Effectively Engage with Your Retail Shareholders

Retail shareholders are are no longer passive investors—they are a growing and influential force in corporate governance. In recent years, retail investors have played a decisive role in major shareholder votes, shifting away from the traditional 'management-friendly' mindset. Companies must proactively engage with their retail base to stay ahead of activism, secure critical votes, and maintain shareholder trust.

Why Retail Shareholder Engagement Matters

Unlike institutional investors, retail shareholders are not required to vote their shares at annual or special meetings. As a result, over 80% of retail-held shares go unvoted, often due to:

• Complex proxy materials that are difficult to navigate
• Lack of awareness about the impact of their vote
• A perception that their vote does not matter

However, companies implementing strategic retail outreach have seen retail voter participation increase two to three times, significantly influencing voting outcomes.

Offense vs. Defense: A Year-Round Approach

Offense: Secure critical voting

A well-engaged retail shareholder base can be the deciding factor in:

• Approving M&A transactions
• Strengthening Say-on-Pay support
• Electing directors and approving equity plans

Defense: Proactive Engagement to Mitigate Risk

Retail shareholders are increasingly vocal and engaged, significantly when performance declines. If ignored, they may:

• Align with activist investors
• Vote against incumbent directors
• Oppose compensation proposals

Building relationships before a crisis emerges ensures retail investors are informed, engaged, and aligned with the company's long-term vision.

Retail shareholders comprise a company’s registered owners and a significant majority in number of Non-Objecting Beneficial Owners (NOBOs). Registered owners can be obtained from the Transfer Agent, while NOBO lists can be obtained from Broadridge and the other proxy intermediaries.

Unlike institutional investors, who have fiduciary responsibilities to vote shares they hold on the record date at annual and special meetings, retail investors are under no such obligation and often ignore their proxy materials. As a result, more than 80% of these shares often go unvoted, partly due to the misconception that their participation is unnecessary. However, with targeted outreach, retail voter participation can increase by as much as three times, which has a profound impact on voting results.

Regular outreach—whether annually, semi-annually, or quarterly—engages retail shareholders in company operations, increases participation in shareholder meetings, and creates long-term value. Over time, these investors will become more accustomed to voting at meetings, which is especially important during periods of activism. A well-engaged retail base can counterbalance institutional negativity and reduce costs in the long run.

Looking Ahead: Building a Stronger Retail Engagement Strategy

Retail shareholders are an untapped source of support that can significantly impact voting outcomes, governance decisions, and long-term shareholder engagement. Companies that proactively educate, engage, and empower retail investors will benefit from higher participation rates, more substantial shareholder alignment, and reduced activism risk.

By implementing a structured and transparent engagement strategy, companies can ensure their retail shareholders remain active participants in the company's future.