Another Spring Rite: Debate Over Annual Shareholder Reports

Spring, again, and the season’s new round of corporate annual shareholder reports raises a persistent question in the C-suite:  Are shareholder reports and CEO letters really, as some now argue, quaint artifacts in a 24/7 digital communications age where one Tweet can move share price?Not really.  Though these reports typically require more than the 140 characters of a Tweet, profitable and socially engaged businesses can still take advantage of this established, long-standing platform to showcase their vision, values and strategic commitments. Whether posted online or distributed as a slick printed copy, clear, candid and credible annual shareholder reports and CEO letters can and do strengthen the bonds of public and investor trust. We admit we’ve seen a few ripe examples that justify a quick  “delete” or a brisk, short flight to the recycling bin.  If a public corporation’s CEO letter is too heavy on jargon, too light on the facts or, heaven forbid, infected with nineties-era promotional prose, then give it a pass.  If you want to gamble this spring, there’s always the Triple Crown.

By contrast, investors will read, and in our experience, respect and remember a message by a CEO who in his or her communications holds fast to the same three principles of accountability, transparency and candor that make for good management.  Nobody expects or wants a lot of dazzle anymore, just well executed fundamentals of communication.  For starters, effective reports:

  • Show a business plan, financial targets and operating goals that are stated clearly and make sense. Link these to a broader vision driving all that the company does.
  • Spotlight success but give good and equal play to things that didn’t go so well.  Explain how the mistake will be avoided going forward.  Nobody expects perfection and good reports don’t try to pretend it.
  • Have high standards of clarity throughout.  Unfortunately, some reports and accompanying CEO letters blur even convincing stories with wording burdened with jargon.
  • Demonstrate humility and willingness by management to tip the hat in credit to others.

Today is a challenging time to do business and communicate business objectives. At Hillenby, we advise our clients to embrace and utilize the full arsenal of tools available to promote their stories.   Yes, the annual report is a venerable institution that pre-dates this transformative age of digital and social media.  But we think it represents an existing platform of ongoing opportunity to publicize the tone, message, framework and language of a business message that can move share price and be Tweeted about too.