Shareholder relations: beyond 'slick' programs to constructive dialogue.

• Author: Crist, William D.
• Position: Putting In Place the Right Board for the 21st Century

EVERYTHING is global these days. We will be closer together during the 21st Century than may be comfortable.

With improved worldwide communication systems, the rapid development of free enterprise in the presently emerging economies, and increased concentration of wealth in the hands of very large institutional investors, the global world of corporate finance will demand increased transparency in business operations and more uniform disclosure to shareholders. Directors serving on corporate boards, individually and collectively, will have to be more accountable to shareholders than they were in the good old 20th Century.

The emphasis placed on improved corporate governance practices over the past decade obviously is not losing steam as the year 2000 approaches. Instead, the principles of good corporate governance, as identified, immodestly, by institutions such as CalPERS, are gathering an increased following worldwide. Cognizant of the value added by good corporate governance, the notion of institutional investors having active corporate governance programs is gathering momentum at the same time fiduciaries of the world's largest trust funds are expanding their international equity portfolios. The global competition for capital is bound to become keener, and the demand for well informed, totally involved, independent thinking corporate directors will accordingly intensify.

Increasingly so over the past five years, conferences on corporate governance have been notable in their frequency and seriousness in several different countries, including France, Germany, Italy, the United Kingdom and, yes, even Japan. These conferences begin with special acknowledgment of a new era of more active shareholder involvement (via collective clout) requiring improved and more meaningful communications with shareholders -- a.k.a., in the past, shareholder relations.

Creation of an international corporate governance network is underway. The Conference Board and other prestigious and responsible organizations (e.g., the OECD) have recognized and continue to research the importance of good communication between shareholders and corporate boards/management. This new focus of research and discussion is global, and it is not a passing fancy brought on by the prospects of exotic travel to foreign lands. It is brought on by the observation that the world is getting more competitive. Adam Smith would be pleased, but...