The number of younger and more diverse traders accustomed to all things digital spiked during the COVID-19 pandemic. At the same time, virtual shareholder meetings transformed from a novelty to a necessity and the norm. Moving ahead, in-person meetings likely will be replaced with VSMs or hybrid meetings. This is creating opportunities for issuers and brokers to improve shareholder engagement and participation in proxy voting.
“Online trading is one of the most successful industries created by the Internet revolution,” declared the Massachusetts Institute of Technology (MIT) in a 1999 report.
Babies entering the world as online trading was starting to take off are now fully grown adults, with jobs, maybe kids of their own, and they account for an increasing proportion of shareholders. According to 2020 figures from Gallup, around a third of U.S. adults aged 18-29 own stocks.
The online trading industry may have been thriving in 1999, but more than two decades later, it has become ubiquitous. Accounts opened by young people spiked during the COVID-19 pandemic as they were tempted by the profit-making opportunities of turbulent markets. This has led to greater diversity among the shareholding public as well as one of the bigger social changes resulting from the pandemic.
Shareholder Meetings Are Late to the Digital Party
For a generation born after the invention of the internet, the notion that the entire investing experience might be anything other than digital could be met with a surprised emoji face. However, going back to 2019, one of the primary opportunities for investors to engage with public companies – the annual shareholder meeting – was a distinctly analog experience.
In that year, only 318 out of approximately 4,400 listed companies opted for a virtual shareholder meeting (VSM) and the growth trend from previous years was moderate. The onset of the pandemic in March 2020 made VSMs a sudden necessity. Its continuation into 2021 ensured that VSMs remained predominant this year. What was only recently a novelty is now familiar, making it hard to imagine a return to physical-only meetings once the pandemic is over.
Shareholders Are Changing, but Engagement Is Easier
If the trends continue, and shareholder meetings of the future remain mostly virtual or hybrid events that attract a younger and more diverse set of attendees, what does that mean for meeting and proxy voting formats?
Firms need to embrace the trends of demography and digitalization that are reshaping shareholder behaviors. In an era of app-based trading, shareholder activism and meme stocks, the inability to flexibly adapt to changing expectations may amass problems. Issuers and brokers need to take advantage of the latest communications tools available, explore the concerns and preferences of retail shareholders, and update their year-round engagement plans.
And Mediant can help. We have enabled investors to vote via text and on an Alexa device. Brokers can use in-app push notification to drive their investors to vote. We offer a platform that investors can access and vote all their shares in a single location for ease of use. For brokers and issuers, it comes down to using technology to meet these younger and more diverse investors where they are.
The online revolution and its impact on trading may be traced back to 1999 or even before, but it is far from over. Fortunately, this has created opportunities to improve shareholder communications leading to outcomes that are all on the upside: better shareholder relations; greater predictability with proxy voting; and avoidance of surprises.
For more information, contact us.