A Holistic Approach to Investor Communications

I have read numerous articles in recent months that suggest a divide between companies and their shareholders. This should not be happening. The Directors and Senior Executives are appointed to run a company and deliver returns to shareholders who have contributed hard earned money in the hope of better returns than a bank can offer.

The crux of the matter is the dialogue between the two. The more open and informative this dialogue the happier the shareholders are likely to be, which means engaging the shareholders in communication.

Historically the annual report has been embroiled in legislative compliance making it bigger and more difficult for the average shareholder to understand. The recent change in Australian legislation (permits listed companies to publish their annual reports online and only supply printed reports to shareholders that specifically request them) provides the opportunity to look at the entire shareholder communication more holistically ie to stand back and assess the effectiveness of the communication in engaging with the shareholder as well as the effectiveness against the dollar spend.

Many companies are slow to pick up on this new opportunity, happy to continue with the status-quo because that is what they know and are comfortable producing. In reality, they are uncomfortable with the change process. This comes at a cost to both the company and its shareholders.

Many consultants are unaware or reluctant to offer appropriate advice, as it comes at a cost to their own service. Many PR companies are unaware of how new media can be used effectively and to deliver cost savings. Designers, printers and share registries all stand to lose by the reduction and emphasis on print. This perpetuates uneconomical and environmentally damaging practices.

The environmental benefit is one that very few people are looking at or even concerned about. Click here to read more on the environment. (Click here to environmental issues on article below)

Some companies have adopted practices that deliver staff bonuses on savings made against a nominated budget, driving them to seek lower prices often at the cost of effective communications.

So how can companies create effective dialogue with their shareholders?

Making the most of technology today means using the internet instead of printing and mailing. Digital technology is now used for printing small quantities cost effectively. Consider separating the legal compliance from communication to more fully engage with shareholders eg communicating the achievements and future prospects of the company.

Online best practice does not include uploading a PDF of the printed report. Shareholders now demand faster and easier access to information. Companies also need to keep in mind the sight impaired and provide an online solution that can be accessed by electronic screen readers. Further engage shareholders with a video presentation from the Chairman or CEO or both. Give shareholders the opportunity to communicate via email - this is non-confrontational and gives recipients the opportunity to think about their response. Adopt online voting instead of the traditional printed proxy forms. AGM presentations should be webcast, so that non-attending shareholders do not feel disadvantaged.

Think outside the square. Put yourself in your shareholders’ shoes.

Companies need to focus on effective communication not the cheapest.

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