Preparing for Positive Engagements Between Directors and Shareholders
The relationship between an organization’s board of directors and its shareholders can sometimes be a rocky one. Nurturing this relationship, and the process to build this relationship is important to the future success of the organization. The following tips will help your board facilitate positive and productive engagement with shareholders.
Set an Agenda and Do Your Research
The meeting will be smoother and far more productive when everyone is aware of what topics will be covered. Directors and Shareholders will be able to prepare appropriately based on the agenda. Once the agenda is confirmed, the board can send relevant materials to the shareholders in advance.
Pro Tip: Using BoardBookit to create and distribute meeting materials streamlines the process while also protecting your data!
Shareholders can use resources like summaries of board makeup, company strategy, or executive compensation to do their research before a meeting, as long as that information does not disclose material nonpublic information. Board members and management can also use this opportunity to do their research on shareholders by understanding their stock holdings and views on governance. This research prepares both directors and shareholders to make the most of their meeting time and have productive conversations.
Board members should also be prepared to explain past board decisions on relevant matters clearly and have a firm understanding of current strategies. For example, plan to consult with your chief sustainability officer if you think your organization’s ESG strategy will be a topic of interest on your agenda.
Invite the Right Participants
A successful meeting entails assembling the right people. The agenda will likely dictate which directors, if not all of them, will be attending the meeting on behalf of the organization. For example, if the agenda is set to discuss executive compensation, the compensation committee chair should be involved in the meeting. In some cases, not all board members will be expected to participate. That said, consider the sociability of the directors involved. Not every board member or director is equally adept at nuanced conversation. If possible, tailor your director line-up to include the members who are most comfortable communicating in high-stakes situations. Any director engaging with shareholders needs to be cautious about avoiding disclosure of material nonpublic information.
Balance the Conversation
Engagements between shareholders and directors often are most productive when the shareholder does most of the talking. While the perspective of board members and directors are essential to the organization, the investor’s priority is to ensure the board understands their concerns. When directors focus on listening to what the shareholders have to say, they open up the opportunity to learn directly from the shareholders what their top priorities are. It can be tempting to treat the engagement with shareholders like a sales pitch, but taking the time to understand their wins and their concerns can prepare the board for future conversations.
Come With an Open Mind
Hearing criticisms of your organization can be uncomfortable and it is second nature to get defensive. Take a breath. Rather than focusing on feeling that the board’s decisions are being second-guessed by an outsider, listen with an open mind. The skill of listening to shareholder concerns without taking up a defensive posture will benefit the board and the organization. Investors obviously don’t have the same level of detailed understanding of your organization, but they do have a new perspective. That perspective is often well researched and thought through, so going into this conversation with an open mind can provide beneficial ideas for the directors to bring back to the boardroom. At the very least, it will signal areas where the organization may want to consider improving.
The actual meeting is essential, but engagement just for the sake of engagement misses the mark. To garner the most impact, boards should prepare to do more legwork after the meeting. Following up with your shareholders or potential investors after the meeting is imperative. Before you go back to the investors, bring back any suggestions or concerns that were voiced back to the boardroom. The full board can then discuss those topics and the feedback provided. This sets the stage for productive follow up meetings with your shareholders.
Pro Tip: BoardBookits messaging and discussion features are perfect for conversations between board meetings and can streamline and secure information shared with directors.
Consider utilizing meeting minutes and some form of wrap-up communication to summarize the events of the meeting, assign action items, or explain tabled items. This is also an excellent opportunity to share more resources that may have been requested during the conversation. Avoid making these interactions feel like an exercise to check a box. Authentic engagement between board members and shareholders can be incredibly useful for both the company and the investors and is the foundation for a strong working relationship.
Engage your Board with BoardBookit
BoardBookit helps administrators, corporate secretaries, and other governance professionals manage both formal and informal meetings. BoardBookit’s enhanced collaboration tools, such as messaging and discussions, fosters engagement with your board directly within the portal. Start a conversation today to learn more about how your board can become more engaged with the support of BoardBookit.
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