“This also raises the bar for issuers by ensuring management and boards truly form a defensible argument rather than simply relying on a tendency for shareholders to support the incumbents,” Freedman says.
This particular trend in active communication is being helped by the fact that some funds are taking an active approach to voting, rather than the traditional “passive” approach associated with their investments.
“Just because a fund is passive when it comes to investing doesn’t mean they are passive when it comes to governance,” explains Freedman. “If you are targeting a larger cap index owned company this element plays a significant role in the potential outcome.”
Freedman will be a panelist in The Broadening Out of Engagement and Activism: Regional Views on Global Trends discussion at the Global Shareholder Engagement & Activism Summit on Sept. 28-29 in Toronto, Canada.