Investor relations is the art of managing relationships with your investors. It used to be easy: tell them whatever you felt like telling them. Shareholder activism, new regulations such as Sarbanes-Oxley, and the internet have dramatically changed the landscape, giving far more power to investors. A great example was the Save Disney campaign. Roy Disney was fighting to limit the powers of Michael Eisner, while the rest of the board was stonewalling. The SaveDisney.com website (now defunct) marshalled support and public opinion, while the Disney board and investor relations group ignored the issue and declined even to present their case. In this situation, pressure was significantly applied by individual investors to the managers of the mutual funds in which they had invested. Mutual funds can no longer ignore governance issues if they want to keep their customers on-side. So now companies are increasingly using the internet to present their side of the story. Chevron, which has been under attack from Amnesty International, among others, has set up a website called willyoujoinus.com, which gets people involved in thinking about the future of energy and environmental issues.
The next phase is blogging by corporate boards. IRWebReport, a company specializing in online investor relations issues, has written a couple of great pieces on Why Corporate Boards Should Blog and 10 Excuses for Boards NOT to Blog. Governance is all about transparency. Blogging is a fabulous tool for giving greater visibility to the governance process, and providing investors with a chance to provide their input and perspectives. Certainly the traditional annual meeting is completely ineffective as a system for getting investor participation and involvement. One of the initial objections you often get on implementing blogging on investor relations issues concerns regulations on corporate disclosure, such as Regulation FD (meaning Fair Disclosure. Regulation FD was established largely to stop large investors getting preferential access to information). Given that RSS feeds allow everyone to get immediate notification of anything released on a blog, blogging in fact provides far more egalitarian information flows than other forms of release. Significant disclosures can be tagged for concurrent release to stock exchanges. IBM is getting on board, offering investor relations information through RSS feeds and podcasting (also available on Odeo). General Motors vice-chairman Bob Lutz has his own blog, as does Carole Brown, chair of Chicago Transit Authority, and over 100 CEOs of primarily technology companies. I believe that in just the next twelve months, blogging for investor relations purposes will become commonplace. The difference between those boards that really do believe in communicating with their investors, and those that prefer to avoid any interference by pesky shareholders, will swiftly become evident.