Corporate Eye

Investor Relations and Corporate Governance

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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Brian is a small business owner, consultant and freelance writer. Brian began his professional career in the computer industry as a consultant where he became keenly aware of the internal workings of companies from Fortune 100 giants to small two-man shops. While working with a mutual fund company, Brian developed a strong interest in finance and became a Certified Financial Planner. As a financial professional, Brian specialized in working with small business owners. Brian is the co-founder of ArcticLlama, LLC a premier business writing and consulting firm. He also runs a real world personal finance blog. Brian lives in Denver with his wife and daughter.