Our partners in Worldcom – the world’s largest partnership of independently owned PR firms – represent some of the top thinking across PR and marketing disciplines.
We’re delighted to share this piece from Dix & Eaton – which continues to set the standard for crisis and corporate communications.
Private companies enjoy certain advantages when it comes to controlling the financial and other business information they disclose. Nevertheless, it is vital for private companies to keep their shareholders informed on a continuing basis, just as it is for their public company counterparts.
In fact, addressing shareholder concerns can be even more challenging for private companies because of the need to keep tight reins on certain disclosures for competitive reasons. It’s a fine line – circulating too much information runs the risk of having it fall into the wrong hands, but too little communication can lead to disgruntled shareholders.
Establishing a disclosure committee is an essential first step in developing and implementing a shareholder communication policy. This committee should include the authorized spokesperson(s) for the company and the board, as well as the company’s general counsel. It should meet at least quarterly – or more frequently, if appropriate – to assess the company’s disclosure practices, ensure that the company is following its own communication policy consistently, evaluate the quality of information flow, review feedback, and confirm that all targeted audiences understand the messaging. Best practices doctrine also supports anticipating potential operational and reputational issues, and having vetted contingency messaging in place for timely review and distribution in case of a crisis or other situation requiring an immediate response.
To prepare specifically against a potential shareholder activist situation, a private company should develop a contingency communications plan based on a keen understanding of current shareholder perceptions, motivations, possible demands and/or complaints, and potential triggering events. Such a plan would include:
Setting a high standard of communications not only protects a hard-earned reputation, but can also help a company deliver its message and defend itself in both the private and public arenas. It also will help keep the lines of communication open if the time comes when negotiations are appropriate. Consistent and effective communication with shareholders is a critical component of a private company board’s governance responsibility.
For more information, please contact Lisa Rose, Senior Managing Director and Head of the IR practice at Dix & Eaton.