Get the FREE 2024 Guide to Shareholder Communications eBook!
Oops! Something went wrong while submitting the form.
Icon Rounded Closed - BRIX Templates

Governance Insights straight to your inbox

Access to the strategies and experience of top private finance leaders in just 5-minutes of reading every other Tuesday.

Please CHECK YOUR INBOX for the special welcome we just sent you from Nth Round.
Oops! Something went wrong while submitting the form.

100% free. Unsubscribe anytime. No spam ever.

Faces of Modern CFO's
Governance Insights

Bridging the communication gap, shareholder insights, and leveraging AI

Nth Round


December 5, 2023

Welcome to this week’s issue of Governance Insights!

Today, we’re sharing advice for shareholder administrators, tips for how to effectively structure proxy votes, and ways you can meaningfully convey equity.

But first…

'The great wealth transfer' is here: Billionaires set to give trillions to their kids

The latest UBS Billionaire Ambitions Report reveals that, for the first time in nine years, billionaires garnered more wealth from inheritance than entrepreneurship.

According to the report, over 1,000 billionaires are set to pass down an estimated $5.2 trillion.

This new era of NextGen heirs is forcing founders and families to adopt innovative strategies when it comes to successfully navigating succession planning.

Anthony Pastore, Executive Director at UBS, emphasized on The Modern CFO podcast the importance of embracing digital platforms and utilizing AI to bridge the communication gap with the next generation.

Now to this week’s insights…

Shareholder Insights

Understanding your shareholders' needs and desires–easier said than done sometimes. Shareholders often seek personalized and specific insights and assistance in managing their investments.

Good thing is, we’ve probably heard about most of them.

Here are three of the most common shareholder insights to keep on hand:

1. Insight into Cost Basis:

Shareholders often require a clear understanding of their investment's cost basis. Obviously, this is critical for tax planning and reporting. It’s also tricky.

There isn’t a single, standard way to calculate cost basis. So shareholders may not even know where to start.

Offer clear, informed resources or guidelines on how to calculate it, or better yet, provide an easy-to-access tool or service that enables shareholders to determine their cost basis accurately.

By addressing this need, you empower shareholders to make informed financial decisions and minimize tax liabilities.

2. Referrals to Accountants:

Many shareholders seek professional guidance when it comes to tax planning, investment strategies, and financial management.

While you may not be a tax expert, you can play a valuable role by offering referrals to trusted accountants or financial advisors.

Maintain a list of recommended professionals, and be ready to connect shareholders with individuals who can provide the expertise they require. This not only adds value to your services but also strengthens the trust and confidence shareholders have in your administration.

3. Addressing Liquidity Concerns:

Liquidity is a common concern for shareholders, especially when they need access to their investments.

Shareholder administrators can help by providing clarity on the liquidity options available within the company, such as redemption policies, secondary market opportunities, or dividend schedules.

It's also vital to communicate these options clearly and proactively. Shareholders appreciate knowing how and when they can access their investment's value.

Be transparent (remember from above) about the liquidity avenues and assist shareholders in navigating them effectively.

Talk to your people

Shareholder administrators play a critical role in ensuring that owners are informed, engaged, and heard.

Here are three key pieces of advice for shareholder administrators:

1. Communicate

And frequently if you can. Clear and consistent communication is the bedrock of a healthy shareholder-administrator relationship.

You don’t have to wait for “news” either. That is to say you don’t have to only communicate only when there’s really good news, or sometimes when there’s bad news. There are company updates, media clips, newsletters, and of course tax and financial reports to keep shareholders in the loop, helping them make informed decisions.

You also don’t have to wait until an event, like tax season or proxy voting when inevitably you’re new-norm will be your work day constantly interrupted by phone calls and emails.

Be proactive, not reactive, and make use of various communication channels – email, newsletters, webinars, or an online portal – to cater to different preferences. By keeping shareholders informed, you foster a sense of inclusion and trust.

2. Be Transparent

People appreciate honesty, and so will your stakeholders about the company's performance and challenges.

Don't sugarcoat bad news or hide information. Instead, address issues head-on and provide a realistic view of the situation. And celebrate good news! Don’t take for granted continued success. It’s hard work!

Transparent governance not only builds confidence but also helps shareholders make well-informed decisions.

3. Don’t Forget The Digits

While digital communication is convenient, personal interactions can be invaluable.

A phone call, or even a face-to-face meeting, can strengthen messages or resolve issues more effectively than written communication. Don't hesitate to reach out to shareholders, especially when addressing concerns or discussing complex matters.

Building a personal connection can go a long way in maintaining a positive relationship with shareholders.

Effective shareholder administration hinges on frequent, transparent communication, and a willingness to engage personally when needed. By following these principles, shareholder admins can help foster a positive, trusting environment that benefits both the company and its shareholders.

Weekly Board Topic:

Embracing Generative AI - A Strategic Imperative for Private Company Boards

In the rapidly evolving landscape of digital transformation, private company boards are increasingly recognizing the need to integrate generative artificial intelligence (AI) into their strategic plans. As this technology burgeons, its potential to revolutionize product development, market strategies, and customer engagement is becoming a central boardroom conversation.

Here are the ways in which forward-thinking boards are navigating this new digital frontier:

Strategic Investment in AI Capabilities: Boards are allocating resources to adopt generative AI technologies, ensuring that the company remains at the cutting edge. Investment is not only monetary but also involves acquiring the right talent and building partnerships with AI innovators.

Ethical and Governance Frameworks: With great power comes great responsibility. Boards are developing robust ethical guidelines and governance frameworks to oversee the use of generative AI, ensuring that it aligns with the company's values and complies with regulatory standards.

Enhancing Decision-Making with AI Insights: Generative AI's ability to analyze vast datasets is being harnessed to inform strategic decisions. Boards are utilizing these insights to identify market trends and make informed predictions about future challenges and opportunities.

Fostering a Culture of Innovation: By encouraging a culture that embraces change, boards are preparing their companies for the inevitable shifts that AI will bring. This involves continuous learning and adaptation at all levels of the organization.

Risk Assessment and Mitigation: Understanding and mitigating the risks associated with AI, such as cybersecurity threats and data privacy concerns, are high on the agenda for boards. They are putting in place measures to protect their companies and customers.

Customer-Centric AI Initiatives: Boards are focusing on leveraging AI to enhance customer experience. Whether it's through personalized services or new product offerings, AI is being used to meet the ever-evolving demands of customers.

By actively engaging with the potential of generative AI, private company boards are not just future-proofing their businesses but also shaping the future itself. The companies that succeed in this endeavor will be those that view digital transformation not as a challenge to be met but as an ongoing opportunity for growth, innovation, and leadership.

Tell us what you think!

We’re really excited about the launch of our newsletter, but we know there’s always room for improvement. Send us an email and let us know if you found the content valuable.

Remember, new issues of Governance Insights are sent every other Tuesday. If this was forwarded to you, subscribe here to join the community and receive the newsletter directly to your inbox.

Until next time!