Are your shareholders revolting? (Maybe it’s something you did?)

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LONDON — This may be the month of some riotous annual meetings. These regular, champagne fuelled events in which the Board deigns to talk down to the blue-haired shareholders, and a few ‘institutional investors’ drop by to show how important they are. They are not going as smoothly so far in 2009 as some people continue to expect them to.

Shareholders (‘the people whose money owns the company’) have been being silly enough as to show up with a sense that they can have a say in how the business is run.

Surprised? Moi?

Executives are shocked and awed.

Except for the fact that even though the system is set up so that shareholders keep an eye on what the business does… it is still so stacked in the favour of executives that in most western countries shareholders hold little real sway… but the AUDACITY they have of thinking they might be able to influence things. Really!

How to fix it

I believe that the time has come for executives and boards to start to take shareholders a bit more seriously. The management–shareholder relationship ought to be less transactional, and more relationship-like.

Shareholders are an important part of your business. You should be building a relationship with them by helping to understand each other better. They should be saying to each other “I used to have shares in XX, but they didn’t really seem interested in their shareholders, so I have moved all my money to YY.”

[Ask Ken Lewis at Bank of America is it’s worth paying attention to shareholders. Look at what the EU thinks about shareholders and their roles.]

Your business can start to build relationships with shareholders by offering them a real education in business… in your business even. You can explain policies and procedures to them. Tell them about the market. Tell them about your strategy. Think how much money and time you spend with analysts. Why not spend that much time on your shareholders? It will take a bit longer and require you to answer some simpler questions. But after all it is their money that just lost 60% of its value because they believed in you.

/df

P.S. You shouldn’t be surprised to hear that we think we can help with this. It’s a question of business education after all.



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