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The good folks at Report Watch by e.com have just issued their 2010 Best Annual Reports piece. Interesting view of the world of annual reports from this London-based “organisation” - definitely worth clicking through when you have a moment.
This was my first year serving as a judge for this report and I can honestly say I was completely blown away by the quality of annuals I saw - from content to creativity. These were true investor education pieces… these companies were using their annual report to assert their distinct value proposition… these reports were strong and proactive pitches to the investment community… these reports were built to make an impact, not meet a compliance… these reports also contain rich CSR content that global investors seek… take a look at the report and see for yourself.
I will tell you this - after reviewing the books I reviewed - I find it hard to believe the talk of the printed annual report going the way of the Betamax is anything more than just that - talk. Be interested to hear your thoughts on this report and annuals in general.
Recently, I helped facilitate a day-long IR training session for a client organization. It was a really interesting session as the participants included folks from communications, finance and legal so we had the chance to look at the issues from a number of different vantage points.
During lunch, one of our senior advisors who is a former Institutional Investor All-American research analyst spoke to the group to provide yet another view of the world, as well as field any and all questions on the “mind of the investor.” During this discussion, one of the participants asked, “What are some things that companies do that absolutely infuriates investors and analysts?”
I thought this was a great question… here’s the list the former analyst came up with:
1. Don’t be dismissive of a question. It doesn’t make you look smart, it makes you look like a defensive jerk. It will also cause the Street to believe that it has uncovered something meaningful.
2. Don’t give out information you don’t want to give out. Investors and analysts are not your friends - and while they may not quote you direct, they will share whatever information you give them.
3. Stay consistent in your disclosures. If you provided a particular data point this quarter, investors are going expect an update on that data point next quarter. Inconsistency in disclosure will cause investors to believe (needlessly in most cases) that you are hiding something - or worse.
4. Help the Street understand the company’s strategic mindset. This isn’t an ask for material, non-public information or proprietary data, rather it is a request for a better understanding on how the company is measuring progress and identify opportunities. The Street wants a better sense of the environment in which you operate - broadly speaking, where are the pressure points, where are the windows of opportunity, etc.
Easy as pie, right? I actually thought it was a pretty fair and doable list. Based on your experience, what would you add or delete from this list?
It’s gone on long enough that I can no longer ignore the elephant in the room. I’ve tried to look the other way. I’ve tried to quietly make suggestions. Nothing’s worked. Therefore, I’m left with no other course of action but to debunk an American myth and take my life in my hands: a healthy percentage of companies are not hosting effective earnings conference calls with investors.
The reason? They are not properly prepared.
Scarier still is the percentage of companies that fall into this category that don’t realize it. So… how can you figure out if you are one of those companies? Here are a few questions to ask yourself:
1. Are you reading the release to the participants?
2. Do your opening comments take longer than the time allotted for Q&A?
3. Do you anticipate questions and address them in your opening comments?
4. Do you know how to maintain control of the call should a participant try to impose his/her agenda upon it?
5. Do you have a contingency plan should one of your CEO or CFO not be available to participate in the call at the last minute?
6. Do you rehearse the call in advance as a group?
7. If yes to #6, does the rehearsal also include the IRO playing the role of the investor/analyst in a mock Q&A session?
8. How do you close your call?
I won’t ask you how you answered these questions. I would; however, love to know how you evaluate the effectiveness of your conference calls.
I know it seems like I’ve got proxy season on the brain lately but I thought this piece from Morrow & Co. was really well done and worth passing along.
After reading it, here’s my question to you: is blindly following the recommendation of a proxy advisory services firm a cop out on the institutional investor’s part? I think I do.
Don’t get me wrong - I understand the role that ISS and Glass Lewis (among others) play in today’s corporate governance… and it’s an important role. We need them on that wall.
I just find it hard to believe that an institution that has invested enough time and resources required to take a position in a company’s equity does not allow itself to take a position in that same company’s proxy. What am I missing?
