Commentary: Why Should Analysts Be Told More Than You?

"Radicalization comes at the end of a billy club" -- Old saw

All right, so the stern-faced guards weren't exactly toting clubs. But they and the even more imposing middle-aged matrons barring the way to the meeting rooms at the posh Ritz-Carlton definitely made me want to toss a brick at some plate glass. Steely-eyed, they stood between me and top honchos from the likes of General Mills, Kellogg, and Campbell Soup. The managers were huddling in private with some 350 analysts and big-shot investors in late February at the yearly Consumer Analysts Group of New York (CAGNY) meeting, in Naples, Fla. As the guards edged closer, one indignant clerk hissed: "You're with the press? You can't be in here."

Why not? After more than a year of browbeating by such heavyweights as Securities & Exchange Commission Chairman Arthur Levitt Jr. and the National Investor Relations Institute, it's simply stunning that high-profile companies still meet in such secret sessions.

VELVET ROPES. Levitt has been unequivocal in stating it's wrong to selectively disclose important developments to a handpicked few who then can profit by the news. That's why smart CEOs have opened their quarterly conference calls to the press. Even better, many now air such sessions broadly via Webcasts on company sites.

Such openness may soon become the effective law of the land. The SEC is mulling a rule, proposed in December, that would require companies to make broad and timely disclosures of any "material" information that they share with select outsiders. Some critics fear Regulation FD--for fair disclosure--could chill routine private contacts, but simple fairness demands more candor with all investors. The rule could help open the doors at cozy gatherings like CAGNY.

Indeed, because of increased pressure to open up, the Naples session saw some oddities. Hershey Foods Corp. Webcast its presentation simultaneously on its corporate site. Investors big and small--not to mention employees, suppliers, candy bar lovers, and anyone curious about the company's fortunes--heard an hour's worth of detail about CEO Kenneth L. Wolfe's "most difficult and disappointing" past year. The oddity: Reporters in the Ritz-Carlton lobby could click onto the site to listen, but still faced those guards if they tried to see Wolfe in person.

Companies should stand up to analysts and large investors who think they deserve special private access and just say no. Yes, these analysts do influence lots of well-heeled investors. And yes, there can be real value in face-to-face sessions. So it's fine to meet with them--but CEOs should insist the meetings be open to reporters and broadcast over the Net. Savvy corporate honchos need to realize that their obligations to communicate extend to all investors. So let that Florida sunshine into those meeting rooms. It'll enlighten everybody.

Before it's here, it's on the Bloomberg Terminal.