This webinar focuses on a discussion regarding how changes in corporate governance approached by the institutional investor communities can impact international investor relations strategies for global companies. Learn practical advice on how the corporate governance approach of institutional investors can impact your investor targeting goals. You can view a recording of the webinar here: https://youtu.be/bkC2Wb3lo5Y

1. CMi2i Annual Investor Survey and Market
Developments
Corporate Governance Trends for 2016
Changing Investment Behavior
The Rise in Activism
06/15/2016

2. SPEAKERS
2
Mark Simms, Chief Executive Officer, CMi2i
Mark was a co-founder of Capital Precision and was its CEO until June
2013. For 20 years he has specialized in the provision of Capital Markets
Intelligence Services to some of the world's largest companies. Prior
to founding Capital Precision, Mark was CEO of Ilios Europe and has held
senior Business Development positions within the Investor Relations
industry, including at Thomson Financial and ICV Ltd.
Bob Power, Vice President of Corporate Services OTC Markets Group
Bob focuses on helping companies that trade on the OTCQX and OTCQB
markets provide their investors with a transparent trading experience in an
efficient and cost-effective manner. Prior to joining OTC Markets Group, Bob
spent over 20 years at the NYSE and NASDAQ working with publicly traded
companies to increase engagement with their investors. Bob has a BA from
SUNY Oneonta and an MBA from Pace University.

3. TOPICS TO BE DISCUSSED
• Preparing companies for the rise of shareholder "activism"
• How regulatory changes effects shareholder behavior
• Understanding the trends of your current and future shareholders
• Investors impacting IR activity and future market drivers
3

4. WHAT WE DO
CMi2i specialises in the provision of
– Capital Markets Intelligence (CMI)
– Investor Relations (IR) Services
– Proxy Solicitation and Corporate Governance Services
Commissioned by both Equity Issuers and their Advisors
• Our CMI analysis is applied extensively to both corporate transactions and “financial
calendar” Investor Relations
• Our Proxy Solicitation team has extensive experience gained from managing numerous
high profile Corporate Transactions and AGM/EGM’s
• Our industry expertise provides our clients with the basis from which to build successful
IR and Proxy Solicitation Programmes, and the tools to conduct effective corporate
transactions
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5. 5
• Our findings reflect the views of a range of critical stakeholders from directors of
Corporate Governance and those responsible for proxy voting from influential global
institutional investors.
• The purpose of the survey is to identify the key Corporate Governance issues
which investors are likely to monitor as we enter 2016. Our focus was to assess
which of these will affect investment decisions.
• Corporate Governance and/or Proxy Voting teams at leading institutional investors,
from both Europe and the US, managing in excess of US$ 10.4 trillion assets,
participated in the survey. A wide range of active/passive fund managers contributed.
THE SURVEY METHODOLOGY

6. 6
• Remuneration and Board Elections are still the key Corporate Governance areas
which Investors will look to scrutinise in 2016.
• 58% of respondents believe issuers do not provide sufficient disclosure on their
risk management policy and internal control process information.
• 50% of investors believe Issuers in general do not have the relevant risk
measures in place to deal with the increasing threat of cyber-security.
• 61% of investors expect their level of engagement to increase in 2016.
• 94% of respondents have been approached by other shareholders to discuss
Corporate Governance issues or concerns in the lead up to a shareholder
meeting.
• Share blocking* is the most common country practice which prevents investors
from voting.
*A mechanism, which provides for a cut-off date before shareholder meetings so that share transactions taking
place after this date cannot entail the transfer of the voting rights.
THE SURVEY HIGHLIGHTS

7. 7
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Initiated by Investor Initiated by Issuer Difference
Graph 1: Topics of discussion: Engagement Initiated by Issuer Vs Engagement Initiated by Investor
SHAREHOLDER ENGAGEMENT

8. 8
RISK MANAGEMENT
41%
59%
Yes
No
Graph 2: Do issuers provide sufficient
disclosure on their risk management policy and
internal control process information allowing
investors to sufficiently evaluate them against
their internal guidelines/policies?
50%50%
Yes
No
Graph 3: Do Issuers generally have relevant risk
measures in place to deal with the increasing
threat of cyber-security?

9. 9
Graph 4: Respondents commented on whether
they have been approached by other
shareholders to discuss Corporate Governance
issues or concerns in the lead up to a
shareholder meeting?
94%
6%
Yes
No
Graph 5: Respondents commented on
whether this level of engagement over the
last 3 years has Increased, Decreased or
Remained the same?
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
Increased Remained the same Decreased
SHAREHOLDER COOPERATION

10. THE STEWARDSHIP CODE
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11. THE IMPACT OF CORPORATE GOVERNANCE
To both existing shareholders and to new investor targets.
– There has been significant increase in the assessment of how well a company is
run to the investment decision making process.
– More and more funds are bringing Corporate Governance monitoring “in-house”
– More and more funds are integrating their CG Teams into Trading Floors
– 94% of Investors stated that they have been approached by other investors to
discuss Corporate Governance related issues in the lead up to a shareholder
meeting
– It is vital to understand the Target Institution/funds voting policies on Corporate
Governance issues
– Implications for IR - are you inviting the foxes into the hen-house?
11

12. THE CONVERGENCE OF IR AND CORPORATE
GOVERNANCE
– There has been an increasing need for companies to communicate with their
shareholders (“owners”) simultaneously at both the Portfolio Manager and the
Corporate Governance level.
– This is being driven by Institutions becoming increasingly active (and even
“activist”) in their investment approach.
– This means that there needs to be better coordination between the IR Function
and The Secretary of the Board to ensure that the investment proposition
includes the Corporate Governance policies, as investors are increasingly
including this as part of their investment decision making process.
– Increasingly it is as important to understand how they will behave as a
shareholder as it is to understand why the shareholder has invested.
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13. IMPORTANCE OF CORPORATE GOVERNANCE
13
LGIM believes it is important for investors and companies to form a trusting
long-term relationship and enter into constructive dialogue on contentious
issues. This is mutually beneficial to both parties as there is a better
understanding of views and expectations which forms the basis of high-quality
decision making and good judgement. As a strong supporter of the
Stewardship Code, LGIM feels that it is its duty to be accountable for its
clients’ assets and ensure that it upholds the highest corporate
governance standards in the global financial market.
Legal & General Investment Management response to Stewardship Code

14. IMPORTANCE OF CORPORATE GOVERNANCE
“In a recent Aberdeen Asset Management study conducted among 300 global financial decision-
makers, governance was found to be an integral factor when selecting and analysing
investments. Almost 90 per cent of respondents considered effective governance to be a
critical driver of investment performance”.
“Asset managers have a unique role as responsible stewards in the companies in which they
invest. Some 85 per cent of those we surveyed said asset managers should engage with the
companies in which they invest client funds, both at the pre-investment due diligence phase
and at regular intervals subsequently”.
“At Aberdeen, our global approach to investment is to think of ourselves as long-term owners of
the business rather than short-term tenants of the shares. We resist the temptation to focus
on “market noise” and focus on each investment as if we were buying the entire
company, and making a long-term commitment to it. Our time horizon is aligned with those of
the companies in which we invest, not with market trends. Good governance and stewardship
are essential to our approach”.
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15. EVEN INDEXERS CAN NO LONGER BE CONSIDERED
“PASSIVE”
– Vanguard stated that they are now “wielding their vote”
– As the largest Fund Family and the biggest Indexer, (so has to hold whether they like it or not)
it came as a surprise when Glenn Booream announced that
“We have a dozen Analysts for whom Corporate Governance and engagement is their
only job”
“Our active engagement demonstrates that passive investors don't need to be passive
owners”
– But why? “Good Corporate Governance supports good returns”
– It is worth remembering that they also stated they work closely with Black Rock and State
Street and between them they hold an average of 16% of every U.S stock
– Reuters Breaking Views Jan 2016 “Vanguard is rear-guard in Vivendi's Italian coup”
– “Vanguard was an unexpected rear-guard in Vivendi’s Italian coup. French funds helped the
media group win four board seats at Telecom Italia, but it also was backed by long-term
holders, including portfolio managers at the $3 trillion U.S. mutual fund company, newly
released data shows. Even passive investors can’t be taken for granted in this age of activism”
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16. SOVEREIGN WEALTH FUNDS BECOME ACTIVE
“Norges Bank to withdraw from 52 companies citing reliance on coal power”
Norway’s sovereign wealth fund (SWF) will withdraw its investments from 52
companies for being too reliant on coal as part of the bank’s continuing
attempts to fight climate change through its investment decisions.
A number of high-profile energy companies, including the UK’s Drax,
FirstEnergy in the US and Tata Power in India, are to be excluded from Norges’
Government Pension Fund Global, estimated to be worth $860 bn.
“Executive Pay crackdown by Norway’s huge public fund”
“Norway's sovereign wealth fund, the biggest of its kind, plans to target
excessive executive pay at the companies it invests in” BBC News
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17. THE RISE OF SHAREHOLDER ACTIVISM
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“Activist shareholders are shaking up corporate boardrooms in record numbers as they
look to exert their influence at a time of swelling company cash piles”.
City AM 2016
“Incidents of shareholders pushing for change in Europe have risen 126 percent since
2010 (and with a 289 percent increase in such activity in the US in the same period)”.
Linklaters
“There is now a huge universe of funds that believe activism can optimise returns,” Josh
Black, Activist Insight
"As proven in the US, no company is immune from activist attention, even the largest
publicly listed firms,” Oliver Parry, The Institute of Directors.
“Activist shareholders may double the number of European companies they’re targeting in
2016, and some businesses in the region are ill-prepared for the onslaught” Capital
Access

18. THE RISE OF SHAREHOLDER ACTIVISM
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Investor Activism Drivers
The interaction by a Hedge/Activist fund with an investee company for one of three
reasons:
1. Economic – (to release or create value)
• Divest or demerge non-core businesses
• Obtain a seat on the board to steer strategy
• Replacement of CEO or other Directors
• Release of capital back to shareholders -Microsoft
2. Corporate governance driven
• Populist activism – remuneration, contractual arrangements, etc.,
• Institutional activism – pre-emptive rights for fund raising, independence of
boards, etc.,
3. Legislative change resulting from public opinion
• EU capping banking and fund manager bonuses
• Swiss laws on excessive remuneration

19. WHERE ACTIVISTS APPEAR!
Activist Investors Geographic FocusCustodian
Baupost Group GlobalState Street
Blue Clay Capital Management United StatesGoldman Sachs
Blue Harbour Group United StatesGoldman Sachs & JP Morgan Chase
BlueMountain Capital GlobalBarclays Capital, Citigroup, Goldman Sachs, Morgan Stanley
Buffett Partnership Limited United StatesBarclays Capital, Citigroup, Credit Suisse Securities, Goldman Sachs, HSB
Bulldog Investors United StatesGoldman Sachs & JP Morgan Clearing
Cartica Management GlobalState Street
Cevian Capital EuropeUBS AG London
CIAM GlobalMorgan Stanley
Corvex Management United StatesJP Morgan Clearing
Elliott Management Corporation GlobalMorgan Stanley
Engaged Capital United States & CanadaCredit Suisse Securities & Goldman Sachs
GO Investment Partners Europe & JapanJP Morgan Chase
Greenlight Capital GlobalCitigroup & Goldman Sachs
H Partners Management United StatesGoldman Sachs & Merrill Lynch
Icahn Associates Corp. United StatesBarclays Capital, Citigroup, Credit Suisse Securities, Goldman Sachs, HSB
JANA Partners United States & CanadaCredit Suisse Securities & Goldman Sachs
Kerrisdale Capital United StatesGoldman Sachs & Jefferies
Marcato Capital Management United StatesGoldman Sachs & Morgan Stanley
Orange Capital United StatesMorgan Stanley
Perry Capital GlobalGoldman Sachs & Citco
Pershing Square Capital Management United States & CanadaGoldman Sachs & UBS Securities
Sandell Asset Management GlobalCitigroup & Credit Suisse Securities
TCI Fund Management GlobalGoldman Sachs & Morgan Stanley
Third Point GlobalGoldman Sachs, State Street & JP Morgan Chase
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20. CORPORATE GOVERNANCE RISK ASSESSMENT
• A corporate governance risk assessment should include the
following research/analysis:
• An analysis of the investor base to quantify the allegiance to the Proxy
Advisory Agencies (“PAAs”) and their level of influence over the voting
outcome.
• An analysis of the voting policies of the PAAs and the top institutional investors
to gauge the voting outcome of a shareholder meeting.
• Assess the corporate governance risks associated with the resolutions
proposed and then develop, and if need be execute, a strategic shareholder
communication campaign in order to maximise the approval rate for resolutions
in line with management.
• General recommendations are provided where the company can strengthen
their corporate governance standards to align with global best practice, with
particular respect to transparency and disclosure of information.
• Investors are screened to their degree of “activism” providing an insight as to
those who are likely to vote and how they behave with contentious resolutions.
• Voting Intelligence Profiles are provided on institutional investors which include
proxy voting policies, contact details of the decision vote makers and the voting
record at the previous shareholder meeting.
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21. 21

22. THE EMERGENCE OF THE CORPORATE
GOVERNANCE ROADSHOW
– If you can see that there is going to be little support from existing shareholders
AND/OR target investors to your Corporate Governance policies and resolutions, you
have to meet and explain your strategy.
– There is a clear disconnect between what the companies think the investors want to
hear and what they actually want to discuss.
– It’s is not always about Remuneration!
– The Corporate Strategy and how the company manages risk is equally as important!
22

23. APPLYING THE CORPORATE GOVERNANCE/PROXY
STAGES
23
Analysis of draft
resolutions
Analysis of previous
years’ voting results
Roadshow
(shareholders + proxy
advisors etc.)
Shareholder
communication
strategy
Analysis of voting
results and future
solicitation
recommendations
Analysis of
Shareholder ID • 1. Preparation
• Pre-Meeting Risk Assessment
• Resolution Analysis Monitor
• Governance Engagement
Roadshow
• 2. Execution
• Proxy Solicitation
• Daily Reporting / Vote
Reconciliation
EGM/AGM
• 3. Post-Meeting Analysis

24. FUTURE DRIVERS: THE SHAREHOLDERS RIGHTS
DIRECTIVE
– It is widely believed that the financial crisis revealed that shareholders in many cases supported investment
managers' excessive short-term risk taking.
– It is also widely believed that there is clear evidence that the current level of “monitoring” of investee
companies and engagement by institutional investors and asset managers is inadequate.
Both of which have been identified as the main drivers for suboptimal corporate governance and
performance of listed companies.
– The Shareholders Rights Directive is likely to advocate MORE long term shareholder engagement and
enhanced transparency between the companies and their investors
– The Shareholders Rights Directive is likely to facilitate better communication between Issuers and their
investors by creating a better framework to enable shareholders to be identified
– First, the Directive requires asset managers and institutional investors to develop a policy on shareholder
engagement. Inter alia, the policy is supposed to determine how asset managers and institutional investors
engage with the investee company, cooperate with other shareholders, use proxy advisor services and
monitor company's performance Clifford Chance Briefing Note, October 2014
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25. FUTURE DRIVERS: SOLVENCY II
General Insurance, Life & Pension sector
– Up to a quarter of direct European equity investment
– Almost a third of investment within hedge and alternative investment funds
Asset Allocation
– Potential to reduce the asset allocation to equities in favour of fixed interest,
direct real estate and alternative asset classes
– Debate remains on exact impact but disclosures in Q3 2015 will provide more
information
Equity investment
– Equity investment may become more short term as medium/long term liabilities
backed by alternative asset classes (asset backed, fixed interest)
– Greater risk taking, benefitting innovation, disruptive industries and challenger
brands
Implemented in January 2016
– Solvency II has already altered the nature of Insurance, Pension and Assurance
investment in equities
25

26. FUTURE DRIVERS: IORP II
IORP II
– Applicable from January 2018 to Defined Benefit (DB) pension schemes;
– UK and Dutch schemes most affected - €2.9tn of assets under management;
– Similar risk framework to Solvency II;
Solvency II & IORP II
– DB schemes have been de-risking for a decade;
– Equity asset allocation (UK & Netherlands) has fallen from 49.4% (2008) to 35.9%
(2013 – last available figures);
– Almost €50bn of buy-ins/outs conducted between DB and insurance companies in the
last 12 months – an accelerating trend;
– De-risking with insurance funds from January 2016 must be Solvency II compliant –
“new money” will be allocated according to insurance funds’ methodology;
Implications
– DB pension funds are likely to “transfer” assets/liabilities to insurance funds at an
accelerated rate over next five years in response to IORP II;
– Transfers need to match Solvency II asset allocation – equity proportion will fall;
– Shareholders will change from DB to insurance with greater mutual fund allocation –
shareholder behavior will also change.
26

27. FUTURE DRIVERS: MIFID II
Investment research
– Sell-side coverage may tend towards thematic, cross-sector idea generation
– Innovation in economic drivers and valuations likely
– Reduction (abandonment) of “care & maintenance” research
– Payment for research may shift towards specific projects (buy-side) or commissioned
by issuers
Corporate access
– Institutions may not be able/willing to pay for corporate access
– Shifts economic model for road show/investor contact
– Issuers are likely to have to manage investor contact without banks/brokers assistance
Implementation by January 2018
– MiFID II is already altering the way in which the sell-side interacts with the buy-side
– This change will accelerate over 2016 and 2017
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28. A CAPITAL MARKETS ENGAGEMENT PLAN
Step 1 - A “stock take” of where the company is at the moment
– Global Shareholder Audit
– Full survey of the Institutional Investment Community's perceptions
– Are the Corporate Governance policies aligned?
Step 2 – Setting the Objectives
– Determining the preferred types of Institutional investors
– Matching the process to future Corporate Governance issues
– Structured Institutional and Retail Investor Targeting Programme
Step 3 – Positioning the company
– Message Development
– Resolution setting
Step 4 – Capital Market Engagement
– Corporate IR and Governance Roadshows, Capital Markets Days, Investor Conferences
– Post Event Analysis, Quantitative, Qualitative
28

29. CONTACT
Mark Simms
Chief Executive Officer
+44 (0) 203 824 1451
mark@cmi2i.com
Bob Power
Vice President Corporate Services
+1 212-896-4406
bob@otcmarkets.com