Our Blog: The Podium

The term “shareholder activism” can sometimes send a shiver down your spine and conjure up all kinds of unwelcome events – unhappy shareholders, proxy contests, shareholder proposals, 13D filings and withhold vote campaigns, to name just a few.

I recently moderated a NIRI Virtual Chapter webinar on “Shareholder Activism Trends.” The participants, consisting mainly of IROs at mid- and small-cap companies, were polled on several questions. The first question was, “Do you have a detailed plan in place for dealing with shareholder activism?” The majority answered “no.”

It may not be feasible to have a detailed plan for dealing with a threat that can take so many different forms. The lawmen and bandits who fought it out at the infamous O.K. Corral in 1881 had no idea how the showdown would play out – and neither will you if your company becomes an activist’s target. But that doesn’t mean you can’t be prepared. Here are four steps.

On January 4^th, the first business day of the new decade, Dow Jones VentureSource released figures suggesting that 2010 will be a stronger year for IPOs. They reported that eight companies completed public offerings in 2009, raising $904 million. This was a 64% increase from the $551 million generated through seven IPOs in 2008.

Looking ahead, VentureSource pointed to the 25 venture-backed companies that are currently in IPO registration as a sign that the market will improve as this year unfolds. The larger attendance and stronger sense of optimism at the most recent Deloitte Tech-Venture IPO Bootcamp, where I spoke on IPO investor relations, suggests the same thing.

So if the proverbial IPO window does open wider in 2010, a good number of venture-backed companies probably will jump through. This will send them into the hectic time of pre-IPO preparations.

Like skilled gymnasts or freestyle skiers, some of these companies will stick the landing. They’ll see good liquidity and strong underlying demand when their shares begin trading. Others will lose a few style points and generate only a tepid response from investors. For the underperformers, the leap into the public markets will conclude with a painful face plant.

Earlier this week I moderated a NIRI webinar with three senior-level investor relations officers representing the finance, real estate and retail industries. The panelists highlighted some new initiatives that IROs should consider in 2010 which, according to the Chinese calendar, is The Year of the Tiger. This just might have been the world’s only “Tiger”-related discussion in the past few weeks that had nothing to do with a certain golfer with a PR problem.

Within Chinese culture the number six is auspicious and considered good for business. So in keeping with this theme, here are six ideas that arose from the panel discussion that are worth considering as you develop your investor relations plan for the coming year.

To whom is the corporation accountable? Before SOX, majority voting, proxy access and “say on pay,” director elections were democratic in name only, and the lines between board and management were blurry at best. Except for the occasional gadfly at an annual meeting, boards rarely communicated with shareholders directly.

Today, after nearly a decade of turmoil in the markets and changes in the regulatory environment, the insulated board is a thing of the past. Shareholders are coming to view directors as leaders whose perspectives may diverge from those of management, who are empowered to exercise independent judgment on matters of consequence, and who are accountable for corporate performance.

A small but growing number of boards, recognizing that investor expectations have changed, have made dialogue with shareholders a formal priority. They are experimenting with new approaches for nurturing this interaction and learning from the experience. Although systematic programs for board-shareholder communications are still atypical in Corporate America, it is not too early to make some observations about what the more successful efforts have in common.

Sharon Merrill Associates Executive Vice President David Calusdian and I recently presented on “The Dynamic World of Corporate Disclosure” at the National Investor Relations Institute’s (NIRI) “Introduction to Investor Relations” conference in Boston. NIRI holds this three-day event twice each year. Attendance typically numbers about 100 people and consists of new IR practitioners in various stages of their professional careers at companies of all sizes.

The fact that NIRI holds two such conferences each year is a testament to the growth of investor relations and the stature our field has achieved in corporations across America and the world. To be honest though, we were wondering how attendance would be affected by the recession. After all, the IPO market has not been a fertile breeding ground for new investor relations officers. And the lack of corporate growth in the past year and associated cutbacks has not lent itself to increasing IR budgets or staff.