 In 2005, both Rowan Companies and El Paso Corporation moved to a summary report similar to a corporate brochure.  The General Motors Investor Information website not only provides financial information to shareholders, but markets to its investor base through imagery of its current-year vehicles.  Nabors Industries’ annual report acts as the centerpiece of its corporate communications. The year’s concept is consistently applied to all other investor collateral, including the investor relations website, presentation graphics and portfolio container. The program helps to establish a financial brand for the company.  Savage Design Group created a commemorative brochure to celebrate Administaff’s 20th anniversary. With minor edits, the brochure, bound with the 10-K, became the 2005 Annual Report.  Because AmREIT is a business that caters to the retail investor, a traditional narrative section bound with the 10-K serves as its corporate marketing brochure and plays a key role in the company’s annual communication strategy. |
Legal requirements aside, effective investor communications are vitally important in maintaining a connection between public companies and their owners. They provide a forum for companies to tell their story, in their own words, and build a strong "financial brand."
The majority of IROs who responded to the Savage Design survey indicated they would develop new types of communication if they stopped printing an annual report. Whether communications are online or in print will vary from company to company depending, in part, on the characteristics and preferences of investors. Thirty-five percent of the IROs favored beefed up websites, online annual reports and/or new types of electronic communications.
Several respondents, however, mentioned lack of direct communications with share-holders as a potential drawback of the "notice and access" model. One wrote "Receiving and having a hard copy of an annual report or 10-K might keep the company on an investors’ radar vs. out of sight and out of mind." Twenty-five percent felt new types of print materials would be needed.
If you’re looking wistfully at potential cost savings, but have the nagging suspicion that many of your investors prefer paper, consider different types of print materials. Join forces (and budgets) with the marketing, recruiting and/or human resources departments to develop a new type of printed piece with or without a pocket for inserting materials specific to different audiences. A corporate brochure containing basic financial information can be a shorter, less expensive vehicle for keeping in touch with investors and a highly versatile document.
Sending some type of printed communication is the only way to ensure that you are in touch with every investor at least once a year. It is the only way to control your message and be sure that investors are getting your story. In the absence of information from management, investors rely on the version told by reporters or other third parties who may or may not be friendly or well informed.
Companies with more electronically oriented investors might opt for an online annual report. An HTML report designed for the Web is far superior to a PDF because it is more engaging and interactive. But the report should be just one component of a robust, user-friendly and interactive Investor Relations website that goes well beyond a feed of financial information from a data service.
Think of your Investor Relations homepage as a strategic messaging gateway. It should build your financial brand and serve as a portal to a stand-alone site that investors can bookmark for access without going through the corporate home-page. Visitors to your investor site should get an immediate overview of your vision, strategies, goals and other key messages. You never know when someone will stop at the first page or go just a level or two down. But be sure the site includes financial details for investment professionals and others who want to delve deeper. Build your "Financial Brand"
Clear, compelling messages, conveyed through user-friendly vehicles that create a strong consistent image can enhance valuation by helping retain current investors and win new ones. It is often in the context of producing the annual report that members of executive management look at the year in review, talk about strategies, goals, accomplishments and direction going forward. It is an opportunity for management to "get on the same page" with regard to the key messages and image that will be carried through the year.
Regardless of what vehicles you choose for keeping in touch with investors, be sure you still have a process for achieving this consensus and that your messages and visual identity are applied consistently on printed materials, your website, IR presentations and elsewhere. The strength of your financial brand adds to or diminishes your investor base and value on The Street. And it’s not just in the numbers. Your brand is built on the power and consistency of the image and messages you convey to investors as well as their perceptions about the quality, quantity and reliability of information you provide.
Paula Savage, President, Savage Design Group
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