FORTUNE – Has the banking industry’s alpha personality finally learned that relationships and straight-talk matter? J.P. Morgan (JPM) CEO Jamie Dimon has scheduled a town hall meeting with regulators to try to bat down criticism about management and board oversight at the bank.
The strategy may be a relatively new one for the embattled Dimon, but many companies have begun engaging with investors and regulators on a more proactive basis. Earlier this year, Ray Lane at HP (HPQ) was able to convince the investment group Change to Win to switch their recommendation of a no vote against his reelection. He kept his board seat but lost his place as chair.
Ray Irani, chair at Occidental (OXY), stepped down amid no votes against him last week. But Irani survived as CEO and then as chair as long as he did because of the close communications the company has established with shareholders. Three years ago, the company’s deliberate process of shareholder consultation, involving the lead director, helped stem a major shareholder revolt.
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Regularly engaging investors has become more important as shareholders of all stripes grow more active. And more companies are catching on to the benefits of such engagement. A general counsel at a firm that’s often criticized for its executive compensation told me how important they felt shareholder outreach was, explaining that he regularly speaks with the staff of a large mutual fund and major shareowner that has turned into a major governance critic. In the past, mutual funds were the layabouts of the governance world, rarely taking an active role.
The desire for dialogue can go both ways. Arch Coal (ACI), the second largest coal producer in the U.S., is taking advantage of shareholders’ desire to communicate this year. Even after getting the SEC go-ahead, the New York Comptroller’s office withdrew an environmental disclosure resolution this year because “we reached an agreement with them,” a spokesperson for the Comptroller’s office wrote me in an email.
And Barbara Jennings, director of the Midwest Coalition for Responsible Investments (MCRI), says that unlike last year, her organization never even attempted to file a shareholder resolution on Arch Coal’s proxy. Last year, MCRI’s proposal asked the coal company to disclose metrics that would help investors assess the environmental and health hazards as well as the legal and reputational risks associated with its mining operations. This year, MCRI is going to try dialogue with the coal giant, Jennings told me.
MCRI has some leverage. The resolution MCRI proposed on last year’s proxy won 45% of the shareholder vote, a very high level for this kind of proxy filing. To put that vote in context, an IRRC Institute report issued in February shows that these kinds of social and environmental proposals tend to earn much lower percentages (an average of 21% in 2011). Not only did the Midwest Coalition’s proposal garner more than double the 2011 average for proposals of this type, less than a third of such proposals received that much shareholder support in 2011, the IRRC study shows.
The communication between MCRI and Arch Coal began in early April. And for now, Jennings remains hopeful. For Arch Coal, it meant an easy ballot with no shareholder resolutions.
These discussions, however, did not produce a quiet annual meeting for the coal giant. Miners protested at the meeting. The United Mine Workers have sued Arch Coal and Peabody Energy (BTU) for the companies’ alleged roles in avoiding pension and retiree health benefits payments associated with the now-bankrupt Patriot Coal. A win for the workers could make it more difficult for companies to skirt those promises.
As Dimon may soon discover, trying to talk your way out of trouble doesn’t always work.
Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance (
), a board advisory firm.