What Makes for Effective Investor Relations Sites? Part 41: Dealing With Shareholders’ Frequently Asked Questions
March 14, 2011
In the old days, before the internet, investor relations departments operated with the telephone and paper based communications. (You remember getting letters with stamps on them, don’t you?)
If you were a large corporation with a significant shareholder base, this meant that at certain times during the year, the volume of phone calls and letters would spike. Usually these increases would be around the issuance of dividend checks (When are they coming? Why haven’t I received mine? How do I replace a lost check?), and the annual general meeting (When is it? Where is it? Can my Aunt Sophie come too?), but certain other types of calls would occur with great regularity as well.
Around tax time, for example, many calls would come in trying to find out how much the shareholder had received in dividends over the past year as they had mislaid the tax reporting form mailed to them in January. Or the shareholder needed to figure out the tax cost basis of the stock they sold in the prior year. Or they had lost their stock certificate. The list goes on, but I will spare you.
The resulting quantity of calls and letters meant that the investor relations staff was stretched, response times slowed down and shareholders were not given the prompt attention they would normally receive. Authorizing more payroll to fix the problem was not considered a good fix as companies do not staff to meet peak demands. So we muddled through and breathed a sigh of relief when things calmed down.
Fortunately, the advent of company investor websites means that it is now possible to allow shareholders to look up much of this information for themselves. Further, they can do this whenever they want to, as opposed to being forced to call during business hours. Well designed Frequently Asked Questions sections (FAQs) can be very helpful in getting information to shareholders before they get frustrated. Set out below is a nice example of a FAQ section by Kingfisher, the home improvement retailer. They appear to have looked at their incoming questions from shareholders and attempted to design a page that answered many of them. It is a good example of using the web to help shareholders help themselves if they want to, but you will also note that at the very top of the page, shareholders are given a link to company contact information.
A lot of heartburn by both shareholders and investor relations departments can be avoided by following this example.
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What Makes for Effective Investor Relations Sites? Part 31: Annual General Meetings
December 3, 2010
Companies are of two minds about Annual General Meetings of Shareholders; some view them as a necessary evil to be dispensed with as quickly and with as little fanfare as possible; others see it as an opportunity to reach out to their owners and present the Board and management in the best possible light while giving the shareholders a good overview of the company and its goals. If your company is in the first camp, you can stop reading now, because unless you have a compelling Annual General Meeting, simply placing it on your investor web site won’t gain you much.
On the other hand, if your Annual Meeting has a high information quotient, it makes sense to place a video of it on your web site where investors that were unable to attend can view the information presented. Any number of companies now place videos of their entire meeting on their web sites. Microsoft, the computer software company, is one that does just that.
While you can put the entire meeting up on the web site, you don’t really need to.
Annual Meetings break down into three basic segments: the business meeting (the boring stuff), management’s presentation (the interesting stuff) and shareholder questions and answers (the stuff that can be anything, from the banal to the insightful).
Obviously, what investors want to see is the interesting stuff, where management reviews the past year and discusses their outlook for the upcoming year. BASF, the German chemical company, handles the differing parts of the annual meeting in an interesting way. As can be seen in the screen shot, the business part of their meeting is presented in written documents, while their CEO’s speech and accompanying slides are available in video format. (In the case of BASF, I could find no record of any shareholder questions at the meeting.)
However you choose to divide up and present the annual meeting, you should consider placing a video of it in the investor section of your web site. Chances are it contains information investors will find valuable.
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What Makes for Effective Investor Relations Sites? Part 30: Help Investors Understand Your Language
October 29, 2010
All businesses have specialized terms that they use in describing their business. In itself, there is nothing wrong with this, as such terms serve as a convenient shorthand and relieve the reader of the tedium of continually having something explained to them that they already know.
Things become a little murky however, when the shorthand terms get further reduced to acronyms and the reader is left wondering what the latest three or four letter combination means. It seems that the more specialized the industry, the greater the number of terms and acronyms get tossed around.
To take a simple example, in retail, comparable store sales, a common measure of sales for stores that have been open for a year or more are sometimes referred to as comps, same store sales, SSS, identical store sales and idents.
In the U.K., the very same measure is often referred to as Like for Like sales or LFL. An American investor looking at a British retail company, or a British investor looking at a U.S. merchant, will often find themselves scratching their heads trying to figure out if they understand what is being referred to.
There is a simple way to deal with this issue, although it does take some effort as it is not something your standard investor relations web site provider is likely to have ready to hand to you off the shelf. Companies with a need to explain their language to investors should create a glossary of terms and include it on their website. Clear and concise definitions can be set forth that will put the investor’s mind at ease that they understand what is being referred to in the discussion of operations.
A good example of how to do this is on the web site for the real estate developer and manager, British Land. Anyone that has ever dealt with real estate people will tell you that they tend to speak a different language. The concepts are the same as in classic finance – cash flow, returns on assets, capital and so forth, but they give everything a different name. So a glossary for the non-specialist is very helpful. And as you can see from the screenshot above, British Land does a nice job setting out explanations for the terms they think you ought to know. More companies should consider incorporating something similar into their IR web presence.
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What Makes for Effective Investor Relations Sites? Part 17: Make the Individual Shareholder Feel Welcome
May 20, 2010
Customer relations (and I use the term loosely) has undergone a number of iterations over the years as companies have sought to satisfy the ever increasing demands of customers for information in a cost efficient manner. During my lifetime I have seen a variety of solutions attempted, ranging from customer service teams onsite (expensive, and usually with long wait times), touch tone telephone service systems (usually with incomprehensible choices) to banks of operators standing by in some country you’ve never heard of.
Generally speaking, the economic solution has been to attempt to substitute the use of capital and technology for high cost labor. None of these have yielded optimal results.
It has been the same with shareholders. It can be very difficult and frustrating to get an answer about your stock. And yet most companies wish to have a large component of their shares owned by individual shareholders.
The advent of the internet has allowed companies to attempt to solve this problem by putting access to more information than ever in the hands of shareholders. This means that shareholders can look things up for themselves at the time of their choosing without being reliant on someone to look it up for them. Further, given the bandwidth of the web, web sites don’t have long waiting times during busy periods, such as tax filing time.
The challenge to companies is to design a page that clearly directs shareholders to the information they need to find. One site that does a good job of this is Centrica plc in their Shareholder centre page reproduced below. The page lays out the most common pieces of information sought by individual shareholders in a very easy to follow format. If a shareholder wants to find dividend information, it is clearly labeled. There are clear links to commonly requested pieces of information such as current and historic share prices. In short, the company has enabled the shareholder to easily find pertinent information.
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Google Invites Investors Home
May 5, 2010
When Google speaks, people listen. Whether it is the enormous market capitalization, the global reach of the company’s well-known brand, or simply the expectation that the company will continue to be a worldwide innovator, when Google does something new, it matters to more than just Internet searchers.
Recently, Google released its first-quarter earnings in a manner that broke the traditional mold for releasing financial information. Instead of posting the actual press release and financial numbers via one of the financial newswires, Google released only a short statement saying that its earnings statement had been posted on the company’s investor relations website. A link to the IR website at was provided. However, no actual numbers or commentary was included in either the release text or its headline.
The full text of the statement released on Marketwire was just 50 words.
MOUNTAIN VIEW, CA–(Marketwire – April 15, 2010) - Google Inc. (NASDAQ: GOOG) has released its first quarter 2010 financial results. Please visit Google’s investor relations website at http://investor.google.com to view the earnings release. Google intends to make future announcements regarding its financial performance exclusively through its investor relations website.
Releasing Financial Information on Company Website
This is not the first time Google has published its earning press release and materials on its investor relations website. In fact, Google and most other corporations routinely post such information on the IR websites in order to make it easily accessible to investors and potential investors. It also reduces the workload of the IR Department by freeing them up from responding to routine investor requests for publicly available information.
However, until this quarter, Google had always followed the time honored tradition of releasing earnings information via financial newswire. Like most other corporations, Google orchestrated a carefully timed dance in which a press release with the earnings data was submitted to one of the financial newswires. Then, they waited for the release and its contents to begin showing up in additional news streams to verify that the release had been done correctly. Only then, did the company release the earnings data online, thereby ensuring that the information had been publicly released in an unquestionable manner first.
With its first-quarter earnings, Google took a different track by simply releasing a notification that the information had already been released (or likely simultaneously released) on the company’s own website.
Google is not the first publicly traded company to release its earnings information on its corporate website, however, it is the first worldwide household name to do so. Ironically, the updated guidance giving companies like Google the green light to do just that came almost a year and a half ago. So, why did it take so long for companies to start using their websites to release financial information, and will other companies follow in Google’s footsteps.
Slow Moving Regulation Meets Internet Speed
In 2008, the U.S. Securities and Exchange Commission updated its Internet guidance for publicly traded companies using websites and electronic media for the first time since 2000. The update brought the agency’s Internet guidance up from archaic to merely out of date. However, in doing so, it opened the door for exactly the sort of thing that Google did with its first-quarter earnings for 2010.
The SEC Interpretive Release addressed several issues, and just as tellingly, specifically did not address even more issues. However, the interpretation did bring acceptance to the concept that a publicly traded corporation’s website could be used in certain circumstances to release information and communicate with stockholders. As long as the company’s website was a “recognized channel” for distributing information, then publishing material on that website would count as publicly releasing the information.
The criteria for considering a company website to be a recognized channel included that investors know the website’s location and that the information be easy to find. Most importantly, the guidance required that the company inform investors that it publishes important information on the website and that it plans to do so in the future. Google has already been stating in its financial filings that it has a website, where it is, and that it does publish financial information there.
Despite this go ahead from the SEC, the vast majority of companies continued to operate under the old financial news release first, website second model. The question was whether companies were just that slow moving, or whether there was some fear about changing a paradigm that was already working.
Penguins must leave the safety of the ice in order to find food in the oceans. However, there is no way of knowing whether a killer whale or other predator is lurking in the waters below. The only way to find out is to jump in and see what happens. Of course, no one wants to be the first on into the water, so the penguins inch closer and closer to the edge until finally, one of them drops into the water below. If nothing happens, then the rest of the penguins jump quickly into the waters to feed. If, on the other hand, a predator appears, the penguins move back to try again another time.
In the case of corporate financial earnings, many companies figured why take the chance of angering shareholders or provoking the wrath of regulators. At issue were both the inertia of a long-used methodology, as well as the pesky problem of letting investors know exactly when and where financial information would be released in the sometimes unreliable world of the Internet.
Google’s press release, it seems was designed to take care of that last problem. The company did not abandon the press release altogether, it just changed what it said. Moving forward, the company has indicated that it will continue to release financials on its own IR website. The interesting piece of the puzzle is whether or not it will issue another mini-press release telling everyone that the data is ready, or if it will skip that step altogether and rely exclusively on its own company website.
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