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Tweeting from the C-Suite: How Executives Can Stay Out of Trouble on Social Media
Posted on December 17th 2012
“Netflix monthly viewing exceeded 1 billion hours for the first time ever in June.”
On July 3, 2012, Netflix CEO Reed Hastings posted a seemingly innocuous message on his Facebook page, congratulating his content licensing team for their part in the company’s record 1 billion hours of user viewing time during the month of June. But his post caught the eye of regulators at the Securities and Exchange Commission, who determined that the CEO had violated Regulation Fair Disclosure, a rule that requires public companies to share material information with all investors.
Hastings and Netflix are now under investigation by the SEC, and could face civil charges for the non-public disclosure of the statistic. The case could help redefine the role of social media in corporate communications, like whether a Facebook post to 200K followers is any less public than a press release filed at the SEC.
In the meantime, CEOs who ache to tweet from the C-Suite – and the PR and communications types who help them do it – can already draw some early lessons from the situation:
1. Be strategic about social media engagement:
According to strategic communications firm Greentarget, there are four “half-truths” that can get in the way of adopting a strategic approach to C-level social media engagement:
- “We can use social media to get our messages out there right away.”
- “It’s easy to learn, so it must be easy to do well.”
- “Social media gives our executives a platform to talk about our company’s wins.”
- “Our executives are important, so they will command respect on social media.”
Their conclusion? Treat executive social media activity like you would any other business endeavor, weigh the pros and cons of engagement, and develop a comprehensive plan for generating value from the C-suite tweet:
“An executive approach to social media, particularly within the B2B environment, needs to take into account numerous complex issues. Further, the final decision must be thought of in the context of the organization as a whole, the executives it employs, and the industry and regulatory environment in which it operates.”
2. Develop a process for vetting social media posts:
Travis Crabtree, an eMedia attorney at law firm Looper Reed, recommends developing a plan to make sure posts containing what the SEC considers to be “material information” don’t get disseminated in the first place:
“Review your current process you use to disseminate information to investors analysts and other in light of Reg FD. After you spot the risks, prepare a policy outlining the consequences and share it with executives, investor relations and anyone else who is responsible for talking to investors. Use the policy to do periodic Reg FD planning and designate a primary compliance person to review statements before they go out if there is a question.”
3. Make sure your social media policy extends to the C-suite:
Your company may already have a social media policy, but does it take your C-level executives AND the SEC into account? Probably not. But that’s very important, writes Darren Freedman of law firm TroyGould:
“The company should adopt social media guidelines which cover the use of social media by representatives of the company from a securities law and corporate governance perspective. The guidelines should regulate disclosures on social media in the same way as the company regulates disclosures in other media (i.e., the company should not disclose material information through social media before disclosing it through a Form 8,K or more customary news releases).”
One final note: it’s not only top executives who need to ensure that the right policies and procedures are in place, writes Tim Banks from Canada’s Fraser Milner Casgrain. Corporate directors also have a role to play:
“What is the bottom line from [a recent] survey of 180 senior executives and corporate directors of North American public and private companies? Senior executives and directors appreciate the power and the risk of social media. But they are not engaged from a governance perspective.”
You can read Banks’ “10 topics that Directors may wish to review from a governance perspective” here.