A Conversation About a Nuisance Shareholder

Pat: The board is faced with a shareholder who has been posting notes in the lobby about the board and what he calls mismanagement by the managing agent. Although the board members do not get paid for the time and services they provide, he is insinuating there is some underhandedness going on. This is an HDFC (Housing Development Fund Corporation) building where no one other than the managing agent gets paid for his services. The shareholder is spreading vicious lies, and there are a number of new shareholders who don’t really know us or the things we have done throughout the years. He was on the board, but he was voted off because of his bad attitude and racial remarks. What can we do?

MT: If the postings contain information that is correct, then it should be okay. Also, if you think you are doing a wonderful job, then what are you afraid of? Why not just post facts on the lobby board to correct him?

Liz People will often believe what they read, even in anonymous notes, and especially if your nuisance shareholder is pushing people’s buttons concerning their money. Part of co-op life involves dealing with a certain number of oppositional folks who seem to enjoy the power that comes with manipulating opinion. Board members will, therefore, always have to respond to misinformation and continually communicate with shareholders, providing clear, factual information.

You and other board members need to be strategic about having informal discussions with shareholders. People appreciate the give-and-take of conversations in which their questions and concerns can be answered, more so than the one-way communication of written memos. If you split up the work – and track the people you interact with – you can (re)gain shareholder trust and will have an easier time managing the building.

Kate: Very good points on the importance of establishing bonds with shareholders. Personal communication is much better than memos. Maybe a bit off-topic, but I think one mistake those from “professional” backgrounds make is to think that memos are all it takes to gain shareholder trust. Also, please do not overemphasize your professional jobs – that will alienate you from those who do not have similar status. In my last building, we had a blue-collar guy who was treasurer. He was conscientious, good with numbers, and did a very good job. And, I am curious as to whether Pat got anything out of our various comments. Hope that at least some of this helped.

Sara: If you can’t disprove what he is saying, just keep calling him a racist – that is the stock answer and might stop him.

Steve Rosenstein: I don’t think responding to the nuisance shareholder by calling him a racist will solve anything. It usually has the opposite effect and escalates the problem (he’s getting the reaction he wants).

Instead, try publishing a one- or two-page newsletter every month or every quarter explaining the reasons why the “mismanaged” decisions were made or actions were taken. Do not refer to the shareholder’s accusations, but simply describe the truth in general, informational terms. Toot your own horns! Slip a copy under each apartment door, or send via co-op-wide e-mail. You are under no obligation to provide “equal time” for any responses.

Do this enough, and I bet the annoyances will decrease because they won’t gain any traction. The nuisance shareholder will start to look like an idiot.

Frankie D: Turn the tables on the shareholder – create a task force or committee and ask him to run it. HDFCs are not known for efficiency, so this could help the cause and get the naysayer doing some productive work.

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