The shareholder paradigm is shifting: engagement can no longer be limited just to IROs and their teams.
Not long ago, Investor Relations responsibilities were very much limited to the IR pros themselves, while C-suite executives and boardroom directors would rarely communicate with shareholders and analysts directly. However, this model has changed in the years following the global financial crisis, as shareholders themselves are calling for (demanding, even) more direct engagement from the company’s leadership. It’s time that leadership finally answered that call.
Changing Strategies
Many executives and directors have been hesitant to directly involve themselves with shareholder engagement for a variety of reasons: some fear that having too many voices would shatter a unified strategy, while others are wary of undermining their management teams and opening the door for disclosure mistakes. These fears have ultimately resulted in arm’s-length interactions with investors, as well as engagement plans that do not prioritize understanding investors’ interests. While such plans have been considered satisfactory in the past, they are now leaving shareholders wanting more.
Indeed, modern investors increasingly expect more regular contact with company leadership, reports the New York Times, and this is forcing executives and board members to rethink their IR strategies. CFOs in particular are coming under increased pressure to take on IR responsibilities.
According to Paula Loop, leader of PwC’s Governance Insights Center, this is a good thing that poses unique challenges all the same.
Specifically, she says, “companies should focus on how [their engagement plan] will measure success.”
“Getting valuable insights from your most influential investors and addressing their concerns should be the true measure of a successful engagement effort.”
Creating an Open Dialogue
Traditionally, successful investor engagement has been understood in the context of presentations and disclosure reports (that investors may find forgettable, confusing, or some combination of the two), often leading to silent shareholder audiences. In this approach, the brief interaction is largely one-sided, and is therefore antithetical to the give-and-take nature inherent in any productive business relationship.
This idea of exchange, of dialogue and discussion, should be central when it comes to shareholder engagement, and this is why non-IR executives need to start stepping up their involvement with investors. This requires understanding investor interests and directly addressing those interests during meetings.
Perhaps more importantly, the floor must be opened for shareholders to raise any concerns and give the company the opportunity to allay those fears, bolstering the investors’ understanding of the company and its goals. The different concerns and perspectives give leadership teams a unique look into the efficacy of the present strategy and messaging, facilitating informed strategic modification as needed.
Increasing Investor Communication
Of course, adopting an IR strategy that more heavily involves other executives and directors is not without its challenges. Time and money are always a concern, especially when it comes to planning and prioritizing meetings.
While there is no single solution, mobile technologies can certainly make it easier. Improvements have made mobile communication faster, clearer, and safer than ever before, and they are becoming increasingly ubiquitous in the financial sector. As investors continue to expect increased C-suite engagement, mobile can help executives fill the demand.