What Is a Total Equity Story, and Why Does It Matter?

To strengthen shareholder relations and value, directors can help management craft a compelling total equity story by following this framework.

In times of transformation and market volatility, companies must go beyond managing change to clearly show investors how they create and sustain shareholder value. Every company has an equity story, articulated or not, that is often more nuanced than management assumes.

A strong equity story is not built on internal optimism; it is built on credible financial realities and a clear execution roadmap that speaks directly to public markets. At its core, it is about ensuring that the company’s strategy is relevant, the business model is viable, and management is accountable for daily operations while articulating the company’s value proposition to investors.

When executed well, it shields against market skepticism, attracts long-term capital, and strengthens valuation multiples. To accomplish this, the company should actively engage with investors and be open to feedback, particularly when its stock price is stagnant.

What Makes an Equity Story Work

A successful total equity story rests on four foundations:

Market positioning. The board and management should clearly communicate where the company competes, how it wins, and what makes its strategy viable and differentiated. This should be rooted in fact-based market insights and free from internal bias.

Value creation plan. A detailed, initiative-backed strategy that links operational and financial performance can ensure enduring shareholder value.

Management and board accountability. Management develops the strategy that is then approved by the board and tied to clear metrics. The board holds management accountable and aligns executive incentives with shareholder returns.

Narrative. This outline connects a company’s metrics to its broader strategy and reinforces its long-term value proposition to investors.

When the Story Breaks

When coherence, discipline, or alignment falters, the equity story unravels.

Consider the example of an established and storied industrial company that was once admired for innovation, scale, and diversification. The business’s story broke down due to the following management missteps over time:

• Conflicting priorities across business units made growth paths unclear.
• Earnings relied heavily on financial services, hiding deep operational weaknesses in core industrial units.
• Capital was allocated to projects that did not generate sustainable returns.
• Repeated earnings misses and unclear company guidance reduced investor confidence.
• The company’s long-standing narrative of stability and diversification no longer matched investor expectations.

As a result, the company lost credibility with investors, experienced a sharp drop in valuation, and was eventually removed from a major stock index. Rebuilding stakeholder trust took years of restructuring and refocusing the company’s priorities.

The Board’s Role

The board owns and guides the total equity story. Directors play a critical role in aligning management and investor perspectives, stress testing strategy and capital decisions, ensuring the narrative is both credible and compelling, and overseeing that the operational plan and communications are mutually reinforcing.

Directors should work closely with management to ensure alignment in the following areas:

• Strong investor relations capabilities. Management should embed investor relations into strategy, align messaging with execution, and use investor and market feedback to guide decisions. The board can reinforce this by treating investor relations as strategic, testing the equity story, coaching executives, and engaging with investors to show alignment.
• Transparent and collaborative engagement. Boards should expect management to maintain open and active collaboration regarding:
  • financial data, providing clear, timely, and accurate reporting with context for performance drivers and risks;
  • market and shareholder sentiment, offering insight into how investors are reacting implicitly or explicitly through investor perception studies that show whether the company’s value proposition is understood by shareholders; and
  • strategic vision and execution, including through regular updates on long-term strategy and how strategy supports sustained shareholder value.
• Chief financial officer and investor relations leadership visibility. Individuals in these roles should have an elevated presence with the board and be empowered to speak candidly about market feedback and investor concerns. The board can enable this by scheduling regular, direct sessions; inviting them into strategic discussions; and signaling that their perspectives carry weight in decision-making.

Ultimately, the board’s leadership in shaping and communicating a compelling total equity story is critical to maintain investor confidence and drive sustainable, long-term value.

To succeed, boards must proactively engage in this process by embracing transparency, fostering trust, and enabling companies to capitalize on both market challenges and opportunities.

A Call to Action

Now is the time for boards to take ownership of the equity story. Directors can start by asking the following questions:

• Market position. Do we understand where we play, how we win, and if this is sustainable? Are market opportunities and risks supported by external, fact-based analysis?
• Credible value creation. Are operational priorities and financial outcomes clearly linked? Are milestones, key performance indicators, and timelines specific and measurable? Does the strategic plan align with shareholder expectations for growth, returns, and capital discipline?
• Management accountability and alignment. Are performance metrics transparent and reported consistently? Does the compensation committee set executive incentives that are aligned with shareholder value? Does management own both successes and shortfalls?
• Narrative. Are communications to stakeholders consistent? Does the narrative withstand market skepticism and competitive challenge? Is it adaptable to changing market conditions without losing coherence? What does the investor community currently think about the company, and how aligned is that perception with the intended narrative?

Done well, a total equity story is more than messaging; it is a strategic and operational blueprint for creating and sustaining shareholder value. Every company has one, but the strongest stories reflect industry realities, relative positioning, and active investor feedback to remain credible in the eyes of the market.

The views expressed in this article are the authors’ own and do not represent the perspective of NACD.

Alvarez & Marsal is a NACD partner, providing directors with critical and timely information, and perspectives. Alvarez & Marsal is a financial supporter of the NACD.