The Executive's Guide to Shareholder Communications

Clear communication is essential if you are to build and maintain healthy relationships with your investors and shareholders.

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As an executive, communication with your shareholders and investors is vital to making your company vision a reality. Clear communication is essential if you are to build and maintain healthy relationships with your shareholders.


Without open and transparent communication, your shareholders have no way of knowing if you are fulfilling the promises you made to them when they first invested in your company. Keeping the lines of communication open is an important part of honoring shareholders' commitment to your company and vision, and it cements the relationships that will help you continue to grow.Many executives find themselves caught up in a swirl of planning and activity surrounding production, development, marketing, hiring, and other facets of building a business. Adding shareholder communications to that list helps pave the way to a successful future. In fact, good communication results in a 47% boost in ROI to shareholders. This comprehensive guide will take you through the most vital aspects of communicating with your shareholders, employees, and investors.



Table of Contents

Part 1: The Value of Communicating with Shareholders

  • Why Communication about Corporate Governance Matters
  • Using Communication to Boost Shareholder Trust


Part 2: The Six Principles of Shareholder Communication

  • Focus on Business Strategy
  • Provide Timely and Relevant Updates
  • Plan on Full Disclosure
  • Connect Your Updates to Company Performance
  • Build Shareholder Relationships
  • Create a Crisis Communication Plan


Part 3: Traditional Methods for Shareholder Communication

  • Email
  • Annual Letter to Shareholders
  • Phone Communications

Part 4: Your Communication Style with Shareholders


Part 5: Introducing Nth Round

  • Get Ready for Your Nth Round

Part 1

The Value of Communicating with Shareholders

Keeping your shareholders and investors in the loop as you grow your company is invaluable. Strengthening the bond with your stakeholders creates tangible and intangible benefits that include stronger relationships, the ability to attract more funding, and opportunities to network with people in positions of influence. The following are among the most important benefits you can reap from keeping open lines of communication with your shareholders.

Why Communications about Corporate Governance Matters

Corporate governance is of increasing interest to the public in general, so you can expect your shareholders to want to know what your board is doing as well. In fact, up to 74% of shareholders are ready to communicate with a company's board of directors, depending on the importance of the topic they're concerned about. While some of those shareholders are content speaking to management or your investor relations team, they're more likely wanting to speak to the board — so you'd better be ready. Clear communication is vital to helping your board and other corporate governance structures to thrive


Increasingly, shareholders are looking for transparency from companies and their boards of directors. There's a reason that 61% expect their boards to review their internal and external communication plans: their shareholders are demanding it. They may want to assure themselves regarding your diversity hiring, your political lobbying, your environmental sustainability, or they may be concerned about your allocation of capital. When shareholders feel they don't have the information they need about corporate governance, they're more likely to divest or to become vocal in ways that could derail your plans for growth.

Check your shareholders' agreement to make sure you're abiding by all reporting requirements, including those involving various types of transactions. Even if, as a private company, you don't have to report to shareholders regularly, doing so will strengthen your commitment to them.

Using Communication to Boost Shareholder Trust

Transparency reduces risk. When your communications with shareholders are frequent, honest, and clear, your shareholders feel confident that they aren't going to be caught by surprise by unexpected bad news.

Effective communication regarding your business strategies and results helps investors and shareholders understand the value of their investment in your company. If you don't communicate (or don't do so well), your shareholders may consider that their ROI isn't worth the perceived risk.


Without frequent communication, your shareholders don't have many ways to respond to what's going on at your company. They can withhold votes from directors, if they have a say, or they can take activist positions, including going to the press, to make their views known. Proxy advisor services company Glass Lewis finds that when 25% of shareholders vote in opposition to management, the company has a problem that must be addressed. By opening the lines of communication, you can stave off these moments, since your shareholders have a venue for letting you know their thoughts, and are less likely to take negative actions.

Part 2

The 6 Principles of Shareholder Communication

When you communicate clearly with your shareholders, you help direct their focus. Regular disclosures and communication keep shareholders from obsessing about the short term, questioning whether you know what you're doing, and raising concerns about oversight. The following guidelines and principles should govern all your shareholder communications

1. Focus on Business Strategy

Your shareholders want to feel confident that you have a plan in place for whatever happens. When you spell out your business strategy in shareholder communications, your investors can relax a bit. They know their present (and potential future) investments are safe because you have strategic plans to meet your business goals and keep growing.


2. Provide Timely and Relevant Updates

Send your shareholders the information they need to know when they need to know it. If you send too many emails or other communications to your shareholders, they're likely to be light on the valuable information, and they may come to view them as irrelevant. Instead, make sure your emails are appropriately timed and contain information such as:

  • Comprehensive analyses regarding performance
  • Your business strategies
  • Your company's position in relation to your competitors
  • Your outlook for the next quarter or year
  • Trends in your industry


3. Plan on Full Disclosure

It's tempting to offer your shareholders the rosiest of outlooks in your communications, but this strategy can easily backfire if your hopes are revealed to be wishful thinking. Never tout news that's too good to be true, because your shareholders will recognize it as such. Yes, it's difficult to share negative news, but you must acknowledge it. However, you control the framework for any negative information you have to share. Take the opportunity to show how you plan to provide the leadership needed to overcome moments of adversity and get the company back on a positive path.Your shareholders are likely to respond with renewed trust when they see your commitment to transparency.


4. Connect Your Updates to Company Performance

One way to make sure your shareholder communications remain relevant is to focus on company and performance religiously. Demonstrate to your shareholders how your business strategies and goals are resulting in price performance, and explain how you expect to hold the company accountable for reaching goals. Providing measurable data that's realistic and clear is paramount. Take the time needed to reflect on your company's current plans, practices, and performance, and make sure you convey your reflections adequately in your communications.Your shareholder communications should regularly include:

  • Comprehensive, clear performance summaries of the most recent period
  • News of any new product launches or existing product enhancements
  • Updates on any key personnel changes, including those planned for the immediate future
  • Discussion of all milestones achieved and of pending milestones
  • Any action items in which you want shareholder input or assistance
  • Runway information and other pertinent financials
  • KPIs to demonstrate how you're meeting your objectives, as well as the business decisions surrounding them


5. Build Shareholder Relationships

Your shareholder communications are a crucial way to build relationships with people who have a vital interest in your business. By personalizing communications with them, you can fortify your relationships. This task becomes easier and less time-consuming when you segment your shareholders according to volume and type, as well as their specific relationship to the company (employees, investors, etc.). Segmenting allows you to prioritize different groups as needed and makes it easy to send out customized updates to shareholders with specific interests.

6. Create a Crisis Communication Plan

Your business can unexpectedly be rocked by all sorts of events over which you have little to no control. Whether you face a dramatic shift in the market, unfortunate personnel issues, or a disruption to the global economy, you need a plan. This seems like a no-brainer — but 49% of companies have no crisis playbook in place, and of those companies that do, only 41% have specific plans in place regarding communication during a crisis.

Of course, you probably already have a crisis plan in place to respond to negative events — but you also need a crisis communication plan. This plan allows executives and officers in your business to speak publicly and to shareholders with the same voice, conveying the same message. Your crisis communication plan squelches negative speculation and makes sure that you're getting your side of any story out to the people who need to hear it.

Part 3

Traditional Methods for Shareholder Communications

Deciding to open the doors to shareholder communication and to provide the transparency they're hoping for is just the first step. Now you have to decide what forms those communications should take. The answer to that question varies depending on what you have to say since each means of communication carries with it a unique set of pros and cons

1. Email

Email is unquestionably an efficient means of communication with your shareholders. It reaches around the world with no respect for time zones, and it's always available. Moreover, it's effective in reaching your shareholders, since95% of today's shareholders are comfortable with online communications. Take a look at other pros of communication with shareholders via email.

Pro's of communicating by email

  • Widely-Used. Email is easy to use. Everyone knows how to read an email and how to respond, and your shareholders are likely to appreciate having such a simple way to contact you.
  • Ability to personalize. You can also be personal in an email. Even if you're sending something out to your entire shareholder list, you can easily individualize each recipient's message, either manually or using an automated program.
  • Speed. The speed of email is also a big plus. If you need to get an urgent message out quickly to your shareholders, there's no faster way to reach them.
  • Cost. You already have email in place for your business, so the only additional expense is the time involved in creating and sending your emails.

Cons of Communicating by Email

  • Not every email gets opened. You have no way to know if your shareholders have received or opened your email. When their inboxes fill up, they may miss your email entirely, an assistant may open it and not pass it along, or it might even go to their spam folder.
  • Impersonal. If you're sending a single email to your entire shareholder list, you're unlikely to want to personalize the communication, especially if it's an official message from the company. That can lead to shareholders feeling disconnected or undervalued.
  • Easy to mis-send. How many times have you received emails that were clearly not meant for you? If you're sending emails to only a subgroup of your shareholder list, it's all too easy to send to the wrong set of people.
  • Hard to manage responses. When individual shareholders reply to your mass email, it can be difficult to track all the answers and make sure you're responding in a timely and consistent manner.



2. Phone Communications

You have a responsibility to send an annual letter to your shareholders, so you should take advantage of the opportunity to communicate your vision regarding long-term goals and plans, as well as the milestones you achieved in the previous year.

Pros of Communicating Through an Annual Letter to Shareholders

  • Opportunity to provide details and context. When you write to shareholders, you provide a sense of context for events that happened over the last year. You also get to impart the data and statistics that your shareholders want to see in a carefully controlled statement.
  • Control of the narrative. There's a reason companies take meticulous care when creating their annual shareholders' letters. These messages allow you to shed light on any downturns of the year and allow you to provide context that your shareholders wouldn’t otherwise get.


Cons of Communicating Through the Annual Shareholders Letter

  • Time-consuming to create. It takes a lot of time and effort to pull together an excellent annual shareholder letter. Since you know you have to do it, try starting the process early and creating it in sections that are ready to be assembled when the time comes.
  • Not interesting to read. Because most companies' letters are so dry, shareholders may only give yours a quick glance. (Perhaps that's why Warren Buffet makes Berkshire Hathaway's shareholders' letters so entertaining.)



3. Phone Communications

While phone communications with shareholders are direct and personal, they are also often time-consuming, and you're not able to communicate with everyone at the same time. Take a look at other pros and cons of staying in touch with your shareholders by phone.

Pros of Communicating by Phone

  • Extremely personal. When you talk to a shareholder by phone (or by a video option such as Skype, FaceTime, or Zoom), you connect with them personally. You hear the nuances conveyed by tone of voice, and you make a stronger connection that allows for transparency and honest communication.
  • Useful for difficult situations. Phone calls are one of the strongest methods of communication when you're conveying difficult information or responding to a shareholder who may be feeling tension or fear. It's also easier to make sure the listener understands you with the back-and-forth of a phone conversation.

Cons of Communicating by Phone

  • Time-consuming. Calling shareholders on a one-by-one basis can eat up your valuable time. Who do you call first? (And given the lag time between calls, will some shareholders be upset that they weren't the first called?) Do you leave a voicemail if you can't reach someone, or try again later? How long will the follow-up take?
  • Some people don't like it. Many people don't like to receive phone calls for anything routine, which might mean tracking which of your shareholders wants a call, who wants a text, who wants an email, etc.
  • Unclear which number to call. Some people want to be contacted at work, some via their mobile numbers. That's more tracking to do, which means more wasted time.
  • Conference calls are awkward. No matter which conference call system you use, you always have to deal with lag, which can make conversations awkward ("No, I'm sorry, you go ahead"). Some of your shareholders may not have access to conference call technology, or they may not know how to use it. Video conferencing tech, such as Zoom, may provide more features, such as the capability to let call participants raise their hands to talk. However, they still experience lag, muting issues, and may feel unnatural.

Each method of communication shines for certain purposes. When you need to work through an issue on a personal basis with one of your key shareholders, a phone call makes more sense than the back-and-forth of email. When you're conveying official information that all shareholders should receive simultaneously, though, email is often the better choice. Match what you need to communicate with the best means of communication to make sure you're heard clearly.

Part 4

Your Communication Style with Shareholders

Your relationships with your shareholders are determined by the communication style you adopt. These guidelines will help you shape and sharpen your style to effectively connect with shareholders.

  • Be transparent. Shareholders (and the press, for that matter) often have an inherent sense for when a business is trying to hide something. When you commit to transparency, even when it hurts, you build the kind of trust that can weather downturns.
  • Don't get bogged down in legal jargon. This principle goes for industry jargon, too. You may understand what you're saying, and you may be conveying precisely the message you want to send. But if your shareholders don't understand it, none of that matters (and you may look like you have something to hide).
  • Update your shareholders often. If you communicate with shareholders only when you have good or bad news, your shareholders may feel out of touch. By communicating regularly, you defuse any tension about what your next message might contain.

  • Talk with your shareholders, not at them. Too often, business communications become a series of lectures with no room for giving and taking. Talking with shareholders (as opposed to at them) means that half the conversation consists of listening on your end. When your shareholders feel heard, they know they can trust you to look out for their interests.
  • Be prepared. Don't rely on spontaneity when it comes to shareholder communications. Again, set aside the time needed to craft a message that reflects what you truly intend to communicate and run it by trusted colleagues to make sure your message is clear. If you're speaking live at a shareholder meeting or sending a message via video, take the time to practice. Few people are naturals in front of a camera or on a stage, so work with professionals to help hone your performance and to make sure that the message you're sending is the one you intend to send.
  • Balance vision with the bottom line. Yes, your shareholders want to catch your vision and see the big picture. But they also want to understand how your overall vision translates to their own bottom lines. Find a way to connect the two in every communication.
  • Don't ignore your competitors. Many entrepreneurs like to focus solely on their own companies when communicating with shareholders. However, your shareholders are well aware of the importance of your company's positioning in the competitive landscape. They'll respect it when you aren't afraid to explore issues involving the marketplace.

Part 5

Introducing Nth Round

Nth Round is here to help you navigate the sometimes tricky landscape of shareholder relations. Think of us as your partner in business growth and delighting shareholders.


With Nth Round, you can take advantage of a secure platform for shareholder communication, making engagement easy and straightforward. Now you can manage and track your investor communications with the ability to filter, tag, and sort your shareholders. Our robust security means your team and your shareholders always feel safe, no matter what you have to communicate.

Posting company updates and distributing documents also becomes quick and straightforward, whether you want to reach out to individual shareholders or select groups. With Nth Round, speedy communication is a given, so you reduce shareholder stress (and your own)during moments of uncertainty. And because you can post updates from your mobile device, you're never caught unaware with no way to communicate quickly with shareholders.

The results of working with Nth Round? Your shareholders are happier because Nth Round's integrated, streamlined platform gives them easy access to the information they want. Your equity management efforts become stress-free, and you reap excellent ROI as a result.

Nth Round investor portal

Get Ready for Your Nth Round

Shareholder relations are a vital element of your company's infrastructure, no matter the size of your business. Small to medium-sized enterprises that may not have this infrastructure in place internally must develop it to be able to grow.Nth Round provides the expertise and the tools you need to engage with shareholders productively and positively.Learn how you can delight shareholders, save time and expense, and achieve your business goals with our turnkey communication and equity management platform. Contact us today to schedule a demo of the Nth Round platform, and get ready to put the relationships back into investor relations.