Should Boards of Directors Communicate With Shareholders?

Despite the rising trend in this area, many directors are passionately against the idea of engaging directly with shareholders. I’ve heard a variety of concerns in recent conversations with directors. Some are afraid of violating Regulation Fair Disclosure. Some directors adamantly assert that “investor relations is not the board’s job.” These directors emphasize that IR is the responsibility of the company’s management team and investor relations officer,whose job it is to relay all relevant shareholder insights back to the board for consideration within the board’s agenda. Directors also correctly point out that the board should not say anything out of step with management anyway, so they question the value of this effort, especially given limited available time that directors can devote. Moreover, some CEOs cringe at the idea of their directors having direct contact with investors. There is also the problem of unfair access: large institutional investors would realistically be prioritized over smaller ones, never mind retail investors.