Shareholder communication tips for Issuers

A strong corporate governance plan includes a solid communication strategy.  It’s easy for issuers to run off-side of the ever-changing corporate governance trends (such as that invaluable director that happens to sit on too many boards). Even the worst transgressions can be overcome if there has been open, authentic and meaningful communication with shareholders. Here are our top 3 tips for good shareholder communication:

  • Be ready to listen

Issuers are often told to “know [their] shareholders”. That doesn’t just mean identifying investors, it means getting to actually know them. One-way communication delivers the facts that shareholders need to make up their minds, but two-way communication influences shareholder emotions. Since humans use not only facts, but emotions to make decisions, facilitating a two-way communication and soliciting their feedback will increase your shareholder’s confidence.

  • Be transparent

Investors need timely and reliable information about the companies they invest in.  If investors sense that information is being withheld or swept under the rug, they will get intelligence from other sources like bullboards, blogs or online research publications such as Citron Research or Muddy Waters. Investors have access to so much information via the internet, unfortunately, that information is not always accurate.  That’s why issuers need to communicate developments (good and bad!), in a timely and transparent manner: Admitting things could have been done differently takes courage and is praiseworthy, and investors are more likely to understand and forgive if they hear it first from the company.

  • Most of all, BE YOURSELF!

If you don’t wear ties every day at the office, it’s ok not to knot the tie when you’re speaking to investors. It’s much easier to win over an audience by letting them see the natural you than it is trying to be someone else. For instance, always rewrite that presentation prepared for you by someone else so that it reflects your actual manner of speaking. Better still, make extemporaneous notes instead of reading or memorizing a speech.

Every company has its unique challenges and opportunities that corporate governance organizations don’t consider in “one size fits all” policies.  Fostering an ongoing strong, healthy relationship with investors makes it easier to overcome a negative vote recommendation so that you can focus on operating a successful business.