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Create Honest And Effective Shareholder Communications

With recent events at Royal Dutch/Shell and Walt Disney Company, shareholder relationships is something you want to consider more carefully. Financial Times describes Sir Philip Watts (Royal Dutch/Shell) as the king who didn't talk, and Michael Eisner (Disney) as the one who didn't listen.

Investors actions were the results of many events, including concerns about Sir Philip's attitude toward shareholders and poor communications skills. Eisner played both CEO and board chairman was accused of micro-managing the company and putting in place a board of insufficient stature. The break down in communications hurt shareholder relations, and when shareholders speak up, their roles the companies change.

Financial Times recommends that non-executives wishing to avoid the same embarrassments should examine their own boards, asking if the voice of investors is being heard clearly. You can avoid these challenges by communicating honestly and effectively with shareholders.

Here are my own suggestions on how you can communicate honestly and effectively with shareholders:

1. Be clear about your board structure, avoiding cumbersome structures that make it difficult to exchange information in a timely manner. Choose a simple management structure, make it easy to share information between leaders in your company.
2. Keep shareholders in your view right behind your most profitable customers. Your investors can provide a significant amount of revenue to your organization when you need it most. Listen to them, get their feedback just as you would customers.
3. Select a board of prominent leaders who can help solve real problems your company is facing. Your board should serve as a sounding board for executive decisions and a protector of shareholders interests. They are also available to help address problems before they become a crisis.
4. Address conflicts early before they become corporate dramas. Invite investors to ask questions, utilize internal checks to effectively address challenging situations. Have a practice in place to identify and address conflict in the top levels of your company.

/ clearly-communicate | executive-relations /

By Justin Hitt at March 5, 2004 8:25 AM  Subscribe in a reader