questions that may be coming in can all of a sudden be answered with the support of the IR team, and the group comms team behind the scenes. So I think actually, it's really aiding the effectiveness of a Q&A session to make sure that all points are addressed.

Equally, what you don't ever see, in a physical form, is an ability to have at the end of the meeting a report of all archived questions. A written form that you could place on your website with answers appended to them, which, again, is great for corporate governance and transparency of the questions received.

So I think, on top of all of this, issuers have got [questions including] how are we dealing with the physical room, the size of the room? Are we anticipating a large number of shareholders to come back? And to come back to the AGM? Yet to be seen, I think there are different plans for different organisations based on the legacy data that they have. But I think what I would anticipate is that a much smaller number of shareholders will be coming back through the doors this year because of the online ability to participate in these meetings.

RJ: And what do you think investor relations teams, now that they're becoming more involved, what should they be thinking about from a governance perspective?

PF: That's a really good question. A lot of the time, there is a concept of trying to answer every single question that comes in or provide an answer to the vast majority of the questions. There are a number of cases, of course, in this type of meeting, especially when questions are coming through in written form, that they are almost one of the same type of question. So, therefore, you don't have to respond to every single question because, in principle, you have dealt with a particular subject area. So yes, I think the build-up to the meeting, the IR teams, and the preparation they go through is providing as much support to the company secretary and the board as they can possibly do in the actual live environment of the AGM. Thinking about the unknowns that may occur in this type of meeting is something for them to prepare. But really, and truly, I think nothing almost changes around the preparation of a Q&A, other than you've got so much more technology behind you now to make it so much more effective. And you can be so much more reactive in the moment.

RJ: And so, do you think that the digitisation element simplifies governance and investor relations activity?

PF: Oh, I think so. I really do. I know how much work goes into these. And I know the output of the work that goes into what was a pre-pandemic AGM with Q&A preparation. And I think there's an enormous amount that can now be done. And actually, the IR professionals and teams alike, don't actually have to be at the AGM venue - they can be supporting remotely, they can be supporting from home. And that's another big thing we're finding, of course - it goes back to the realms of anticipating the unexpected, I guess. And we see that a lot, where key people, board members, all of a sudden, the night before, cannot attend the AGM, because of certain reasons. And this is, again, where we're seeing a lot of advantages to this, or key members of staff, where they can pivot, they can work from home, and be effective and supportive.

RJ: Yes. Which again, for the board members, in particular, it enhances your ability to still run that event in the best way possible for the shareholders by having accessibility to board members, even if they're not able to be there physically.

And what do you think shareholders would be looking for in a digital-first IR strategy? That’s an obvious benefit, what would the other benefits be?

PF: From shareholders, I think it's the ability to participate in a remote form and to feel like you are part of the meeting; you're watching the live meeting, you're watching the live video broadcast, you feel included in the process, and in the AGM. That's, ‘I am being heard by either writing in my questions; it being read aloud by a moderator or the company secretary and responded to.’

There are other features with the way technology has evolved in the last couple of years. And the way we are evolving, is of course, is listening to not only shareholders but also the issuers themselves around the advancement of this technology. And one really simple one is the concept of replying directly back to the shareholder.

We are seeing the introduction by some clients this year of video questions from shareholders. So questions, being able to speak live, be seen and be heard, I think is an advancement. It poses a few concerns, I think, to some companies, that's for sure. But equally, it is the future.

So, the shareholder feeling when joining the meeting, to be able to vote live and happily cast my vote, and to receive a confirmation message back to say that my vote was cast, to have my questions read aloud and be addressed, wherever I may be in the world. I think it's great for corporate governance. And I think it's a really strong shareholder engagement opportunity.

RJ: Yes, absolutely. And do you think there's a difference between how you manage institutional investors and how you manage retail investors who perhaps have different priorities, different questions, different things they want to get out of an AGM?

PF: Yes, I think that's a really interesting point. And I think, obviously by its nature, your quarterlies and half-year results and four-year results will probably get much more of the institutional investor involvement at an Annual General Meeting. There was a little bit of an interesting statistic that we were seeing in the last couple of years where perhaps not as many institutional investors were joining these remote meetings. But I think it's starting to grow. That’s definitely the trend we saw in the United States.

But I think, from an institutional point of view, what's important for an organisation behind the scenes is that it is a fully authenticated platform. And when that question comes in, you know exactly who that question is from. So, not to suggest that there's any prioritisation that occurs often, but of course, some of those questions may hold a little bit more weight, depending on who they are, and therefore can be bumped up slightly and addressed in a quicker, more efficient way, perhaps. Both from an institutional holder but also from the company dealing with those types of questions. Again, I think it's a positive piece of technology that ensures that both parties are satisfied, at that moment.

RJ: And would you communicate differently with those two parties in the run-up to the AGM as well?

PF: Yes, I think organisations naturally do. From a comms point of view, an AGM is inclusive for all, and therefore the notice of meeting that goes out is probably focusing a little bit more on the retail shareholder. But equally, institutional shareholders are open to participate as well, both in a voting capacity, as well as a Q&A point of view. A lot of the time, the platform itself is not necessarily only open for the AGM day itself, but is open for the six weeks of the notice. And is open for questions during that time. And so, some of the institutions may well use the platform, in that window, to post their questions. Typically, it's done by email and very direct to the company. But once again, the platform is open for that period of time prior.

RJ: And what technology do you think should meeting organisers be using to make digitised investor relations a reality?

PF: I think we've kind of touched a lot on how the AGM has evolved. And also how the investor relations meetings have evolved as well. From a technology point of view, we reference the platform that Lumi’s supporting, being one, but I think also it's the form in which perhaps the broadcast takes. From a broadcasting point of view, you want to make sure that the shareholder’s experience is really, really strong, and I think having a video broadcast that is of really good quality, with the presentation slides being presented at the same time, with a really nice formalised programme, as we refer to it on a broadcast, I think is really important. And I think that forms a big part of the platform itself and digitising the whole half-yearly results, four-year results, etc., or Annual General Meeting.

But I think, as I said, the wealth of information that's also behind the scenes in a reporting form is that from an IR team's perspective, you know exactly who's participated in these meetings and how long for, and where they've come from. And, of course, how much they were inputting into the Q&A period, etc. So I think that type of technology is key. I think the messaging surrounding the notice and surrounding the IR meetings on the IR aspect of their websites really promoting that. We're seeing that a lot more from issuers now, they're really trying to promote the Annual General Meeting as much as they can and the participation because it obviously has an electronic form. So I think that's something that we're going to be seeing more and more of.

RJ: Well, thank you, Peter. This has been a really interesting, informative discussion about how the investor relations team and the governance team are starting to work more closely together on the Annual General Meeting, and on shareholder engagement more broadly. And it's been so interesting to hear about how technology has actually facilitated this move together of these two teams, and also how, during the pandemic, we've embraced that technology that we've been reluctant to embrace before. So thank you very much for the discussion today. It's been really good to speak to you.

PF: Thank you so much.

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