Corporate Eye

What Makes for Effective Investor Relations Sites? Part 14: Engaging the Individual Investor

One of the Holy Grails for many investor relations departments is to achieve more ownership of their company’s stock by individuals. There are various and sundry reasons for this, including the fact that individual investors tend to keep their stock holdings for longer periods, become proponents of the company’s brands and advocates for the companies they own. One of the problems companies have is getting information to individual investors. They are dispersed and prefer their information in plain English as opposed to the dense technical prose and financial data most companies tend to use when delivering financial information. This makes getting information to individual investors expensive and requires extra effort, which usually means it doesn’t get done.

At least one of these obstacles can be overcome with the judicious use of an investor relations web site. Shareholder newsletters are a great way to reach out to individual investors, but in the past have been expensive to produce and distribute. The web and some publishing software now mean that almost any investor relations department can produce a shareholder’s newsletter at minimal cost. Time and effort still have to be devoted to writing and editing the newsletter, but you no longer have to write big checks to printers, designers and postal authorities.

Below, I’ve included samples from Total, the French energy company and EADS, the European aerospace company. The two companies take differing approaches with their newsletters, with Total focusing more on descriptions of the company and its employees while EADS spends more space discussing financial results, but the point is that they are both geared towards non-technical investors. They both help individual investors understand the companies.

EADS Shareholder LetterTotal Shareholder Letter

Both of these newsletters have the look of being professionally produced, but companies with smaller IR budgets than either Total or EADS can also produce good looking newsletters and distribute them via the web and email at minimal cost. The reward should then be a more stable and diverse investor base that supports your company.

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John Palizza

John recently retired as a Lecturer in Management at Rice University’s Jones Graduate School of Management, where he taught investor relations. Prior to that, John was in charge of investor relations for Sysco Corporation and Walgreen Co. He holds a MBA from the Kellogg Graduate School of Management at Northwestern University and a law degree from Loyola University of Chicago. You can learn more about John’s thinking about investor relations at his blog, Investor Relations Musings.