CorpComms Magazine

As chairman and chief executive of the world's largest steel company, Lakshmi Mittal probably never imagined that one day he would sit in his office in Luxembourg and communicate with a group of cartoon style characters gathered around a virtual auditorium.

But that is exactly what the industrialist did recently as part of ArcelorMittal's efforts to improve communications with its disparate retail shareholder base.

Almost 70 retail shareholders donned their cartoon alter egos, known as avators, and entered virtual world Second Life to communicate with Mittal from the comfort of their own homes.

Julien Onillon, director of investor relations at ArcelorMittal, who was responsible for this new forum, explains: ‘We have a legal obligation to communicate with our shareholders, and we talk to retail investors through the press and a series of meetings with board directors. But the issue for us is that we have many retail investors and that can be difficult to manage.'

As ArcelorMittal led the consolidation of the global steel market, it picked up more than just underperforming companies. The world's largest steel company also gained listings on the stock exchanges of New York, Amsterdam, Paris, Brussels and Luxembourg, plus four regional exchanges in Spain, and about 80,000 retail investors who account for around 2.5 per cent of the company's outstanding shares.

Onillon explains: ‘Our annual meeting takes place in Luxembourg, where we are headquartered, and between 300 to 500 retail shareholders attend that.'

ArcelorMittal also holds additional town hall meetings in Paris, Madrid, Amsterdam and Brussels for its retail shareholder base. ‘We don't hold a meeting in America because the shareholders are too spread out. We are not legally obliged to hold these meetings, but we do so because we want to keep our retail shareholders well informed,' says Onillon.

The biggest meeting took place in Paris, where about 500 investors turned up, but fewer than 50 retail shareholders made the effort in Madrid.

But it was not the poor attendance that concerned ArcelorMittal. Onillon believes that many retail shareholders who turned up for the meetings came expecting lunch, or even a gift. ‘There were not really many serious questions,' he adds. ‘But the meetings cost more than £250,000 to hold. They involved members of the management board, which used a lot of their time, and it cost money to organise venues and catering. Yet the returns seemed to be very little.'

Onillon decided that ‘something needed to change'. At the same time, he was keen for ArcelorMittal to engage with a younger demographic. The majority of ArcelorMittal's retail shareholders are older than 65.

‘We need retail shareholders because they tend to be committed long-term investors,' he explains. ‘But we also need to get some younger shareholders. They are more used to using IT, so we started thinking about meetings and new technology, which led us to Second Life and the virtual world.'

The company already produces podcasts and Web TV for shareholders, but Second Life offers the possibility for real-time dialogue.

Onillon decided to hold a meeting for retail shareholders in two locations - Luxembourg and Second Life - simultaneously.

ArcelorMittal established an island on Second Life, and created a virtual building shaped like the group's logo. Shareholders were invited to pre-register their interest on the company's website, with specific questions for Lakshmi Mittal to answer.

Retail shareholders who had attended previous meetings, and might not wish to embark on a Second Life journey, were invited to attend a face-to-face meeting with Mittal in Luxembourg. The steel company also offered to contribute 50 per cent of the cost of their travel expenses. However, just 20 shareholders signed up for the deal. ‘It showed that the majority of shareholders did not care,' says Onillon.

On the day of the meeting, those shareholders attending in Luxembourg were able to put their questions to Mittal personally while the Second Life participants were able to hover or sit in either a chat room underneath the logo, a sun-sheltered auditorium or an open air café (although no refreshments were served).

Onillon explains: ‘Mr Mittal was physically visible on a screen to participants on Second Life and shareholders could see him and ask questions in real time.' The fact that they asked questions in the guise of rabbits and other cartoon characters did not seem to faze the Indian-born billionaire.

In total, 69 unique avators entered the auditorium at various points to attend the meeting, which lasted more than two hours. ‘Very few were actual shareholders,' admits Onillon. ‘They had heard about the meeting and just wanted to see what it was all about.'

The virtual auditorium also offered attendees online access to relevant documentation, access to episodes of the steel company's web television series and the ability to engage in dialogue with the company.

After the meeting ended, however, a further 300 avators entered ArcelorMittal's island and downloaded information about the company and transcripts of the question and answer sessions. And, to date, more than 450 people have visited the site, many of whom were previously unfamiliar with ArcelorMittal.

But Onillon concedes that there are some problems holding events on Second Life. ‘If more than 50 avators attend an event, technical problems occur,' he explains. ‘There are limitations on the server. There is also an issue that some shareholders did not know how to use the technology.' Many of the participants had basic avator characters, rather than more sophisticated images, which indicated that they were new to Second Life.

‘But I would say that this is still an interesting forum to interact with shareholders,' says Onillon. ‘And at least we have succeeded in creating something different for them. We are trying to create and develop a community for shareholders, and Second Life offers us a platform on a global basis.'

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