A recent survey revealed that the majority of retail shareholders now support digital delivery through key touchpoints such as the AGM and dividend payments. However, over a third of retail shareholders still receive cheque dividends. What do shareholders really want, and how can issuers ensure they meet the needs of current and future shareholders?
In 2017, ITV became one of the first FTSE 100 companies to move to a completely paperless system. As part of our ongoing dividend series, we explore how one of the UK’s largest media companies has transformed the shareholder experience in collaboration with Link Asset Services.
Over the last few years, ITV’s management have been presented with the same challenges faced by many UK corporates – rising costs and a large base of disengaged, uncontactable retail shareholders. With cost saving initiatives remaining an important issue, the need to modernise shareholder communications was becoming increasingly important and ITV’s Secretariat team, decided to act.
In 2016, Helen went to the Board with a proposal to move to an entirely digital system, removing all cheques, dividend confirmations and proxy cards. Her proposal was met with immediate support from the Chairman and the Board, who recognised the benefits to shareholders and of increased efficiencies and reduced costs.
25,000 dividend recipients and 50,000 proxy card recipients – where to start? ITV’s Articles of Association had been changed to allow much of what was proposed but a few minor amendments were needed, which were approved by shareholders in 2016. With governance and change management a priority, it was then necessary to consider the processes and communications around the change. Key to this was Helen’s partnership with the Chairman, to ensure that support was coming from the very top.
“We had been considering how we communicate with our shareholders - in an increasing digital environment - for some time. Digital communication is much easier and secure for shareholders and for the company. In addition, issuing cheques, proxy cards and other paper communications to shareholders is costly, especially because we only had minimal engagement. Link calculated the potential cost savings and mapped out the process for moving to digital. The arguments were compelling!” Helen Tautz, Director of Secretariat and Operational Risk
With the necessary governance in place, Link and ITV worked together to implement the 'digital-only’ message across all communications platforms and channels. They mapped out the customer experience for all current and future shareholders, beginning with the very first piece of communication a new shareholder would receive – the welcome pack.
Thanks, in part, to this comprehensive approach, Helen and her team found that the change was generally well received by shareholders and complaints were few and far between. Voting levels have been maintained and the new systems passed without comment at the last AGM. Helen attributes the successful implementation of the project to a few key areas:
While some shareholders may struggle to adapt to new systems, ultimately, technology can play an important role in enabling greater engagement. With 100% of under 30s supporting digital dividend delivery, for example, companies need to ensure that they are adapting their systems to cater for the shareholders of the future.
“As shareholder engagement rises further up the corporate agenda, methods of communication with corporate and retail investors need to evolve. With the growth of digital communications and platforms alongside traditional channels, issuers and administrators have a vital role in working together to make all choices available for shareholders.” Jai Baker, Head of Industry at Link Market Services
Link Asset Services is the UK’s largest registrar, and the first to offer dividends via CREST. We are committed to working with issuers such as ITV to progress towards the digital goal, and provide investors with more choices in how they interact with companies. Together with our clients, we will continue to review the shareholder experience and explore innovative new ways of delivering content and payments to shareholders.
Clients who are interested in moving to a paperless strategy should contact their Relationship Manager.
Some of the views and opinions expressed in this article are those of the client and do not necessarily reflect the opinion of Link Asset Services or any other company in Link Group.