The makeup of a shareholder base can vary significantly from company to company. Kering, a global luxury group based and listed in France, is controlled by the Pinault family, which owns roughly 42% of the company’s share capital. The remaining shares are held by a mix of institutional investors, including both active and passive investors, sovereign funds, and ESG funds, as well as individual shareholders, mainly domestic, accounting for 4% of the capital.
As is the case with many multinational companies, Kering’s investor relations strategy centers around attracting and retaining investors who prioritize long-term performance and align with its vision. Based on this objective, Kering adopts a two-pronged strategy.
- In routine calls and communications, the Group maintains a consistent message that applies to all shareholders, regardless of their investment horizon or investor type. This approach is rooted in the need to ensure equal access to information for all investors and shareholders, as required by its status as a listed company. However, recognizing that long-term and short-term shareholders may have divergent perspectives on certain issues, Kering customizes its roadshow meetings to cater to specific investor types. Depending on the concerns and interests of each group, Kering assigns different members of its engagement team to facilitate discussions and address relevant topics accordingly. For example, a large institutional investor may bring a team of 5-10 people, including portfolio managers, analysts, ESG professionals, and other managers to a given meeting. In response, Kering might also bring in various experts in different fields to thoroughly address potential questions, notably when it comes to ESG issues.
- Complementing its broader approach to ESG demands, one-on-one engagements with shareholders still play an integral role at Kering – especially in proxy voting. While standard proxy voting policies exist, a one-on-one conversation before AGM season can be a prudent form of engagement. Both companies and shareholders can directly interact on issues of mutual concern – beyond standard proxy voting policies.
Over the past few years, Kering has undertaken ESG initiatives, driven by its strategic vision and commitment to fostering a more sustainable business model, empowering Kering to fulfill the escalating expectations of investors in this area. As recently as 2017, Kering was only getting a handful of questions on the topic, all from ESG specialists. Over the past few years, this has expanded to fund managers with broader mandates weighing in on ESG issues as well. Responding to this increased demand, Kering went on its first ESG-themed roadshow in 2018 and began incorporating feedback from targeted investors into its future presentations – and ultimately into its overall investor communications strategy.
After appointing a Chief Sustainability Officer to its Executive Committee in 2012, Kering has proactively taken various measures to anticipate societal expectations and meet the demands of its long-term shareholders. At the board level, in addition to a Sustainability Committee, Kering has made strategic hires and appointments of directors with substantial expertise in ESG issues to actively engage with investors. This includes a lead independent director, whose role is defined in the board’s internal rules, and a board member specifically focused on climate change. At the operational level, the Investor Relations function includes an ESG team, led by an ESG IR Manager responsible for coordinating engagement with investors and analysts on ESG matters. This organizational structure has allowed Kering to expand the scope of their ESG roadshow, including extending the duration of the event and increasing the number of investors and shareholders met. Additional speakers, including the Chief People Officer in 2021, have been involved in these roadshow efforts.
Considering the discussions during the roadshows, the company has implemented measures such as revising the structure of remuneration incentives to align with long-term goals. This includes adopting a transparent Free Share Plan based on a set of performance criteria, as opposed to an existing phantom stock plan that was viewed as opaque by investors. The revised remuneration structure incorporates non-financial (environmental and social) key performance indicators (KPIs), reflecting Kering’s commitment to transparency and accountability.
Overall, a combination of engagement strategies is needed to unlock shareholder value. Hosting one-on-one engagement opportunities for both sides to express their stance lays the groundwork for alignment between both parties. Incorporating feedback from investors on roadshows, evolving trends, and timely topics communicates that the company is listening to the needs of its shareholders and is integrating them into their long-term strategy. Kering’s shareholder base might look different from other companies due to its large insider ownership, but its comprehensive tactics have nonetheless helped it attract a balanced, long-term shareholder base – a key to Kering’s long-term success.