It was the one thing CEOs had left to hold onto, and now they might have to let it go as well: a strong stock price.

Despite forced shutdowns, layoffs, and missed earnings resulting from the pandemic, the stock market has remained buoyant, posting remarkable gains over the last few months. But now, although quick upticks may occur (the market rose Wednesday), Wall Street has seen some dramatic plunges for the second week in a row, leaving leaders with more bad news to communicate to a series of stakeholders, from directors to large investor groups.

Without a doubt, many CEOs have long kept a close eye on their stock price—given the role it plays with executive compensation and with powerful institutional investors who can create considerable noise about the C-suite’s and board’s direction. As a result, investor-relationship professionals work hard to create a messaging plan around sinking stock prices. “The companies that get through bad times are the ones that have cultivated relationships with investors who trust that there will be light at the end of the tunnel,” says Peter McDermott, a senior client partner in Korn Ferry’s Corporate Affairs Center of Expertise.

Until recently, Wall Street had no problem seeing that light. Through the summer, as the market posted record monthly gains, the prevailing view was that the worst of COVID-19 might be behind corporate America. Investors looked at cities lifting lockdowns and vaccine updates, as well as government stimulus programs, and saw a promising rebound. Meanwhile, tech stocks soared to record highs as people relied on streaming video, e-commerce, and social media for work and entertainment.

Now, however, as that air appears to be coming out of the market bubble, experts say firms need to put more emphasis on the long term. That'll be especially true in the coming months: October is a historically tumultuous time for stocks, adding more potential for wild swings in share prices. “Leaders have to reinforce to stakeholders that the ultimate mission is to execute against business goals regardless of stock price swings,” says Richard Marshall, a global managing director in Korn Ferry’s Corporate Affairs Center of Expertise.

To be sure, one of the biggest challenges for leaders is preventing employee engagement and stock price moves from swinging in tandem, says Dan Kaplan, a senior client partner in Korn Ferry’s Chief Human Resources Officers practice. “When a share price is high, employees can develop artificial confidence and bravado, and when it drops they too can become equally deflated,” says Kaplan.

That’s partly because a large chunk of some employee compensation plans is in the form of stock awards. Mark Royal, a senior director at Korn Ferry who specializes in employee engagement, says while organizations aren’t giving out raises or bonuses, “at least rising stock values were helping keep people from feeling too under-rewarded.” Royal says communicating a path forward in the face of a declining stock price can improve employee engagement much the same way it can raise investor confidence. Employees, like investors, “need to have confidence that their leaders have a plan to succeed,” he says.

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