I KNOW I’ve been ranting, and venting, and tilting at windmills, and proclaiming “told you so.” And, yes, I do take this stuff far too seriously.
But now it is someone else’s turn to wonder aloud why companies that are early movers on the SEC’s “notice-and-access” model for shareholder meeting materials are making such a mess of it.
Broc Romanek, editor of TheCorporateCounsel.net, documents his experiences visiting investor relations websites of companies using e-proxy. And he wonders why companies are not doing the most basic of things — like explaining to shareholders what they are doing when it comes to e-proxy.
His experiences would be funny if they weren’t so sad. Like not being able to view a document on Microsoft‘s website because they’ve posted it in Word 2007, which does not work with prior versions of Word.
To be fair, there’s a download called Microsoft Office Compatibility Pack for Word, Excel, and PowerPoint 2007 File Formats that you can install to view Word 2007 files if you have an older version of the software. It weighs in at 27.3 MB, which Microsoft happily informs you will take 1hr 8min to download using dial up.
He documents several other examples of confusing or insufficient explanation and says: “As many more voluntary e-proxy’ers are expected as we near the calendar year-end, we hopefully will see some more descriptive explanations of what companies are doing.”
I couldn’t agree more.
Short-term gain, long-term pain?
But why aren’t companies explaining what they’re doing? Because companies are using the voluntary notice-and-access e-proxy method strictly as a cost-saving exercise. Communicating or explaining themselves is NOT part of the agenda.
That’s fine in the short-term, and some IROs and corporate secretaries might win brownie points with their bosses for saving the company a bundle on printing and mailing costs, but what about down the road? What happens when management really needs to call on the support of its shareholders?
There is a price to pay for not communicating with your shareholders, engaging them and keeping them informed. Perhaps it’s a small discount on the company’s forward P/E, or a steeper drop than the market in those inevitable downturns, or a shareholder base that is more receptive to activists and raiders.
The price of not engaging and communicating with your loyal, long-term owners is much more significant than the price of paper, envelopes and first-class postage.
Note: I have volunteered to moderate a webinar on Nov. 15 for TheCorporateCounsel.net that will discuss how to design great online annual reports and proxy statements. We are fortunate to have representatives from three of the world’s leading online annual report producers. They will explain what is involved in producing effective online experiences for shareholders on the Web. I know I’m looking forward to learning from their wisdom and experiences.