Corporate Eye

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John Palizza

John Palizza

Making Your IR Website More Robust

I’ve been reviewing a number of websites lately and it seems as if investor relations web sites are becoming more robust. I’ve been impressed with the variety and ingenuity exhibited on some of the sites I’ve seen, particularly for European companies. Overall, my impression is that the European IR websites have been more innovative in their use of the power of the web.

As you might expect, not every site does everything, so for the benefit of those investor relations officers that don’t have time to conduct a review of other web sites, I thought I would provide a series of posts that list some of my favorite features that can help you help investors.

ENI interactive chart

First, charting – there are lots of charting sites available, but some things can be done better on the company page. For example, interactive charts with links to events and press releases are very helpful. Many times I’ve stared at a stock price chart with a big dip or rise and wondered, “What happened here?” Such large dips or rises are almost invariably accompanied by a press release, so an interactive chart that leads you straight to the event saves a lot of time and effort.  

EADS interactive chart

Another helpful feature is being able to specify an exact time frame for your chart. After all, most investors don’t invest on the exact day necessary to fit into the standard time range specified on most web sites. I also found that charts that let you specify other companies to chart against very useful, although I’m sure many companies are not thrilled about having their competitors charted on their site.

As I continue to review sites, I hope to be able to  cite more examples of best practices.  It’s kind of fun to be able to hand out praise instead of criticism. 

The Minimalist Approach to IR Websites

Mies van der Rohe, one of the founders of modern architecture, famously said, “less is more”.  I have now found an investor relations website that attempts, unsuccessfully, to put this into practice.  

Kroger, a U. S. supermarket chain, has an investor relations section that consists of four pages.  The initial page contains a table with quarterly high and low stock prices and six facts about the company: number of employees, number of shareholders, shares outstanding this year, shares outstanding last year, stock ticker and exchange it is listed on.  

That’s it, nothing else, which makes it kind of difficult to form any sort of investment opinion about them.

I thought that was minimalist, but the next page takes it a step further.  Their FAQ page lists exactly six questions that they deem important enough to list.  On the third page, the effort to supply useful information about the company is not better. You want a report about the company?  Your first default is that the company sends you off to the SEC Edgar database.  You want to see the company’s annual report?  You have to dig through 73 pages of a proxy statement before you get to the most recent annual report.  No indexes, no tabs – you’re on your own if you want to find helpful data.

Finally, the webcasts page lists a link to a single upcoming event – no archive of past presentations, nothing to give you much context.

Oh well, I’ve never been much of a fan of modern architecture anyway.  In this case I think more would be more.  

Kroger has evidently decided one of two things: 1.) They are only going to provide the minimum amount of information they possibly can, or 2.) Let all those pesky investors go somewhere else to find the information.  After all, there’s a whole world wide web of information out there.  In either case, they are effectively driving investors away.  That can’t be good for their stock price.

What Good Are Those IR Awards?

If you’ve ever found yourself off the IR awards list (or the short list, for that matter) your reaction was probably something along the lines of, “Well, they’re just beauty contests anyway and they really don’t signify much”.  I know, I felt pretty much that way when I practiced investor relations on the corporate side.  It seems there just were not enough trophies to hand out to all of the campers.  

Unfortunately, I’m here to tell you that there is actually academic research that shows that being nominated for investor relations awards can help your stock price.

In a March, 2008 working paper, Professor Richard J. Taffler of The Management School, University of Edinburgh, together with Vineet Agerwal, Angel Liao and Elly A. Nash authored a study entitled “The Impact of Effective Investor Relations on Market Value”. In their study they use nomination for IR Magazine’s “Best Overall Investor Relations” awards over a three-year period as an indicator of quality investor relations. Their study shows that firms that are seen as having effective investor relations, as indicated by being nominated for the awards, earn superior abnormal market returns both in the year of nomination and the year following the awards.

The part of the study that is of the most interest to me is the quantification the authors put on the abnormal risk adjusted stock returns earned by firms in the year following their nomination for an award. The results show that all nominated companies earned 80 basis points per month superior market returns. When you compound 80 basis points per month over a full year, the result is an excess return of 10%.

So while the awards may be a beauty contest, they appear to be one where there is genuine prize money at the end.

Retailers Want to Sell – Not Tell

Allow me to start with a gross over-generalization: retailers would rather investors get lost in their product offerings than find useful information about them.  I say this after poking around on a number of retailers’ web sites.  By and large, it is very difficult to find your way to the investor relations page from most retailers’ home page as the home pages are cluttered with wiz-bang deals for goods on offer you just can’t refuse. My poster child for this problem is Sainsbury’s, the British supermarket chain.  I started out at their home page and went to the logical spot, “About Sainsbury’s”, conveniently displayed at the top of their home page.  Nope, IR is not in “About Sainsbury’s”.  Nothing remotely resembling investor relations is listed under that tab.

Sainsbury's
Sainsbury’s Retail Site

Then I looked at the “Online Community” tab. Nope, not there either.  A perusal of their FAQs was of no use, and given all that went before, it was no surprise that their Help function was of no help either.  I was a bit put off by this point, but hey, these are only the owners of the company trying to get information, so why should management care if it is readily available? Finally, after much searching and a high level of frustration, I found a tiny tab at the bottom of the home page entitled, “Corporate Site”.  In desperation, I clicked on it and, what do you know, I finally got somewhere where I could learn about the company as an investment. 

Sainsburys
Sainsbury’s Retail Site

This is the worst design I’ve seen so far in terms of getting to the investor relations information area.  It took me at least 6 clicks to get there, – three times as many as your normal site and there was a very high treasure hunt factor involved.  Given that many investors today have an attention span roughly equivalent to the life span of a Mayfly, many will give up before they find out where to go.  On my completely arbitrary ratings scale of 1 (lowest) to 10 (highest), I give this a 5, a failing grade.  The only reason the ranking isn’t lower is that the investor relations section, when you finally get to it, is fairly serviceable.

Do Tech Companies Give Good IR Web? (part 3)

Tech companies should be good at this stuff – but they’re not. My search for a perfect IR portal from a company’s home page has led me to disappointment so far by both Microsoft and Apple.  It was with diminished expectations that I pointed my browser at Sun Microsystems.  I was pleasantly surprised.  It turns out that when you arrive at the Sun home page all you need to do is to scroll your mouse over the tab labeled “About Sun” at the top of their home page and a descriptive menu drops down showing you all the places you can go to get information about Sun, with short descriptions.

Sun Home PageSun Home Page

A single click, with very little hunting.  It doesn’t get any better than this.  On my arbitrary scoring system I give Sun a 9 out of 10.  The only way they could have scored higher is if they had set the link to investor relations out separately in 36 point type and surrounded it with flashing lights, so for all practical intents and purposes, they received a perfect score.  Not only that, but when I went to their investor relations page, I also really liked the way they laid out their information, with an easy to follow layout.

Sun Investor Relations Page
Sun Investor Relations Page

As an investor, this tells me a couple of important items: 1. Sun understands the web and how to use it to make your life easier, and 2. Investors are an important constituency for them.

I am encouraged and my faith in mankind restored (at least when it comes to web sites dealing with investor relations, an admittedly small field).  Next I plan to look at how a couple of retailer approach the same issue, before moving on to more weighty issues.

Do Tech Companies Give Good IR Web? (part 2)

After subjecting Microsoft to my critical and highly subjective review of how tech companies get investors to their investor relations pages, I thought it would be fair to look at how Apple does it.  After all, Apple is a company that is known for its design flair and ease of use.  My expectations were high.    

When I visited Apple’s home page, I searched high and low for something that typically would lead me to the investor relations page, either a link or tab that was labeled “About Us” or “Our Company” or even “Investor Relations”.  I found nothing – nada – zilch – that looked like where I wanted to go.  Finally, down at the bottom of the page, in tiny print I found “Media Info”.  Clicking on that lead me to a page of press info with a small box labeled “Media Resources” where Investor Information is number four in the list.  Clicking on that got me where I wanted to go.  

 Needless to say, my expectations about Apple were not met.  This was a disappointment for me as I am a fan of Apple’s products – this post is being written on a Mac and between my kids and I we have more ipods in my house than I care to think about.  So how do I score them on my completely arbitrary scoring system?  I give them a 7.  While it only took two clicks to get where I wanted to go, the treasure hunt factor was way too high for a company of Apple’s stature.  Further, Investor relations is not a media category, and the printing for the links was tiny.  

 

Further investigation of the web page revealed two other ways to get to the investor relations page.  The first was to navigate to the site map and find the “Investors” page.  Personally, I try to avoid site maps whenever possible as they usually involve extended hunting for what you want.  This wasn’t my first choice and I don’t give Apple much credit for it.  The second method was more innovative.  At the top of Apple’s home page there is a small search box, similar to the search box that is built into their current operating system.  By the time you type in the first three letters of investor relations, the link for the appropriate page pops up.  This is cool, if only you know to do it.  it may be the wave of the future, but most of us are conditioned to use links and tabs at this point.

So what does all of this tell investors about Apple?  First, if you never found Apple investor information it would be OK with them.  By placing investor relations as a subset of media, it also tells you that Apple wants and expects to control the message to investors, something they can do with the media.  Alas, this almost never works, although it doesn’t keep companies from trying.