Toward a Dialogue With Shareholders

In principle, corporate directors have embraced greater transparency and communication  with shareholders through various organizations including the Business Roundtable and the National Association of Corporate Directors.  Yet individually, most directors are reluctant to interact with shareholders.  Many invoke (while secretly expressing gratitude for)  Regulation FD.

“Communicating is not in our DNA,” one director confided.

At a minimum, boards need to develop their own communication policies to establish “Rules of the Road.”  That is, what should individual directors do when they are called at home by shareholders? Who represents the board to the media and under what circumstances? How does the board get important third party information without it becoming adversarial.

Given the shift from a director-centric to a shareholder-centric world, boards would be well advised to begin discussions about their approach to communication as they begin to craft policies.  In the meantime, shareholder expectations are growing.