Satisfaction for All Comers on IR Websites
January 6, 2009
We’ve discussed the idea of who the target audience of an Investor Relations website is before. From employee and retiree shareholders, to retail investors, to analysts, and the financial media, an IR website can be expected to cover a lot of ground. That is why Investor Relations departments try to mash so much information onto a single webpage.
Quick Investor Relations
Cisco is one of the world’s leading networking companies. Its hardware runs inside the networks of companies big and small. That means that it is on the minds of many people both in the technology industry and not. Interest can jump quickly based on numerous events including media coverage that concerns the company either directly and tangentially.
The Cisco corporation can also be considered a fit for numerous investment categories, technology, networking, hardware, telecommunications, and even plain old large cap U.S., which means that in addition to a spot on the public’s awareness radar, it also commands a spot in many stock screeners or other investing tools that return companies based on various criteria.
Just how to provide useful investor information at once to the savvy retail investor or professional analyst, and the event driven investor, or investors looking for “a technology company”, can be a design and logistics nightmare. Those who come to a company’s IR site frequently, don’t want to be bogged down with a long list of links burying the specific information they came to get, while those who are new to the site don’t want to have to figure out which menu has what, just to get a quick look at the company.
Company Fact Sheets
The investor relations webpage is accessible from the Cisco homepage, though it is not visible until one clicks on Quick Links (tsk, tsk). From there, an information packed and useful IR landing page greets potential and current investors. All the usual information is readily accessible, stock quote, regulatory filings, financials, even events and presentations. Additionally, a Fact Sheet link commands a prominent space in the left side menu.
The fact sheet at Cisco is, like many other companies, actually an offering of the “news” section of the Cisco website, but it contains a treasure trove of information for new investors who want to take a quick look at Cisco and decide if it is an idea they wish to pursue further. But, since those investors are likely to arrive via the IR site, they may never find this source of information which may fit their needs better.
The easy to find link on the IR menu ensures that all arrivals have the opportunity to decide that their needs might be best served by a fact sheet rather than fully navigating the information available on the IR side. By offloading these potential investors to this one-stop shopping style information page, the Cisco IR department can focus on building its Investor Relations web pages and navigation to suit those investors who may be making one of many returns to the Cisco IR information.
IR Best Practices
For the fact sheet to be a useful way to provide “at a glance” information to potential investors, it needs to contain links to the most commonly requested information. Use your own experience by leveraging the knowledge of those who serve as investor contacts at your company. They will likely be able to rattle off a small laundry list of items which are the most frequently requested by callers and email. Position those items on the company fact sheet as well as other information that you would like quick hitting information seekers to find. On the Cisco fact sheet for example, the company lists its many awards so that anyone viewing the sheet will see them regardless of their intention to seek out a list of such kudos.
By creating a quick and easy way for users looking to go through a lot of information one click after another, you make life easier for them. At the same time, you relive the burden of sifting through a unruly stack of links from frequent IR visitors, creating a win-win situation for all potential and current investors.
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DRIP Investment Programs and Investor Relations
December 26, 2008
DRIPs, or Dividend Reinvestment Programs, are typically aimed at smaller retail investors. As such, they are not often on the front radar screen of most Investor Relations departments. Still, as shareholders, DRIP investors end up being fairly loyal, and in most cases do not sell shares based on news, market movements, or other “events.” So, in a very real way, DRIP investors act much like a stock buyback in that they remove shares from the market for longer periods of time. A large DRIP program could theoretically have a nice positive impact upon a company’s long-term stock price.
DRIP Investors
Most stockholders in DRIP programs are very small time investors. Often, they are inspired to setup such an investment after reading a magazine article or website which touts their benefits. Therein, lies the difficulty. Typically, such investors will have little or no experience with investing other than mutual funds and their retirement accounts. Thus, their knowledge base regarding how stocks, the stock market, and public companies work will be very limited. So limited, in fact, that just figuring out that “Investor Relations” means them may be a challenge, and the concept of a transfer agent will most likely be completely foreign. A one liner directing potential DRIP investors to the main page of a company’s transfer agent will likely result in failure for converting an interested investor into an actual investor.
A more effective means of converting these small time prospective investors into actual company shareholders can be accomplished with just a small amount of effort. Such effort, can virtually be a one-time thing that continues to pay dividends (pun intended) well into the future.
Investor Relations and DRIPs
Since the DRIP programs at most companies are administered by a third-party, many firms simply to choose to take a hands off approach to investors seeking information about a companies DRIP program by directing them, whether directly or indirectly, to the third-party that handles the DRIP. However, those companies generally offer DRIPs for several publicly traded companies. They have neither the time nor inclination to provide any sort of company specific information to prospective investors.
Additionally, many IR departments and their companies are concerned that offering too much information may be construed as an offer to sell securities which, of course, opens up a whole basket of potential problems.
So, for a lot of companies, the only information on their direct stock purchase program is an answer in the FAQ that says, “Yes, we offer a plan, click here.” While completely sufficient, and for the savvy investor, more than adequate, this can be confusing to a novice shareholder, especially when the link in question points to the transfer agent’s home page where such an investor will get lost in a sea of what must be just mumbo jumbo to them.
However, a proactive IR department looking to acquire and retain more investors of any size can have a huge affect on this dilemma with just a single webpage or two of educational content.
For example, take a look at these images taken from Target’s investor relations site. Instead of burying the information in the FAQ or elsewhere for the user to find, they have an actual webpage complete with normal header for the direct investment program. There is very little text on the page, but what their is satisfies even the new investor’s questions. It points out that an investor can use the program or a brokerage account. Then, the page notes that the direct investment program is administered by its transfer agent, and says that to learn more the user will need to click the “button” below. (It’s actually a link, so that is a tiny bit confusing, but we’ll chalk that up to design issues.)
The link sits directly beneath the disclaimer that the program is not an offer to sell securities, meeting requirements for both proximity and likelihood that the investor knows what they are agreeing to.
In this case, Target has also chosen an additional notice that the investor is leaving the Target site. When the user clicks yes, the landing page is customized to users coming from the Target site. This prevents confusion among investors who might otherwise wonder if they are “in the right place,” and whether or not they have stumbled upon something too complicated to continue with.
The landing page at BNY Mellon spells out exactly why the users are here, and what their options are for the program. Finally, the link for the Target specific information and details sits at the bottom of the page.
The combination of these two tiny pages accomplishes multiple things for the IR department. First, it fulfils any obligation to notify users of the program as well as providing the necessary link to the appropriate third party. But, while the FAQ answer stops here, these pages also ensure that the user understands where they are and why. They confirm that the link they have followed it the “right” one regardless of whether they are an existing shareholder or a new shareholder, and finally, they ensure that the potential investor will arrive at the program details without any doubts or concerns. In total, these benefits add up to less calls and emails to the IR department who otherwise might be involved by investors looking to “make sure” that they are doing it right, and also lowers the number of calls received by the transfer agent from prospective investors looking for a live person to confirm that things are in order.
As is often the case, a little extra communication ensures a smoother process for both future shareholder, and IR department.
Getting the landing page right for investors
December 18, 2008
There are many theories regarding landing pages within and without the Investor Relations field.
One idea is that a landing page should be quick loading and serve merely as a sign post that the user has arrived at their intended location.
Another theory suggests that as much information as possible should be placed on the landing page in order to provide an interface which requires the fewest clicks from a user in order to reach the information they were looking for. However, this can lead to an unpleasant looking page that is so full of information that it appears unfriendly and perhaps takes longer for the user to find what they are looking for despite any savings in how many clicks it takes to get there.
McAfee Landing Page
The McAfee investor relations landing page is a solid example of a page which contains lots of information while maintaining its overall readability and aesthetics.
When first viewing the page, one is struck by the fact that although the page remains fully branded, there are remarkably few graphics. This is accomplished by using not only the corporate logo in the upper left corner, but also by using a branded logo as the graphic that accompanies the top news story in the main content area. By using this technique, the page avoids the sparse look that comes from no graphics, while not wasting any area for superfluous design elements.
The other design element which allows for McAfee to get so much information onto this single page is that the separation between sections has not been aggrandized by large overbearing fonts, nor complex scrolls or other design heavy separators. Instead, simple (and proven) gray bars are used with bold text. Thus, the content areas are well separated, again without the cost of space loss.
What remains is a landing page that contains the beginning of virtually all of the basic information any investor might be looking for. Just a quick perusal of the landing page shows just how much information has been loaded at the investor’s fingertips:
- Current Stock Quote
- Most recent webcast
- Most recent earnings information
- A year’s worth of previous earnings info
- Most recent news release
- Company Profile
- Upcoming Events
- List of Press Releases
- Investor Relations Contact Information
- Stock Listing Information
This array of information often takes many investor relations websites several pages to convey to the investor at any level. The success of this arrangement comes from the idea that while a user will appreciate fewer clicks to find the data they are looking for, it is impractical to simply provide multiple full content documents on a single display. Thus, when the McAfee IR landing page displays the “Corporate Profile,” it makes no attempt to display the whole text, nor even a major portion thereof. Instead, a quick overview of what the company does (often referred to in marketing as an “elevator pitch”) is paired with two links. One link goes to the corporate brochure, which no doubt contains a much more complete picture of the company profile, and the other goes to a corporate fact sheet, which contains much of the other information a user might want regarding an overview of the company.
Easy navigation from the landing page to other more specific information is made easy by a clear easy to read menu bar at the left and a compact and user friendly toolbar across the top.
Best Practices – Layout Design for Maximum Information
Contrast the McAfee IR landing page to your company’s investor relations landing page. Are you able to communicate as much information to a prospective or current investor as quickly? Does the graphical design of your landing page use up valuable real estate that could be better spent communicating with your investors? How many clicks does it take to find the same information? For example, a shareholder with physical stock certificates looking for contact information for the IR department, or the transfer agent will require how many clicks to find the same information on your site?
Of course, copying the success of others is rarely the answer, but the layout and design used by McAfee provides a compelling case for the much information on the landing page paradigm without falling victim to its potential flaws. Studying what works here can help lead to ideas that will work for you as well.
GE Reports – Investor Relations Branches Out
December 4, 2008
When it comes to communicating with shareholders, many IR departments walk a fine line between the demand for more insight from shareholders, and the concern of legal and regulatory issues.
One of the issues with additional communications on the Investor Relations page is that its very placement suggests a formal and authoritative nature. One company is eliminating that problem by communicating with shareholders and customers alike via a separate website with its own domain name. This is a corporate blog, clearly linked from the main investor landing page.
GE reports
GE Reports is hosted at www.gereports.com. The link from the main site is in itself commendable, and the benefits of the additional site are numerous. The site is not specific or limited to investor communications. Instead, the site provides GE with a forum to publish its take on virtually any matter that arises.
The beauty of this idea is that it allows GE to not only respond to issues raised by the media or others, but also to express opinions and ideas proactively. In this way, GE can comment on both potential trouble and potential success in a way that helps to shape the discussion on such topics.
While a good idea in general, our concern here is with the value of such a site to Investor Relations departments. This value comes in many forms, both overt, and implicit. For example, the top post on this day notes the upcoming investor meeting for GE Capital including the fact that both a webcast and the materials will be available online. Such information not only reminds both investors and non-investors alike about an important upcoming event, it also demonstrates the company’s commitment to its investors.
GE Reports Answers
Perhaps the easiest way to see the enormous potential benefit of such an endeavor comes in the form of the Q&A that is posted regularly. The most recent had three questions posted. The first question was whether or not GE’s cash flow from operations minus asset sales is negative (and has been for years). I have heard this on occasion too. (I do not own GE stock, nor have any relationship with the company.) In the regular IR section of the official website, dispelling a rumor like this comes with some pretty thin ice to skate on. But here, a quick answer regarding GE’s cash flow is not only possible, but expected. (However, I am slightly disappointed that the answer did not directly answer the part of the question about asset sales.)
The next question asks about forecasting GE’s dividend after 2009. Again, this is a hot button issue that has many current investors nervous. The answer is a quick no, but more importantly it provides a link to a story about GE’s dividend, albeit the 2008 dividend. Such opportunities to steer investors in the direction of information that the company has already produced are tougher to come by on the more static IR pages since it requires anticipating not only the questions investors will have, but how they will be asked as well.
Good News
Finally, the GE Reports site gives the company the opportunity to highlight good news. Bad news is, as we all know, preferred by the mainstream media, and thus propagates on its own very well. Good news on the other hand is often considered “not news” and thus not disseminated on its own as well. A potential investor looking for how GE has been doing recently can read through multiple articles highlighting various company achievements and milestones. Of course, care needs to be taken to avoid becoming nothing but a cheerleading site, or investors and customers alike will quickly determine the site to be less useful for real information.
Best Practices
Obviously, setting up such a site isn’t something that is done on a whim, but this type of information source is clearly an advantage when done properly. Consider that press releases and regulatory filings cover much information, but to audiences who may not have the same interests as others. A report, or up to date information site like GE Reports can help your company reach yet another group of people. The upsides for both public perception and investor confidence are well worth the cost of looking into the concept further.
Investor Relations and Corporate Governance
November 26, 2008
When it comes to investing, knowing about what a company does, who its competitors are, and how its financials look are all critical factors. But, there is another critical factor that any savvy investor will list right at the top, and that is the quality of management.
Judging managers on an individual basis is a process which must be handled by each individual investor. There is no way to quantify the quality of a manager or executive in such a way that can be usefully published by the IR department. However, there is something that Investor Relations can do to help investors determine how those managers can and should behave.
Corporate governance became a hot topic in the stock market meltdown following the bursting of the Internet bubble. It is once again on the lips of many investors as revelations come to light about how many companies behaved during the recent sub-prime mortgage build up and how they reacted once it began to become clearer that there might be a problem. Investors want to know: who is it that is running the company, how are they held responsible, and what rules guide their behavior.
The Qualcomm Investor Relations page contains the kind of information that investors are looking for these days. Under the Corporate Governance section of the IR pages, there are several documents available for download and review by investors. These documents include the Governance Principles and Practices of the company as well as the oft requested “Code of Ethics.” Additionally, the same page also lists the membership, structure, and charter of important management committees.
Under the Audit Committee section, for example, an investor can learn exactly which board members are on the audit committee. The investor can also read the mission of the audit committee (here as “Purpose”). Even more detail is available such as the fact that the audit committee should meet at least four times per year. If an investor feels this is too little, they can look elsewhere for their investment opportunities, but regardless of whether they choose to do so, no one will be able to later complain that they were unaware of just how often the audit committee was required to meet.
Then, the authority AND the responsibilities of the committee are laid out in full detail for the investor’s inspection. Most companies have similar documents, but not all of them make them so easy for the prospective investor to find and view. Such easy access to valuable information like this is a key goal for investor relations departments and websites.
It’s not just the Audit Committee. The same information is also available for the Compensation Committee, the Finance Committee, the Governance Committee, and the Strategic Committee. What is even better is that all of these documents are available in the investor’s choice of format. Regular webpage (HTML) files are available as well as a PDF file download.
It is no wonder then that Qualcomm is able to boast of many awards related to its company and the Investor Relations department’s efforts to communicate openly and easily with its investors.
Best Practices for Investor Relations
Look into getting similar information on your company website. After all, most of the “mission” documents of these committees are already public information in some format in other locations. Putting them on your IR site shows your investors that you are serious about your communications with them and keeps them from having to dig all over the place to find these important documents.
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