Home » How We Think » Street Talk »
Yes... I'm still on my soapbox about annual meetings. And, frankly, the more I think about it, the more worked up I get. In my opinion - or "IMO" as the kids would say - it just defies logic not to use that forum to further engage shareholders, as well as to difuse any potential rift(s) that activists could exploit for their self-serving agenda. Though, as one person commented to me late last week, "Proactive communication...can take the wind out of the sails of more excitable shareholders." In other words, if you wait until the annual meeting (or the proxy season for that matter), it's likely going to be too late.
Do yourself a favor... thumb through this latest issue of Directors & Boards, in which folks much smart than I offer their thoughts on this subject. Also, when you have a minute, please let me know what the benefits to a "five-minute annual meeting" are that I'm overlooking.
As some of you know, I like to talk to myself... particularly on my morning walks... and particularly on subjects like web disclosure that tend to be as polarizing as Justin Bieber. Well, thanks to the nice folks at Thomson Reuters, I had the opportunity to talk to others about this subject (web disclosure that is, not Justin Bieber) at an NYSE event the other week.
By and large, I thought the panel turned out to be an interesting session. Though, like so many recent debates about IR and technology, I came away from the session with a sinking feeling that the more we talk about web disclosure, the more adamant the advocates will get and the more resistant the doubters will get. Oddly enough, I remain somewhere in the middle - I'm a big proponent of the use of technology for IR purposes, yet I have not heard anything still changes my belief that web disclosure may not be for everyone (and I think it's okay if it's not for some companies). Frankly, I wish the IR community would spend half as much time talking about ways to improve the quality of the content in disclosures as it is talking about the various of distribution channels for disclosures. Just feels to me like we're putting the cart before the horse in some respects.
Anyway, back to the topic at hand... if you find yourself in the middle on this topic as I do, here are just some of the questions that I think you should be asking yourself and your colleagues:
1) How strong and reliable is our company's current Web server and IT function? You'll need enterprise-level hosting and accessibility, plus mobile access. You'll also need a contingency plan in the event of a server outage.
2) Do we have the internal resources - both from a time and knowledge standpoint - to handle the issuance of timely disclosures? Believe it or not, there are many companies that still want their communications firms to oversee the dissemination of corporate news as they simply cannot afford any added distractions the morning of a major announcement.
3) Is our IR website a recognized channel of disclosure (i.e., do you have a Reg FD compliant website)? I suspect this is/will be the biggest hurdle for most companies... and, sadly, it seems to be also the least discussed as most folks - particularly those with a dog in the fight - want to debate cost savings or system security or distribution scope and reach. All important considerations, but none relevant if the site isn't FD compliant.
Have you heard/seen anything relating to web disclosure lately that's swayed you in one direction over another? Are there other considerations you are weighing?
It's the most wonderful time of the year... if you like making / reading / debating lists. Personally, I'm fascinated with lists. Not so much the content, per se but the fact that we have this undeniable urge to make lists (and seemingly resistant to economic conditions). So - to get myself in the spirit of things - I'd like to share with you my list of IR lists:
5. The Greek Investor Relations Awards - I know absolutely nothing about these awards. That said, if the banquet is anything like the weddings, how can it not be on this list?!!?
4. Best Annual Reports by Report Watch - Despite the fact that they asked me to be a judge this past year, I find this to be a very smart look at the world of annual reports.
3. IR Global Rankings - A thorough look at the industry, to be sure. Truth be told, the numerical calculations have never really worked for me (nor the price tag).
2. SABRE Awards - The folks at The Holmes Report always put together a thoughtful review of the industry... and also have some of the more interesting categories.
1. IR Magazine Awards - Rightly or wrongly (I vote for the former), the IR Magazine awards seem to be the most coveted in the industry. To be sure, Cross Borders does a great job of keeping its fingers on the global pulse of investor relations.
What would you add to / change about this list? What awards do you hold in highest regard?
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.
If you’re like me, you likely expected the 2010 proxy season to be much more combative than it is shaping up to be. For the most part, it was eerily quiet despite what seemed to be ideal conditions for activists to assert/insert themselves - from lingering depressed valuations to hoarded cash on the balance sheet, among other things.
My colleagues and I recently spent some time sorting through what’s already occurred this current proxy season with an eye towards preparing for 2011. Our thoughts on the subject can be found here.
Be curious to know how this lines up with your experience in 2010 or expectations for 2011.
This morning, I had the conversation with my youngest son that I’ve been hoping I would not have for several more years. Below is an actual transcript of the conversation as it is now forever burned into my memory.
William: “Ummmm, Dad. I need to ask you something.”
Me: “Oh yeah? What’s up?”
William: “Well, we were talking about some stuff at school and I just didn’t know what to say.”
Me: “What do you mean? Who were you talking to?”
William: “My friends… at lunch…”
Me: “Yeah, and what were you talking about?” (now covered in a fine sheen of shvitz)
William: “Well… we were talking about grown up stuff… and…”
Me: (dying slowly while pretending to still be sorta watching Mike & Mike on ESPN2)
William: “... and… well… let me ask you something first…”
Me: “Okay.”
William: “Dad, do you have a job?”
Me: “Yeah, baby, I have a job. That’s what I do when I go to work.”
William: “Okay. Right. Okay. So… ummm… what’s your job?”
Me: “Oh… my job? Well… let’s see… I… uhhh…” (now in full panic - how do you explain IR to a 6-year old?!!?)
I think I mumbled something about helping companies tell their stories to people and help them answer questions when people have questions for them. I may have even mentioned something about intangible assets. Whatever I said, it felt lame but he let me off the hook as he came right back with “Yeah, I thought so. I could do that too when I’m a grown up. Hey Dad, can I still be a fireman and do what you do too?”
Me: “Of course, baby. You can be anything you want - and I know you’ll be great at doing it!”
So I gotta know - how have you explained what investor relations to your kids?
Just digging myself out from beneath the pile of “stuff” that grew on my desk while I was presenting at NIRI’s latest Intro to IR seminar and wanted to pass along some things from Santa Monica while they’re still fresh in my mind:
1. The folks at Aflac deserve all the IR awards they win. Wow, that’s an impressive team and program. One of the things I love that they do is their yearly Financial Analysts Briefing Book that they use to help educate investors on the various components of the business (think: a mashup of an annual report and an offering memorandum but on steroids). While not the most aesthetically pleasing piece I’ve ever seen, it is truly a disclosure piece of art. Talk about treating IR as a customer service function!
2. Along those same lines, one of the other presenters said that he sends a copy of their quarterly conference call transcripts to his investors to save them the step of having to find it online themselves. Brilliant. I will steal that one.
3. The message from the sell side and the buy side was identical - “make it easy for us.” By that they meant both make the company’s business easy to understand and make it easy for them to get the information they are looking for.
4. There was a lot of discussion on disclosure policies, which was good to see as I think this document is too often overlooked or under developed. During one of the discussions, someone mentioned that they include a policy on participating in corporate surveys (e.g., CSR practices). Very smart idea. I will also steal this one.
5. I was surprised at how little discussion there was on intangible assets, particularly given how much influence they have on valuation. Transparency on these mostly invisible growth catalysts is a critical component of an effective investor relations program. I’ll have to remember to ask the NIRI powers-that-be why that aspect was all but omitted from the program.
6. Similarly, there was very little discussion on how to effectively leverage financial or trade media within an IR program. Research continues to show that media coverage is a top source for investment ideas among buy-side investors. I’ll have to add that to my NIRI follow-up list.
On a slightly unrelated note, Kirk Cameron was apparently in Cleveland two weeks/weekends ago as he was on my flight to LAX. Who knew?!!?
