Anglo American Integrates Governance & Social Responsibility
December 31, 2008
Prior to the financial crisis, I read some academic papers about a trend toward convergence of Corporate Governance and Social Responsibility. Then I came upon Anglo American PLC, a mining and natural resource company.
Note how the About Us integrates references to Governance and Responsibility.
The Governance description includes a reference to Extractive Industries Transparency Initiative (EITI) –
EITI exists to improve transparency in generating and spending of revenues from the extractive sector. The basic concept is straightforward: oil and gas and mining companies should declare in participating host countries the payments they make to the government – either individually or aggregated by an independent third party.
Once audited to international standards, these figures are then available for comparison against the host government’s own separate declaration of the revenues received. This two-pronged process reduces opportunities for revenue leakage.
To date, over 20 countries – including several in which Anglo American operates or has interests – have declared their intention to implement EITI principles. We applaud their commitment to transparency.
There is also a link to Good Citizenship Business Principles which includes the company’s commitment to Corporate Citizenship and access to –
Getting Noticed by Goal Setting via Corporate Media Relations
December 30, 2008
In a few hours, we will be welcoming in a New Year. We’ll all be making personal resolutions (finally, to lose those last 10 pounds, organize my desk, start a garden, finish 2 novels, etc.). The pressure will be on to make it through the first 31 days of January without giving up and the call to action will be looming over our heads. Will we make it? Will we actually be able to accomplish anything? It can be quite a stressor, especially if you’ve been down that road before and you know your pattern of behavior. You don’t have to raise your hand here if this applies to you. Just nod your head…and smile.
Set Goals for Your Business
On the business side, perhaps you’ve also set some other goals to complete. There are always goals on this side to set as they never get old, they are never boring or never will you do the same thing twice. Almost never. But what’s so much fun and enlightening about setting business goals is that you get to see your hard work in action. Whether that’s on an online business that you’re developing or as a key producer in your corporate chain. Whichever side of the spectrum you fall into, it’s well worth understanding that without writing down your goals and plotting your course to success, you will not be successful. Many successful corporations have CEO’s who share their stories about their goals that they’ve set, how they worked to achieve them and the results that they now enjoy. What are your corporate or business goals for 2009?
I’ve been writing on this blog since around July of 2008 and I’ve gotten to meet and talk with a lot of interesting, smart and capable individuals in the media relations industry. Having left traditional corporate America over 10 years ago, I am still connected with my corporate colleagues, both online and offline. The corporate world is a very different world, but not so much though in terms of communications and reaching out to your customers. You still have to implement the same tools and strategies to win customers whether it’s through Twitter or whether it’s through a breakfast meeting with a potential client. In other words, customers want to see what they’re getting, why it’s so great and what makes you different than the others.
Make YOUR Blog Different
You have a corporate website or blog and perhaps you feel that it’s doing what it needs to do…but is it? Is your blog achieving the goals and objectives that you want it to? Is it attracting and retaining the readership that is specifically for your product or service? Have you sought out or marketed to those warm markets? In media relations, the job of the process is to provide information and a landing place for the potential customer once they’ve decided that they’re ready to buy. How does your media relations pitch stand up?
Looking back at 2008, I want to share just a few websites where media relations efforts seem to be a high priority on the minds of these corporate blogs or individuals. They seem to “get it” and they’re making an A+ effort to find, connect, communicate and interact with their customers.
General Motors blog: This blog is very personal, very customer-centered and approachable. It seems like GM knows how to make a corporate blog work to their advantage.
A very impressive blog from Marriott International. The CEO is the blog writer himself. Or, he addresses the audience himself. Why am I impressed? Any corporation that has the foresight to let the CEO blog is just asking for it…success that is! Everyone wants to know what the boss thinks!
The BBC blog gives a fresh insight and behind-the-scenes kind of coverage that you don’t find on most other blogs. Whatever makes you different, whatever makes you stand out is where everyone looks. The BBC site also features a voice from their bloggers and equal time to voice it. What a great way to get more visitors than to let the bloggers speak. All eyes on BBC please…
What will your corporate blog do differently in 2009 to stand out? What goals have you set for your business? Your staff? Your department? How will you implement changes for 2009?
Making Your IR Website More Robust
December 30, 2008
I’ve been reviewing a number of websites lately and it seems as if investor relations web sites are becoming more robust. I’ve been impressed with the variety and ingenuity exhibited on some of the sites I’ve seen, particularly for European companies. Overall, my impression is that the European IR websites have been more innovative in their use of the power of the web.
As you might expect, not every site does everything, so for the benefit of those investor relations officers that don’t have time to conduct a review of other web sites, I thought I would provide a series of posts that list some of my favorite features that can help you help investors.
First, charting – there are lots of charting sites available, but some things can be done better on the company page. For example, interactive charts with links to events and press releases are very helpful. Many times I’ve stared at a stock price chart with a big dip or rise and wondered, “What happened here?” Such large dips or rises are almost invariably accompanied by a press release, so an interactive chart that leads you straight to the event saves a lot of time and effort.
Another helpful feature is being able to specify an exact time frame for your chart. After all, most investors don’t invest on the exact day necessary to fit into the standard time range specified on most web sites. I also found that charts that let you specify other companies to chart against very useful, although I’m sure many companies are not thrilled about having their competitors charted on their site.
As I continue to review sites, I hope to be able to cite more examples of best practices. It’s kind of fun to be able to hand out praise instead of criticism.
Ethics And Executive Compensation
December 29, 2008
Recent headlines have chronicled the ubiquitous debate on Executive Compensation and its relationship to the financial crisis. This debate is not new and has been going on since the 1990′s. However, the current financial crisis places a new focus on the topic and has revealed some exorbitant practices. A recent Wall Street Journal article by noted management guru Gary Hamel indicates –
We can hope, though, that the current crisis will bring leaders to the fore who have the virtues we have always sought in those who manage our nation’s financial institutions: honesty, humility, prudence, foresight, and a keen sense of stewardship. It is these qualities, more than any amount of regulation or recapitalization that will rebuild the foundations of America’s financial system.
WSJ, October2, 2008
Executive Compensation is a key Corporate Governance issue and Boards have been, for the most part, derelict in their responsibilities to oversee compensation and ensure ethical practices. For example, in a Society For Human Resources 2006 Survey, Ethics Compliance accounted for only 10% in factors determining cash bonuses.
We are in the midst of a tectonic-plate movement in the financial world that is shaking the ‘real’ world quite dramatically. My purpose here is not to review the causes and potential consequences of our current situation, but to explore the possibility that once again, in the world of publicly traded companies, boards of directors have let us down.
DAVID BEATTY Globe and Mail Update December 9, 2008 at 6:00 AM EST
Well, not all Boards “let us down”.
Here are a few companies that consider ethics factors in determining executive compensation –
- Ventas (one of the nation’s leading healthcare real estate investment trusts (REITs).) For 2007, the value of the long-term incentive award was based on the accomplishment of a series of corporate objectives, including total shareholder return (absolute and relative to the Company’s peers), the integration of the assets and operations acquired through the Sunrise REIT acquisition, FFO per share growth, effective diversification, balance sheet management and capital markets execution, business ethics and reputation and individual performance.
- Sempra Energy (a Fortune 500 energy services company) The committee annually will review its principles and policies for executive compensation and related compensation programs in light of the corporation’s current and prospective business environment and other relevant factors including, but not limited to: The need to recruit and retain executives of outstanding ability and proven experience who demonstrate the highest standards of integrity and ethics.
These companies understand that compensation drives behavior and that including ethics in executive pay will contribute to avoiding Warren Buffet’s warning –
Earnings can be pliable as putty when a charlatan heads the company reporting them.
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.
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