IR Guide - Sept 2009

GUIDE
September 2009

The annual report
in the age
of social media

Embracing online communications

Why annual reports still matter

Changes in retail voting

The wider use of e-comms

Paper still packs a punch

Contents
Social revolution
Social
Making the most of
the digital age
page 2 revolution
W
Still valued hether it’s rapid obsessions; they are here to stay.
The appeal of the advances in social The advance of social media
annual report
page 4 media, changes to does not, however, mean that tried
disclosure regulations – including and trusted methods of communi-
Disclosure notice and access and the new cation need to be thrown out of the
rule changes ban on broker discretionary voting window. Instead, the right objective
The impact on
– or the impact of the current should be to coordinate historically
retail voting
page 6 worldwide recession, the world of important modes of communica-
IR is undergoing intense change. tion, like the annual report, with the
New ways to share But there’s one thing that power of the internet, and the reality
Beyond Facebook
hasn’t changed: the need to clearly that the web is both the world’s
and Twitter
page 8 communicate a public company’s fastest and its longest-lasting mode
value proposition with investors, of communication.
Print still vital potential investors and the financial
The power of paper community at large. Now, perhaps New opportunities
page 10
more than ever, the print and online While many of us marvel at
Sponsor’s statement annual report can play an essential the web’s power to provide nearly
page 12 role in achieving this goal. instantaneous two-way communi-
The social media revolution is cations, the stark reality is that the
behind us, and the revolutionaries web’s massive digital databanks
have won. For investor relations mean any communications posted
professionals and corporate com- – whether a press release, blog com-
municators alike, it’s high time to ment, tweet or annual report – will
accept and adjust by identifying the remain there, possibly even forever.
best ways to mix social media into It’s this dynamic more than
traditional corporate IR programs. anything else that mandates that
Social media can no longer be ruled everything posted on the web
out as simply fads or kids-only must consistently communicate a

2 IR GUIDE The annual report in the age of social media

company’s accomplishments, invest- As the cover of Pulte
ment thesis and vision for the firm’s Homes’ annual report makes
future in the best and brightest light. clear, the company wants to
Moreover, opportunity now emphasize a CSR message. On the
exists to spread a company’s investor front page, one of the company’s
communications, including the homes is shown surrounded by trees,
annual report, further than ever with a tagline reading: ‘Delivering on a
before. Investors who find a report responsible strategy’.
they like can quickly and easily share
it with thousands of like-minded ence of the individual social media by sharing your materials with his
people. Of course, that speed of outlets, from Facebook, LinkedIn, or her friends and followers. In
transmission is a double-edged blogs and Twitter to content-sharing other words, social media are not
sword: weak reports can spread just platforms like YouTube, SlideShare just about how the IRO tells
as quickly and easily as strong ones. and Docstoc. For the first time, the company’s story; they are also
Amplifying the power of the the individual has the true power to concerned with how non-affiliated
web is the enhanced user experi- become your company’s evangelist third parties spread the story.
Over the last three years, the
Sustainable printing evolution of the web has clearly
With so many stakeholders connected through social networks, accelerated. Facebook opened to
corporate reputations have become more and more fragile. the public in September 2006, the
One way to boost your credentials is to print your annual same year Twitter was created. A
report using environmentally friendly paper and printers. March 2009 report from Nielsen
The Forest Stewardship Council (FSC), an independent, Online shows 67 percent of the
not-for-profit organization, certifies that your paper has come global online population uses social
from a sustainable source. Safeway, Medtronic and Regency are networks and blogs, up from 58 per-
all companies that have printed their annual reports on paper cent in March 2008. When it comes
certified by the FSC. to spreading your message online,
social media cannot be ignored. ●

The annual report in the age of social media IR GUIDE 3

Still
valued
I
n a fast-moving online world, investors with an investment
the annual report may seem horizon of three years or greater,
Print redundant, and it’s certainly the proportion who find the annual
true that print runs are down. report useful for tracking their
runs may be
NIRI’s 2008 annual report survey portfolio rises to 80 percent. This
down but investor
finds the greatest proportion of demonstrates that, as the investment
interest in the
respondents – 35 percent – printed horizon of investors increases, so
annual report
fewer than 10,000 copies of their does the value of the annual report.
remains high most recent annual reports, up from
20 percent in the 2006 survey. An opportunity to
The value of the annual report address volatility
to investors remains high, however. The annual report can help compa-
Rivel Research Group monitors the nies attract and retain long-term
habits of investors in its annual study, investors at a time when global
‘Perspectives on the US buy side’. equity markets continue to be
This year’s study, which questioned volatile. Market commentators are
232 buy-side professionals by still arguing over how long the
telephone, reveals that 70 percent economy and stock markets will
of respondents think the annual take to truly get back on track.
report is helpful when making In the meantime, the annual
the decision to buy a stock. report offers a way to sideline
Furthermore, 69 percent of short-term volatility in share prices
respondents say the annual report and reach out to longer-term
is helpful for keeping track of stocks investors with a compelling strategy
once they have been purchased. for the future. And social media
Notably, long-term investors technology gives IR practitioners
value the annual report even more a great new tool to achieve this, as
highly. When Rivel separates out it hands companies the opportunity


Perspectives on website is a significant influence on bolsters stock performance when
the US buy side their decision to buy or sell. the hedge funds are dumping, the
Proportion of investors The web is also key to attracting activists are shorting or Wall Street
who say the annual report another type of long-term investor: analysts are downgrading the stock.
is useful for: the retail shareholder.The popularity It is the long-term investor that
70% 69% of shareholder forums on Yahoo! – perhaps most loudly – the print
Finance shows how important the and online annual report speaks to.
internet is for private investors when The truth is, most savvy IROs are
picking stocks. In addition, an SEC well aware of the annual report’s

38%
survey released last year finds more value in this regard. ●
Monitoring a portfolio
Making a buy decision

than 50 percent of retail investors
Print run trends
Noticing a stock

use the internet to help them make
investment decisions. Proportion of annual
reports with a print run
Loyal supporters of less than 10,000
Just as the internet age spawned
Reason 36%
the catchphrase ‘sticky eyeballs’, in
Source: Rivel Research Group
reference to the desire of content
providers to build relationships with
to spread the annual report – and its users who spend a long time on 22%
investment story – to many more a website and repeatedly return, 20%

current and future stakeholders. public companies must engage their
Previously, you may not have equivalent: the long-term investor.
considered buy-side investment It is the long-term investor that
professionals to be the main audi- doesn’t get scared off by short-term
2008

2006

2004

ence for your corporate website. volatility – which continues to
In fact, 76 percent of respondents increase with the spread of so-called Source: NIRI
to Rivel’s research say the corporate high-frequency trading – and who


Disclosure
rule changes
F
or the past few years, notice Issuers with smaller numbers of
and access has been a hot shareholders have less reason to sign
New
topic as investor relations up, as incremental costs associated
regulations
professionals sought to identify the with the adoption of notice and
are increasing
best communications mix to achieve access often negate the savings on
the need for firms
their company’s goals. smaller print runs.
to communicate Under the new rule, while issuers In addition, there is evidence
effectively must now post proxy materials that notice and access lowers retail
with the including the annual report online, voter participation in shareholder
retail base companies have the option of resolutions. As retail shareholders
initially mailing shareholders only generally vote with management,
a notice about how to access this would hand more power to
materials, instead of a full hard copy. institutional investors, including
The economic situation has activist shareholders.
made this decision even tougher
as companies struggled to find cost Ban on broker
savings across the board at the exact discretionary voting
moment when communications and This year’s big regulatory change
outreach were perhaps most impor- may be even more important to
tant to keeping investors in the fold. IROs, particularly with respect to
As of May 21, 2009, only 12 the impact on retail shareholders.
percent of issuers had chosen to In July the SEC voted to block
adopt the new system, according brokers from voting uninstructed
to data from Broadridge. Most shares during director elections. The
adopters are companies with large change will make it harder for listed
numbers of shareholders that companies to elect their directors,
achieved significant cost savings from because uninstructed votes – which
the subsequently lower print runs. are usually retail votes – have


Kellogg’s gave shareholders different
options with an online annual, a print
annual and a notice and access brochure.

traditionally been voted in
favor of management’s rec-
ommendations. While not
institutional votes per se,
these votes were handled by register. Some shareholders will
institutions on behalf of individual react to new channels of com-
shareholders. Following this change, munication, such as interactive
quorums will be harder to achieve websites and social content net-
and directors harder to elect. works; others will prefer traditional
Last year almost 19 percent of annual reports delivered in the post.
shares voted were through broker Kellogg’s this year produced an
votes, according to Broadridge.With online annual, a print annual and a
the loss of that block, companies notice and access brochure. The
will need to do a better job of breakfast cereal company decided to
communicating with stakeholders have well-designed online and print
that have a true economic interest. editions so different audiences could notice and access brochure
Costs may be higher for some access information in the way that’s is a great way to remind retail
issuers, but improvements in corpo- easiest for them. shareholders about their voting
rate governance and shareholder The Kellogg’s notice and access rights and the annual report.
relations should result. brochure helps to explain the notice Before, companies could rely
card – a nice touch for any company on their brokers to pass director
Covering all bases given that many investors still resolutions. Now, they may need the
The challenge for companies is to do not understand what notice and active participation of the retail base.
improve voting participation, and access means to them. Good investor communications will
the way to do that is to communi- It also highlights another way not only keep retail shareholders on
cate the investment story in a companies can bring in the retail management’s side, but may also
compelling fashion that reaches out vote: through education about inspire them to get up and vote for
to all types of shareholders on the the proxy process. A well-designed the company’s annual resolutions. ●


New ways
to share
B
logs and Twitter are already are benefits for companies that
widely used for IR. In the take control of the distribution of
Annual next phase of technolo- their corporate materials. These
gical development, companies are include improving awareness of
reports are
beginning to put communications your company and managing what
among the thousands
materials on social content networks content is made available by third
of documents being
like SlideShare – basically YouTube parties. Publishing your own material
shared on social
for presentations and webinars – also gives it authority in an online
content network and Docstoc, where people share world replete with anonymous and
sites professional documents. little-known commentators.
Docstoc contains an annual
report section with around 2,500 Online options
entries. Visitors to the site can click abound
on various tabs to find interesting Other types of social media can
information like the most-viewed be used to drive traffic to your
or most-downloaded reports. At time annual report. One option is to
of writing, the top-viewed annual set up a Twitter account and
report was Chesapeake Energy tweet when important corporate
Corporation’s 2006 effort, which has documents are released, including
been viewed about 10,000 times. a link to your website. Both Dell
SlideShare is also proving and Sun Microsystems are already
popular: Yahoo!’s second-quarter doing this in the technology sector.
earnings presentation clocked up This sort of activity demon-
more than 1,000 views in less strates that annual reports are now
than 24 hours after it was posted. being shared and discussed more
Much of the content on these than ever, so the rewards for a good
social networks has been uploaded report are magnified.
by individual web users. But there The web offers many different


American Campus Communi-
ties’ executives line up to
answer your questions in the
company’s interactive review.

ways to present the annual report. ent firms choose different
Of the two main options – PDF or forms of communication
HTML – each has its own pros and at different times to fit
cons. For a start, a PDF is cheaper changing investment needs
to produce than an HTML report; and business conditions.
it is usually just an electronic version
of the printed annual report. PDFs Two-pronged
are relatively simple to read on a approach
computer screen but can also be American Campus Communities
printed out as hard copy. this year produced an interactive
HTML reports cost more but annual review alongside a traditional
potentially come with many more 10K wrap. In the review, readers To save
bells and whistles, such as animation can click on different members of on cost and extend
and embedded audio and video the executive team to see them step the use of the piece,
elements. They are also much easier forward and give a presentation. Diamond Foods printed a
to navigate online. More traditional annual report separate summary annual
It is important to remember that readers can still print out a PDF report and typeset 10K.
there is no single right answer: differ- version if they wish. ●


Print
still vital
W
hether it’s a tradi- have powerful narrative sections,
tional annual report, like those you would find in a
The vast a 10K wrap or a traditional annual report. Another
summary annual report, most low-cost option is to place the 10K
majority of
companies still produce some kind in a promotional folder that doubles
companies still
of hard copy annual report. up as a stand-alone marketing piece.
produce some
They recognize that this form Over a third of respondents
kind of printed
of communication is a vital tool for to NIRI’s survey produced a tradi-
annual report getting your investment story across tional annual report, up slightly from
to existing and potential investors. 32 percent in the previous survey
NIRI’s 2008 annual report survey two years ago, while 12 percent
finds 91 percent of respondents produced a summary annual report.
produce an annual report in one As we can see, the annual
of these formats. report has retained its importance in
today’s online world. It cuts through
Different document, the noise created by 24-hour news
similar content and online networks to deliver
There is always going to be an audi- management’s long-term vision for
ence for the print annual, particularly the company and its shareholders.
among more traditional investors
who are used to reading corporate Value for money
literature mailed to their home. This is why savvy companies still
The largest proportion of design, produce and mail an annual
companies – 53 percent – used a report to shareholders, updating its
10K wrap. It is important to remem- message through media and web
ber there is often not that much strategies that refine the story as the
difference between an annual report year progresses.
and the 10K wrap. Some 10K wraps Remember to keep the internet


Annual report tips
Regardless of which method of delivery you choose, there are
some basic pointers that can always be applied.
● Leave plenty of time. Starting early does not cost any more
money and gives management a chance to think hard about
what it wants to say and how it wants to say it. To save on cost and extend
● Transparency is key. With the internet, investors can find use, medical equipment
information on your company from many sources other firm Hill-Rom took a
than the corporate website. Don’t get caught fudging the different approach with
truth or leaving out embarrassing details. a promotional section
● Think sustainability. Regulators in the US and elsewhere are featuring a pocket folder
keen to move forward on legislation concerning climate for the 10K that can be
change. Make sure you address environmental, social and used as a stand-alone
governance issues in a strategic way. marketing piece.
● Keep it simple. Research suggests analysts spend an average
of three minutes reading each annual report so don’t bombard tions provided by the annual report,
your reader with too many messages: stick to the basic the project would produce a 500
investment story from the beginning. percent total return to shareholders.
That sounds like money well spent.
version in your head from day one; to Curran & Connors. Consider a One annual report design
the best results occur when the print hypothetical client with an annual company that was quoted in NIRI’s
and online reports are developed in report budget of $100,000 and 50 annual survey puts it this way:
tandem, creating a coherent message mn shares outstanding. In this case, ‘By the time the annual report
across both channels. the annual report costs the company comes out, it is often yesterday’s
A simple cost-benefit analysis less than $0.002 per share. news, but it is the only place where
makes the case for maintaining In other words, if the company’s management can talk about what
investment in an annual report stock price increases by just one matters to the business. It tells the
project for your company, according penny as a result of the communica- story in a broad and deep way.’ ●


Sponsor’s
statement

O
Offices ver the past four decades, Curran & Connors has
Atlanta, GA evolved beyond its core capability – annual report
Boston, MA design and production – to meet the challenges of a
Brentwood, CA continually changing corporate environment.
Our ongoing evolution translates into greater creative
Charlotte, NC
capacity, enhanced design solutions, cutting-edge web services
Chicago, IL
and better results for you. With design studios in New York,
Cleveland, OH
Chicago, Florida and California, and account executives across
Dallas, TX
the country, we continue to offer an unparalleled range of
Denver, CO talent, coupled with knowledgeable local representation, to
Fort Lauderdale, FL create enduring connections for our clients.
Hauppauge, NY
Houston, TX
Los Angeles, CA
New York, NY
Princeton, NJ
San Francisco, CA
Washington, DC

For more information:
Noah Butensky
Phone: +1 631 435 0400
Fax: +1 631 435 0422
nbutensky@curran-connors.com
www.curran-connors.com


IR Guide - Sept 2009

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