IR Guide June 2010
- 1. GUIDE June 2010 The annual report: many ways to tell your story The role of the annual report Picking the right format Engaging new audiences
- 2. Purposeful Contents design W Purposeful design hen Arthur ‘Art’ through phone calls. But it felt the Ensuring your message Keeney stood annual report provided the best gets across page 2 down as president place to make a lasting statement and CEO of East Carolina Bank about the company’s future direction. Tailored message (ECB), the company wanted to ‘It takes all the strategic initiatives Choosing a format to set out its vision for the future. we do and gathers them under one suit your company page 4 Keeney had been at the helm umbrella,’ says Runion. of ECB for more than 14 years, Modern audiences overseeing a period of strong, Numerous options, The impact of social media and CR profitable growth. Following his one aim page 6 departure, the company wished to For its 2009 annual report, ECB reassure investors that the growth produced a 10K wrap, including a Sponsor’s statement page 8 and stability of the Keeney years mission statement, the two share- would continue. holders’ letters and three editorial ECB chose to make this reas- spreads focused, respectively, on suring statement in the annual customers, employees and sustainable report. ‘In our report, we did two growth. The bank also produced a shareholder letters: one from Art, separate print run of just the wrap and another from the new president,’ section, which it gave to its explains Lorie Runion, ECB’s sales teams to use as additional chief administrative officer. ‘The marketing material. second letter took a strategic There are, of course, many focus. It described how ECB has ways to deliver the annual report, been a great organization and this including the traditional print an- is where we are heading.We felt it nual report, the summary annual was a really important story to tell report, the 10K wrap and the 10K our shareholders.’ only, as well as online options, As you might expect, ECB also such as the online HTML report made this point in press releases and the downloadable PDF. and interviews, on its website and Some produce a separate cor- 2 IR GUIDE The annual report: many ways to tell your story
- 3. WMS Industries produced a traditional print annual report porate responsibility (CR) report the buy side still to supplement the main document. holds the annual Different formats and styles will report in high suit different companies; there is regard. Market data no single way to communicate provider Rivel Re- every company’s message. search conducts detailed What’s important to recognize telephone interviews with is the opportunity the annual investors. In its most report affords. It offers the chance recent survey, released in to pull together all the different July 2009, it finds 70 percent strands of a company’s message in of respondents think the one document, and gives investors annual report is useful when a clear idea about why they should making the decision to buy a invest in your company. stock. In addition, 69 percent of As a result, it’s not surprising buy-side respondents say the annual report is useful for helping Noise reduction them follow a stock once it is in Long-term investors are always trying to block out ‘noise’, by their portfolio. which they mean the factors that move the market on a day- ‘The annual report is a document to-day basis: market rumors, momentum trading and PR that retains a great deal of disasters. Such factors distract from the fundamental strengths credibility,’ concurs Bill Pfund, (or weaknesses) of a stock that are borne out over time. vice president of investor relations ‘We use a variety of electronic media to get our message at WMS Industries, the gaming across, such as press releases and a YouTube account,’ com- company. ‘It has a set of audited ments Bill Pfund, vice president of IR at WMS Industries. financial statements. It has the ‘In those channels, however, the balance is tilted toward chief executive’s letter. If used immediacy and the facts. The annual report gives you the properly, it is an opportunity to opportunity to balance that with a greater perspective cov- share a greater perspective regarding ering the direction of the company.’ the company and the industry in which it operates.’ ● The annual report: many ways to tell your story IR GUIDE 3
- 4. Tailored message S o what kind of annual and feel annual reports.’ report is right for your Lee doesn’t believe the printed company? It’s a complicated annual report is going away any question and the answer will be time soon. ‘I don’t think that will The hard copy different for each firm. But it’s happen in my world,’ she says. annual and HTML worth bearing in mind that most ‘The older investors like to sit report both have companies still produce some down with the report and read it their merits kind of hard copy annual. from cover to cover.’ with investors NIRI’s most recent annual report survey, conducted in 2008, Disappearing act finds 91 percent of respondents Engaging with individual share- produce either a 10K wrap, a holders is particularly vital today, summary report or the traditional after two years of regulatory annual report. Of those printing changes that threaten retail an annual report, the most popular participation at the annual meeting. format is the 10K wrap, with 53 There is evidence to suggest percent selecting this option. notice and access has reduced the The printed document is retail vote since its introduction in particularly important for connecting 2007, while this year’s change to with your retail shareholder base, Rule 452, eliminating the broker says Robbin Lee, vice president of vote during directors’ elections, IR at ProLogis, the global provider should push retail vote levels even of distribution facilities. lower. Issuers need to do whatever ‘The majority of our share- they can to boost retail interest in holder base is made up of institutions, their stock, and an engaging but we have around 65,000 annual report is one of the best individual shareholders,’ she explains. tools available for this task. ‘These tend to be older individuals This year, ProLogis produced who own ProLogis as a yield play, a 10K wrap and, like ECB, printed and they like to be able to touch a separate run of the 16-page 4 IR GUIDE The annual report: many ways to tell your story
- 5. ProLogis produced a 10K wrap, HTML report and online-only CR report to cater to its different stakeholders front segment to help employees dealing with customers who lease its facilities. The company also produced an HTML version of the report for its corporate website and a separate, online-only CR report. Lee says the HTML report is useful for professional investors and have a short attention span and analysts who tend to prefer the an urgent need for immediate quick access to information afforded gratification,’ she explains. ‘This out can take a couple of days.’ by the internet. can be solved by giving them the Whichever method you ‘Professional investors tend to HTML version, because mailing choose, there is a cost-benefit analysis that makes the case for Reinvesting print savings companies to produce an annual Notice and access is still evolving. Only the bigger companies report, according to Curran & have signed up en masse, as they have more to save from Connors. Consider a client with reducing larger print runs. Figures from Broadridge tracking 50 mn shares outstanding and a notice and access adoption between July 1, 2009 and March $100,000 budget for its annual 31, 2010 show only 29 percent of eligible companies had report. In this instance, the annual used the new option. report would cost the company As there is evidence to suggest notice and access less than $0.002 a share. reduces retail interest, one option is to reinvest at least Now imagine the company’s some of the print run savings in an online annual report. share price increases by one penny One company doing just that is ProLogis. ‘Do we make any as a result of the communication savings from notice and access? Dollar for dollar, it’s probably provided in the annual report. a wash because we spend a little more money designing the This would result in total return HTML online report,’ says Robbin Lee, vice president of to shareholders of 400 percent. investor relations at ProLogis. That’s money well spent, says Curran & Connors. ● The annual report: many ways to tell your story IR GUIDE 5
- 6. Modern audiences T witter users send, at new documents that have been the last count, posted to the website. Others are around 55 mn tweets taking a more engaged approach a day, and that figure is rising by conducting conversations with sharply. But the advance of stakeholders through the site. Social media networks social media does not It is worth noting that every and CR are changing mean traditional forms one of the millions of tweets sent the way annual reports of communication, like each day is now being stored by are consumed the annual report, should the US Library of Congress. This be sidelined. On the serves as a reminder to everyone contrary, social media that anything posted to the internet networks can enhance the is there to stay. value of your annual report. While the web offers instanta- Issuers are now posting their neous access to a wealth of reports to websites like Docstoc, information, it also acts as a where the documents can be massive storage bank that makes viewed, shared and commented material available ad infinitum. on. Docstoc has an annual report That means extra care must be section containing more than taken over whatever appears 1,600 items and its most viewed online, including shareholder item – Chesapeake Energy communications like the annual report. Corporation’s 2006 report – has clocked up more than 14,000 Earthly concerns views on the site. By uploading For many investors – both documents, issuers can take professional and retail – the effort control of the way they are companies put in to protect the portrayed on social media networks. environment is becoming a greater Twitter feeds are also being and greater concern. In turn, the used by corporates to spread their focus on sustainability has resulted message, mainly as a way to flag in a rise in the number of investors 6 IR GUIDE The annual report: many ways to tell your story
- 7. Kellogg’s produced its second CR report this year in the US focused on corporate responsibility, says Lee. To highlight its sustainable approach to business, ProLogis continues to provide an online- only CR report, which this year was released on Earth Day (April 22).The report helps raise awareness about the company’s programs supporting CR. ‘The CR report makes it very easy to access all the information that’s very important to CR investors,’ notes Lee. ‘It Corporate Office helps them decide whether we fit Properties Trust into their investment profiles.’ developed a video ProLogis is not alone. Corpo- report starring its rateRegister.com, a website that management team stores and reviews CR reports, says 3,764 stand-alone reports were produced in 2009 globally, emphasize Kellogg’s focus on up from 3,408 in 2008 and 3,011 sustainability from the top down. the year before. In general, the CR report This year, breakfast cereal complements the content in the producer Kellogg’s delivered its traditional annual report, which second CR report, which is available has the wider aim of making a in HTML, PDF and print formats. lasting and comprehensive statement important stakeholders for whom The report features interviews about a company’s operations, we believe the annual report with David Mackay, president and finances and strategy. remains an important part of chief executive, and John Bryant, ‘Shareholders, employees, our communications strategy,’ chief operating officer, in order to suppliers and regulators are all concludes Pfund. ● The annual report: many ways to tell your story IR GUIDE 7
- 8. Sponsor’s statement Offices Atlanta, GA Boston, MA Brentwood, CA O ver the past four decades, Curran & Connors has evolved beyond its core capability – annual report design and production – to meet the challenges of a 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 8 IR GUIDE The annual report: many ways to tell your story