Abe Wischnia, APR President - Abe Wischnia & Associates
There is a lot you can do to maintain the
support of your current shareholders even in a market as
bad as the last few years. A key step is getting back to
one of the basics of investor relations: In troubled times,
communicate more, not less.
Now, more than when times are good, your shareholders want
you to communicate with them. However, they will be expecting
much more than “business as usual” communications.
In addition to information, they want reassurance.
First and foremost, they want and need the truth. We have
seen the results of CEO’s forgetting the most fundamental
aspect of shareholder communications – that communications
must be truthful.
Communicating more with shareholders doesn’t necessarily
mean putting out more news releases. If you don’t
have real news, don’t try to make some up just to
pump the stock. That gets companies in trouble and deepens
shareholder cynicism.
There are many other ways to communicate with shareholders.
These include blogs, webcasts, conference calls, newsletters, emails,
phone calls and shareholder meetings.
Consider making broader use of webcasts. It’s easy
and not very expensive to incorporate synchronized sound
and graphics to give an updated presentation on company
strategy. It can be the same presentation that the CEO or
CFO might give at an investor conference. Archived on the
company website, it can remain available to current and
potential shareholders. It can also be easily removed or
updated as the business progresses or as circumstances change.
A growing number of companies are having success with CEO Blogs. Think of the CEO's blog as a form of a news release that uses more conversational language. A blog, appearing once monthly, would allow the CEO to provide additional detail and color about the company's business and other announcements as disclosed in news releases and filings. The CEO can communicate in the blog in a less formal, more personal, and more conversational way than in a news release. Just make sure the blog text gets the same review and vetting that you would use for a news release and file an 8K.
There is another very effective communications tool that
is often overlooked, perhaps because it’s too low-tech.
It’s the telephone. Are you using it effectively in
your shareholder communications? Does your company have
a knowledgeable, sophisticated, articulate, and reachable
person available to take shareholder calls? If shareholders
call with questions or concerns, is there someone who is
fully informed on the company’s operations, business
opportunities and challenges, who understands and can explain
your financial reports, who really knows what he or she
is talking about, to take or return the calls?
Make it easier for shareholders to reach you by publishing
your investor relations phone number on news releases, on
the company website and in the annual report. Include the
name of the investor relations officer so shareholders know
who to ask for.
Many companies will only take or return the calls
of the big shareholders, analysts and portfolio managers.
Don’t play favorites. Take and return the calls of
all shareholders, regardless of the number of shares they
hold.
To avoid trouble, as you communicate with investors make
sure you adhere to both the letter and intent of Reg. FD
to give everyone equal access to material information. Again,
don’t play favorites. Use your shareholder communications to set realistic expectations.
Help shareholders understand what your are doing, why you
are doing it, where the company is going, what it will take
to get there, and why you believe you will be successful.
It’s just as important to be upfront about the risks
and uncertainties. If shareholders have realistic expectations,
they are less likely to sell when times are tough.
If there are problems, don’t try to deny or hide them.
Instead, acknowledge them and help your shareholders understand
what the problems are and what you’re doing to solve
them. This can be effective even when the company is doing
well, showing investors that there is potential for even
more growth once those problems are fixed.
Your shareholders want to believe that they made a smart
investment in buying your stock. They want to believe in
the company’s products and management. You need to
pay as much attention to keeping the support of your current
shareholders as you do to bringing in new ones. You can
do this with clear and consistent communications in good
times and bad.
