Much has been written lately about the importance of shareholder engagement. (See this Doug’s Note, for example.) There has even been recent clambering to involve directors directly in shareholder engagement.
I am skeptical of direct shareholder-director engagement for reasons explained in this Doug’s Note. Microsoft, however, has been implementing a creative, middle-ground approach to this issue for the past several years that deserves consideration—a series of director videos that provide helpful director communication and insight without the potential downside of direct interaction.
What is Microsoft doing?
For several years, Microsoft has been rolling out short videos in which its individual directors respond to questions from an interviewer. The questions and answers address things like the director’s background, how that background is relevant to his or her role on the board, how the board operates, how the Microsoft board is different from other boards, some strategic insights, and the like.
The interviews are casual and conversational and don’t appear to be overly rehearsed. Production quality is good, but not elaborate. The interviews are conducted in what look like conference rooms or similar spaces (no fancy studios) with two cameras that switch between the director and the interviewer.
Video length varies from around ten minutes to nearly an hour, though the videos that are ten to twenty minutes seem most effective.
I like that Microsoft shoots and posts the videos one-by-one over time, rather than all at once. This allows the directors to address new developments and provides continuously fresh board communication, which should further enhance shareholder engagement.
The videos are posted on Microsoft’s web site under the Governance & Citizenship tab of the Investor Relations page. My only complaint (and it’s a small one) is that the videos are a little hard to find if you don’t know to look for them. Perhaps a more prominent Board of Directors tab would help.
What’s the benefit?
This strikes me as an easy, inexpensive and effective way to let shareholders hear from the directors in a controlled setting. Obviously, the videos can be edited and polished so that the directors appear in the best possible light, and there is no risk of a miscommunicated response to unexpected questions. The time commitment for each director should be relatively small (maybe a couple of hours), particularly if the video is shot in conjunction with a regularly scheduled director meeting.
If done correctly, director videos should provide insight into the board room that shareholders rarely get, while identifying the company as progressive with its disclosure, shareholder engagement and technology.
This idea has not gained a lot of momentum since Microsoft began doing it several years ago. For the right companies and boards, however, it could offer effective differentiation in an era of increasing engagement.