SHAREHOLDERS are becoming more engaged in the affairs and governance of public companies, and many boards and managements will need to find new and more effective ways of getting their message across to them.

In the United States, for example, shareholders have new powers to vote on equity compensation plans, and soon may have the right to include their director nominees in your proxy statement. At the same time, large institutional investors, required by law to disclose how they vote on issues at annual meetings, will be much more circumspect about taking stands on issues at annual meetings that potentially will be unpopular with their clients.

In this highly charged environment, many public companies are likely facing difficult, and potentially humbling battles come their next annual meetings. It is essential for these companies to have effective communications programs in place aimed at making sure that investors fully understand their positions on potentially divisive issues.

Companies with strong governance and management must seek to make sure that shareholders and the public at large know about their performance in this area. Firms whose governance and business practices lag good practice will find proxy season much more uncomfortable than in the past.

Audience is not just fund managers, but their clients, too
A further complication is that programs aimed at communicating the company's position on issues will have to be more broad-based than most IR departments have experience dealing with. This is because shareholder communications programs must be directed not only at large shareowners like mutual funds, but to the clients to whom fund managers are accountable.

Failing to communicate your company's positions clearly to a broader audience could result in institutional investors being unwilling to take positions they suspect will be unpopular with their investors. Making sure your company's messages are heard will require an integrated plan which draws on all communication functions inside your company, including public and media relations, marketing, sales and employee communications.

The Internet will play an important role in many companies' communications plans. It potentially allows a cost effective way to get the company's message out to its diverse publics. However, the Internet as a communications vehicle will only be effective if it is used properly. Today's standard website practices won't cut it.

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