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3 ways to improve your IR content

Last week, I sorta felt as though I was taking my life in my hands when I dared to "debunk an American myth" and question the true strength of today's emerging IR tools. Refreshingly enough - and much to my relief - many of you agreed (guess I can cancel my request for Witness Protection).

Let's indulge that notion for a moment, shall we? Let's say you're self-actualized enough to admit that your IR content is not as strong as your IR tools. Would you know where to start the rehabilitation? Obviously, if your core investor messaging is so bland that it could apply to any company in any industry, a major re-work is in your near future. But let's say for the sake of argument that that's not the case. Let's say your core investor messaging is actually pretty good but it just hasn't been refreshed as recently as your IR toolkit has. In some ways, this is a harder problem to address. 

One way to think about it is to view the task as a home improvement project... it's an expansion (read: adding to the sound foundation), not a makeover (read: gutting the structure and starting over) ... make sense? As you well know, I could go on and on about analogies... let me know if this home improvement analogy doesn't cut it for you. Here are a few ways to expand (read: improve) your IR messaging to ensure it's as strong as the tools with which you use to diseminate it:

• Innovation – Every company claims to be innovative, but how many can prove it? By establishing a consistent and accurate metric and reporting it to investors (e.g., a vitality index that captures the amount of revenue generated by products launched over the past three to five years), you will be able to more fully leverage this important value driver.

• Use of Cash – With balance sheets restocked with cash, investors are anxious to understand how these dollars will be deployed effectively to spur growth and drive value. They want to know what criteria the board and management are using – and over what timeframe – to determine the best uses of the cash to generate value.

• Governance – Investors consistently rank quality of governance as pivotal to strategy execution and shareholder value creation, and they expect transparency around a variety of governance issues. Succession planning is a key area. Investors are also becoming more acutely focused on the qualifications of each director and want to understand how each contributes to the company’s strategic growth plan.

There are a few more ideas included in this piece that we just issued. Anything else you'd add to this list? Anything on this list you'd avoid?

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Here’s a thought…

The best IR tools known to man can't save a company from lousy investor messaging.

In other words, you could have a fully loaded, state-of-the-art IR "sound system" in place (e.g., turbo-charged website, active Twitter account, plush YouTube page, hearty virtual road show itinerary) but investors will turn a deaf ear if you don't have something compelling for them to listen to. Think about it, would you rather listen to this or something original like this?

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Daniel and the Terrible, Horrible, No Good, Very Bad Day

"Hello darkness, my old friend... I've come to talk with you again..."

I'd be surprised if these words (or, perhaps, these words) haven't crossed the mind of Sprint CEO Dan Hesse in the wake of his company's most recent analyst day that - according to Walter Piecyk, an analyst with BTIG LLC, which specializes in global trading and fund services for hedge funds - turned "ugly" when Mr. Hesse refused to provide detailed financial forecasts in response to repeated questions. The stock valuation fell approximately 26 percent following the event. As my uncle once said, "It's a paper loss... but that's A LOT of paper."

If you were in charge of Sprint's investor relations, what would you do?

I tell you what, waiting for the dust to settle would not be an option in my book. An organizational trauma such as this requires swift and immediate action - from a formal release addressing the financial question(s) to a follow-up conference call/webcast to discuss release regarding the financial question(s) to expanded content on the IR website (and elsewhere) to 1:1 meetings with investors, among other things. I'd also want an investor perception study done - likely after earnings are announced later this month - to see how "Operation Restoration" (I just made that up - it's kinda catchy, though) is tracking, if the messaging needs any modification in the short term and what the IR priorities need to be in the coming year. Such a study would also allow management and the Board to more clearly separate what's real and what's rhetoric amid the clamor of its vocal analysts. I'd also want to work closely with HR to combat the rumor mill and anxiety in the hallways, as well as keep in touch with sales/marketing to monitor the marketplace as closely as investors will be.

How do you see it?

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IR’s Forgotten Audience

While there are those that continue to want to hang Andrew Mason in effigy for the twists and turns relating to Groupon's proposed IPO, I think he deserves some credit for not overlooking IR's forgotten audience - the employees. 

It's been my experience that - more often than not - senior management teams are so focused on their large institutional holders that they completely lose sight of the loyal shareholders right under their noses. Among other things, these employee-owners can represent an important voting block each proxy season and, thus, should hear from management directly throughout the year on financial performance, strategic accomplishments and "... all the stuff that one would want to look good..." Of course, the communications to this constituency needs to be consistent with all other public disclosures to investors and in accordance with Reg. FD. But it should not be left to chance or assumed word will trickle down. Certainly employee-owners have a unique purview on their part of the company's operations, but they likely know less about the entire business and its strategy than you think. They - like all investors - need to have the dots connected for them and the metrics examined regularly.

Have you talked with your employee-owners lately?

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More Noise About the Quiet Period

According to Dan Primack, it's time to kill the IPO quiet period because, among other things, "It's time for the SEC to let companies communicate more freely with everyone..." While I am all in favor of making sure the governing rules and regulations align properly with the reality of the marketplace - and always think it's a good idea to see how we can get the government out of the marketplace - I think Mr. Primack has the gun pointed in the wrong direction on this one.

It's not time to kill the quiet period - it's time to (not literally) kill those who insist on putting together unreadable prospectuses filled with industry jargon, legalese, and fill-in-the-box boilerplate pap that make it nearly impossible for investors to get a true sense of the issuer's distinctive value proposition. It's time to treat the prospectus as a marketing tool, not merely a required compliance document. It's time to finally make "plain English" a reality rather than a theory. It's time to focus less on historical/unaudited/pro forma financial results and focus more on the core intangible assets (e.g., innovation/commercialization, management credibility/integrity, corporate reputation, market position, quality of strategy, customer loyalty, governance, CSR, etc.) that will drive results and create future growth opportunities. It's time for the prospectus to directly answer the primary question on every investors' mind - "Why is now the right time for me to take a position in this company?"

As Mr. Primack wisely points out, it's "... too loud a world to keep these [IPO] companies so quiet." But, from where I sit, killing the IPO quiet period will only increase the noise level in and around an initial public offering. I'd rather we focus on improving the quality of the discussion.

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Grading Directors by Stock Price (... and other dumb ideas)

Did you see this article a few weeks ago in The Wall Street Journal about this about grading directors by stock price? (subscription required) Man... that's about as dumb as trading two fast-rising pitching prospects for a guy who can't find the strike zone.

IROs - and people who love IROs - where are you on this one?!!? Why aren't you filling the blogosphere with call-and-response chants of "What do we want? METRICS! When do we want them? NOW!" Where's the sudden surge in related webinars? Where's the collective push to establish a comprehensive governance score card for companies and their Boards to use with investors?

C'mon people - if you really want a seat at the table as you've said before, then you can't sit on your hands! If the stock price isn't the right way to grade your performance, then how is it the right way to measure your boss's boss?!?!

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The Best Annual Reports of 2011

There are few things in life you can truly count on:

• Death
• Taxes
• "Next year" being "the year" for any professional sports franchise from Cleveland to finally win a championship
• "This year" being "the year" that the annual report is put down like a badly injured racehorse

We'll leave the first three for another day... talk to me about the annual report... why is this communications tool a perennial on the "death watch" list of so many in/around investor relations? And, if it is so damaged, then why do reports such as these continue to be produced?

(My thanks to the folks at ReportWatch for allowing me to serve as the North American judge again this year... truly a labour of love)

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Responding to a rude investor e-mail

A while back, I asked folks how they handle rude e-mails from investors, which - not surprisingly - sparked a healthy debate on LinkedIn (For those of you who participated in this online discussion, I sincerely thank you for taking the time to share your experiences and point of view - turned out to be one of the best webinars/seminars I've attended/been to in years!).

As I have reflected* on that discussion, a couple of things come to mind. First and foremost, let me make clear that I don't believe "respond" equals "debate" - rather it simply means "acknowledge." For that matter, "respond" does not have to involve an ongoing e-mail chain. In fact, it shouldn't. I agree with the majority of folks who felt strongly that the best way to address was to invite the sender to discuss the issue on the phone. Among other things, it prevents you from having your e-mails become fodder for various social media channels. Finally, if nothing else, a response puts the human element back into the equation. For example, see this redacted response to the IRO who received the e-mail that sparked the debate:

"Thanks for the news….I like what you said….just having you there to correspond is so uplifting no matter what happens…I can tell you are a really warm and considerate person- rare in this dog eat dog world…"

Of course... there is a risk of getting voicemails like this that was received by an IRO at a different company:

"(name), you are in charge of investor relations.  Well, for someone in charge of investor relations, you definitely have no clue about how to handle investors.  Listen, I have the big d#ck here, so you're here to suck my d#ck, not the other way around. I’m not here to prove to this (slur) motherf#cker guy who I am. Okay? So, next time you put someone like this on the phone, I’ll cut his f#cking balls off and I hope you (inaudable) this sh#t." [NOTE: the aforementioned "(slur) motherf#cker guy" was the company's CEO]

So... let me revisit the question - what's the rudest e-mail you ever got from an investor and how did you respond?

* I know - kind of pompous sounding but I couldn't think of anything that worked better.

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Whatever happened to… ? (vol. 2)

In this installment of "Whatever happened to...?", I'd like to take a look at another phenomenon that seemingly vaporized long before its time - #irchat. Now, I don't mean the once weekly Twitter forum that devolved into a monthly forum that may or may not exist today... I mean the hashtag itself as a Twitter designation for useful information and thought-provoking discussions on a wide range of IR issues. 

I don't know about you, but I rarely check this thread anymore. Where #irchat used to serve as a source for new ideas and healthy debate (admittedly some used it as a bully pulpit), it's now seems to be nothing more than a parking lot of retweets. Worse yet, its RT of stuff I suspect most tweeting haven't read as they go mute if you ask a question about the content. Seriously, not to go all "Lloyd Bentsen" on folks but I knew #irchat... #irchat was a friend of mine... #irchat is no (longer) #irchat.

I miss #irchat. I miss being able to throw out a question and get several different points of view to stretch my thinking and challenge my assumptions. I miss the laughs and the comradery. 

Maybe I'm expecting too much... maybe that virtual, global community was never sustainable... maybe it just jumped the shark... I dunno... you tell me... whatever happened to #irchat?

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Remembering Alan Miller

A few weeks ago, we learned that Alan Miller, co-chairman of Innisfree, had died at the much too young at age of 62. For those of you that had a chance to work with Alan - or work against him in a proxy fight - you know full well what a superb practitioner and strategist he was. If ever an individual was synonymous with proxy solicitation, it was Alan. We truly lost an icon with his passing.

We also lost a heck of a good man.

I first met Alan back in 2001, when I was asked by my CEO to retain outside proxy solicitation firm for a controversial and contested merger proposal. I still remember my call with Alan to this day. First of all, he was the only senior leader that took my call (the other firms had an appropriate saleperson call me back). Secondly, he took my call immediately as his admin forwarded me to his cell phone. And, finally, when I said to him, "We're a pretty small company - how can I be sure I won't be lost in your machine?" he replied without hesitation, "Because I will not let myself or my team look bad in front of you, your lawyers or directors. You have my word that I will personally work on your behalf."

I hired him on the spot... and he was a man of his word. And we also got the deal approved despite the aggressive opposition.

My last time I saw Alan was a year or so ago. He was very apologetic for letting so much time go by in between our semi-regular contact (in hindsight, he was clearly in the midst of his medical issues but he never used it as an excuse) and invited me out to lunch, where we had a wonderful meal and kibbitzed for several hours on a wide range of topics, including even a few work related ones. I distinctly remember leaving what turned out to be our last time together thinking, "It's amazing that a guy like Alan Miller still makes time for a schlub like me." Here's a guy that is in the middle of seemingly all the major transactions and proxy fights... a guy whose rolodex is stuffed with key decision makers and VIPs... a guy whose professional life requires speed and doggedness... and yet he can still find a way to kill a couple of hours over lunch discussing kids, world events and hilarious mishaps at coat checks with someone that is neither a key decision maker nor a VIP.

We lost a good one with Alan's passing. Rest in peace, my friend.

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