To keep the company’s shareholders apprised of the status of the company, how can you report to them? What kind of information do you need to have to keep them informed? To help you out, we are going to look at seven practices that CEO’s should use to provide their company boards and their shareholders the required information, while at the same time minimizing the shareholder ad-hoc reporting info requests, and demands that shareholders can demand on reporting.
This practice involves preparing a comprehensive monthly report of between 15 pages and 50 pages based on detailed pre-specified reporting needs and formats that shareholders have requested. When you agree with your shareholders to have a standard report format that includes key metrics, a table of content, methodologies of calculation, exhibits (actual and planned budget, register of major risks, cost curve, major variances), data tables from embedded BI and embedded analytics; it is possible for a CEO to reduce the ad hoc information requests.
A weekly one pager report
This is a short email or memo that comprises of five to fifteen bullet points in a consistent format to provide the board members with a weekly progress and the issues that arose, together with the areas of focus. The one-pager will not only provide the board members with an update on the venture, but it will also serve as a reflecting point on the weeks passed and the weeks to come, and also as a tool of communication to the entire management team that reads the memo.
A copy of the management-level reports
This report provides the board members with management report copies that the CEO’s team uses to review the performance and management of the business on a weekly/monthly basis. The operational and finance data is also included in the report across business and function lines. This does not require any extra investment when it comes to reporting, other than reducing some information like data pricing that is not appropriate from a competitive standpoint, ensuring that the members of the board are confidential.
Access to financial information
Some shareholders can be given password-protected access the database to access the company’s underlying financial records to generate a report on performance and company operations. This allows shareholders to have access to the information needed without straining the management on reviews about the operations since the information is accessible by the board and the support staff before meetings.
Shareholder Meeting that is open
The CEO and the CFO can host a meeting that is attended by the targetted shareholder staff (like the finance staff, asset managers, committee and board members) to clear out information for the shareholders. When ad-hoc reporting requests are placed before the meeting, the management should not be expected to respond. This practice will reduce the time spent in handling info requests, and it will reinforce transparency, as the shareholders are present when responding to questions.
One-page performance dashboard
In this context, it involves the formation of a one-page summary of important financial metrics that serve as a company’s performance update in board meetings. The content and format of the dashboard will depend on the business, but it should fit on one page, and it should include red-green-yellow summaries of the status on each category, plus making comments on each section. The board will be able to check the dashboard for issues and performance metrics, it will prevent the board meetings from diving too much into unimportant financial details and operations, and allow the board to focus on valuable inputs.
Use “CC ALL” in Email Responses
When a shareholder requests for information from the company management, the management team should “CC” or send copies of the response to the entire list of shareholders. This practice will promote transparency between shareholders, signal management team’s neutrality, and reduce info requests because each shareholder will know that requests will be public for all the board to see.
It is important to know that there is no CEO who uses more than four of these practices. It is good to understand these practices as menu items that can be selected based on the preferences. It is important to have the right flow of information to allow for good governance. It is common to have inefficient shareholder reports that waste time, add conflict which eventually leads to poor performance.