Topics Covered
What is proxy solicitation?
Why is proxy solicitation important?
The proxy solicitation process
Digital solutions for proxy solicitation
Getting the greatest value from proxy voting

Proxy solicitation is a method for fostering meaningful dialogue between companies and their shareholders for the purpose of proxy voting. Digital channels can enhance proxy solicitation, leading to improved governance, shareholder decisions, and voting insights. This article discusses proxy solicitation roles, processes, firms, and opportunities, as well as digital methods that support more favourable results.

What is proxy solicitation?

Proxy solicitation involves gathering shareholder votes on corporate decisions. Issuers hire proxy solicitors to reach out to shareholders, provide them with essential information, and encourage them to exercise their voting rights. This process is vital for ensuring quorum—the minimum number of voters—at shareholder meetings, and gathering support for corporate decisions.

Why is proxy solicitation important?

The end of 2024 saw a heightened focus on corporate governance among regulatory bodies and shareholders. For example, recent FCA overhauls emphasize requirements for companies to stay in communication with shareholders.

Shareholder activism, which can lead to unexpected voting outcomes, has become more common and unpredictable as well. “Despite a steeper-than-average slowdown in Q3, 2024 [shareholder activism] activity continues to exceed that of recent years, driven by an uptick in first-time activists,” Barclays reports.

Fortunately, proxy solicitation, with the support of the right technology solutions, can bridge the gap between issuers and shareholders, adding greater fairness and predictability to corporate decisions. Issuers can:

• Gauge shareholder sentiment on key issues

• Mitigate risks associated with shareholder activism

• Ensure transparent and efficient decision-making

While larger issuers often work with proxy solicitation firms, medium and smaller listed companies also need to understand the rules around the process and how to gather necessary votes. Moreover, while proxy solicitors can be useful in helping large issues gather favourable votes, legacy systems in place hinder connectivity between issuers and shareholders.

The proxy solicitation process

As we will find, purpose-built digital tools can make proxy solicitation easier, more predictable, and more effective, even for smaller companies. But issuers must engage in common best practices before any solicitation of proxies can proceed.

Pre-solicitation

Before outreach begins, companies and any solicitation services they employ should conduct an analysis of the shareholder base. This involves identifying key stakeholders, understanding voting patterns, and anticipating potential challenges. With Proxymity Shareholder Insights, connected issuers receive responses in less than 24 hours, providing an accurate breakdown of your beneficial owners and share ownership more efficiently.

Solicitor participation

A proxy solicitor is an internal or partner specialist who is essential to the entire process. They offer:

• Strategic advice on shareholder engagement

• Vote projection and tracking

• Assistance with regulatory requirements

Proxy solicitors ensure the voting process is fair and all votes are counted, which must happen before company leaders may act on the initiatives that have been put to a vote.

Active solicitation

During this phase, companies engage in direct communication with shareholders. This may involve various outreach strategies, including:

• Personalised communications

• Phone calls or meetings with key shareholders

• Digital platforms for real-time messaging and vote tracking

Solicitation of proxies is governed by specific rules, such as the SEC’s Rule 14a-19. An experienced proxy solicitor will know these rules but might need the support of digital tools for efficiency and accuracy. You can learn more about SEC rules on proxy voting in our recent article on the universal proxy rules.

Post-solicitation

After the vote, issuers can analyse the results to gain insights about future shareholder engagement. This phase is crucial for continuous improvement in shareholder relations.

Digital solutions for proxy solicitation

Dedicated digital tools can improve proxy solicitation. Platforms that support real-time communication and data analytics can help companies engage shareholders quickly and with better results. Outcomes may include:

• A comprehensive view of a shareholder base, including registered shareholders, beneficial and non-beneficial owners, movement in share ownership, and any proxy advisory firms

• Real-time voting and vote outcome data, so issuers can anticipate future vote outcomes early and foster timely engagement

Issuers can adopt “digital best practices” that supplement existing methods as a result. They can:

• Improve strategies for engaging shareholder segments

• Personalise messages that resonate with shareholders

• Build relationships beyond annual meetings to foster trust and understanding

• Develop a better understanding of issuers’ shareholder base—including institutional investors, retail investors, and advisory firms

Getting the greatest value from proxy voting

Ultimately, improving proxy solicitation helps companies transform this process from a regulatory requirement into a competitive advantage. In time, successful issuers will view this as an opportunity to foster a more connected, collaborative, and effective corporate environment.

Proxymity Shareholder Insights can help

Proxymity Shareholder Insights Suite helps issuers innovate how they understand and engage shareholders.

With comprehensive shareholder data delivered in as little as 24 hours and real-time tracking of votes, issuers can learn about their shareholder base quickly and make more informed decisions about proxy solicitation.

Visit our product page or contact Proxymity directly by filling out the form below to learn more about our solutions.