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Tate & Lyle Analysts List Makes the Grade

Recently, we covered the SEC’s Interpretive Release in some detail.  One area of concern in that document revolved around companies providing links to third-party information.  The particular example cited by the SEC was a company that provided links to just a few analysts, all of whom had favorable opinions of the company.  The suggested solution to such concerns is to list several analysts without regard to their opinion of the company.

Here we take a look at Tate & Lyle’s list of analysts as displayed on their Investor Relations website.  Such links provide valuable information for investors.  Not only do the links allow investors to quickly find professional analyst coverage of a company, but they also demonstrate to some extent the kind of coverage the company gets from the analyst community.  Thus, the concern of the SEC that someone might see such a list and assume that the two or three analysts listed represent the whole universe of coverage.  So, if a company can provide very beneficial information to investors while at the same time not running afoul of any hint of underhandedness, then we have a winner.

First, the Tate & Lyle page includes a disclaimer at the top of the page frame before the listing of analysts.  This is good positioning as it ensures that any investor who reaches the page should see the disclaimer.  The disclaimer specifically states that Tate & Lyle only provide the links for the investor’s convenience and that the do not warrant the accuracy of the information behind them.  Further, the disclaimer also points out that the list is not comprehensive.  We’ll turn a blind eye to the phrasing, “…nor does it endorse or accept any responsibility whatsoever…”  (Has a court ever ruled that not accepting responsibility is a weaker standard than not accepting any responsibility whatsoever?)

The one concern is the decision to make the disclaimer a light gray text.  While this is standard procedure for disclaimers in general and especially for those in printed text, in the case of IR, it may be better to error on the side of blaring, rather than aesthetically pleasing.  Frankly, it would be preferred if the disclaimer were both in full black color, and a larger font.  In fact, going all the way to bold may even be advisable.

Still, the disclaimer certainly makes the grade.

What about the list?

The list of analysts covers 15 names and companies.  Fifteen names most definitely can be considered a broad list assuming that the 15 were not cherry picked for their positive views.  If there were 20 analysts with coverage and the only five with negative comments were the ones missing, I think we can all see how that would be a flashing red light.

The analysts and companies listed represent a cross section of the biggest names in the investment and analysis world in both Europe, and the U.S.  One can hardly fault a list with these kinds of names.

What is particularly intriguing is that Tate & Lyle has chosen to link analysts via email address.  Many companies that provide a list of analysts fear to link at all.  Even the mighty Google, whose bread and butter are Internet links, chooses to not link to the analysts or even the main page of the companies they work for.  The tactic by Tate & Lyle is an interesting one.  By providing an email link, the IR site is more helpful than a simple list, or even a list with names and addresses as other companies have done.  At the same time, Tate & Lyle does not explicitly link to any information regarding the company, but rather only to information about how to contact people who cover the company.

So, the list gets a passing grade as well.

Best Practices

The Tate & Lyle site provides a solid example of what an analyst coverage page might look like for an IR site.  Using a large list, and a well positioned and well worded disclaimer are the keys to success with this form of investor information.  As an added bonus, it always looks good when your company seems like it is not afraid of the analysts.

Summary Information on Company Investor Pages

>The U.S. Securities and Exchange Commission (SEC) recently put forth some guidance for publicly traded companies with respect to summary financial information posted on the company’s website.  While earlier topics covered from this release (here and here) required some rooting around in the details and language for full understanding, the concepts put forth by the SEC here are simpler.  Indeed, the comments regarding the posting of summary information span just three and half pages of the 47 page document.

Using Summary Information

The SEC in some cases actually requires the inclusion of a summary in certain filings or prospectuses in order to highlight important information that could otherwise be lost within the lengthy pages of details, boilerplate, and disclaimers that make up such documents.  The SEC further notes that summaries are particularly appropriate when information provided is either long or complex.

So, it comes as no surprise that the SEC does not oppose, and in fact encourages, the use of such summaries on a company web site as well.  The key issue, however, is that such a summary must not give any indication of being complete information.  In other words, a summary published in such a way that a reasonable investor might believe he is reading the complete report or filing, is unacceptable.  While most IR sites and their staff’s have no intention of misleading investors into thinking that they are reading anything other than a summary, just how to go about properly posting such information comes down to a few easy sign posts that can be marked by the IR staff.

First, while documenting that the information on the web site is a summary either in the title of the document itself, or via accompanying text on the IR site, is a natural first step, the SEC suggests taking the next step and providing a guide to where the full information is located.  For the IR professional looking for best practices, such information should be linked both within the document’s web presence itself, and at the point of entry.  For example, if a summary of a complex financial transaction is made available from a web page via a link, a corresponding link to the full information should be included as well.  Such a link should be coded and positioned in such a way as to be obviously related to the link to the summary information.  Further, at the end of the summary itself, should be something along the lines of:

“This summary provides an overview.  The complete report can be found here.”

In this way, the IR site both makes clear to the investor that the information is a summary AND provides unfettered access to the full documentation.

Layered or Tiered Information

The SEC is a proponent of presenting information, not just on company web sites, in a format in which the most important summary or overview is presented first.  Within that summary or overview, directions to more detailed information would be included at the appropriate points.  Thus, an overview that included summary explanations of three concepts would also include the means with which to find further details on those three topics.  In published materials, such pointers would take the form of something like, “For more information, see page 173.”  On an IR web site, obviously, these pointers would take the form of “For more information, click here.”  Indeed, the argument could be made that simply telling someone where the additional details could be found might be insufficient without a direct link.  This raises the issue for IR professionals to carefully review material that is being published to ensure that when appropriate, actual links are added or substituted for the existing “go here” directive from print materials.

Depending upon how a company publishes such materials, the difficulty may rest in having the link not only send the user to the right web page, but also the right location on that web page.  For example, an overview which mentions stock option compensation and has a link to more details would be much less effective if by clicking the link, the investor simply arrived at the top of a lengthy web page about all aspects of executive compensation.

IR Action Items

The information and guidance from the SEC in regards to providing summary information on a company web site is hardly earth shaking.  None the less, it does provide some sign posts for the savvy IR professional.

First, don’t leave summary information out there on its own.  Just because it was a previously approved publication doesn’t mean that it belongs front and center on your IR page without any context.

Second, always provide clearly marked and easily accessible links to the detailed information from which any summary or overview is drawn.

Third, always review any such summary or overview for references to additional materials that may have been appropriate for the printed version, but may not be ideal for an on line version.  Most importantly, if an item is referenced, make sure it is made available in some form via the same web site that the summary and overview are available from.

Investor Relations and Main Street

In America, the populist press often likes to refer to Wall Street and Main Street.  Wall Street, of course, referring to all those suit wearing Ivy League graduates who prowl the arcane corridors of finance and insulate themselves from the rest of the world with high walls around their mansions, and Main Street being hard working “normal” people who can’t get a break from Wall Street.  While I doubt most IR professionals would subscribe to that view, it does raise the question, can an IR site be helpful to regular investors?

Investor Relations and Molly Mainstreet

Recently, we discussed how to make IR sites more user friendly for employee shareholders, but how does one go about making an IR site more user friendly for the average person?  The number of people who own stock is higher than it has ever been and it is growing.  So, how can an Investor Relations website target those common “Main Street” folk who are becoming a larger group of shareholders each day?

For Dummies versus Dumbing It Down

For many, the first instinct is to “dumb it down.”  This is a recipe for trouble.  By trying to give an investor just the gist of the information, you risk eliminating pertinent specifics and creating legal and ethical issues.  However, much of the space on an average IR website is taken up by what could be considered technical material.  While a prospectus or annual report is indeed designed precisely to provide information to the public, it can seem overwhelming to investors without a degree in finance.  The beloved, retired, widowed, orphaned, school teacher, is unlikely to find much use out of thick, statistics filled financial statements.  So, how do we reach this audience?

The popular “For Dummies” book series has achieved success by taking one concept and sticking to it religiously, provide the necessary information, but do so in a manner that is friendly, accessible, and straightforward, with minimal use of jargon.  This same concept is the secret to success with the regular investor.  However, the time required to rewrite financially technical materials can be significant, not to mention the need to re-approve everything.  It would be great if there was a source of such material already available.

News, Lots of News

There is one area where some information has already been reduced to a digestible level.  When a company issues a press release, the information cannot be long and unwieldy.  The average reporter would not bother with it, and the affect of the release would be squandered.  So, press releases are, by design, developed as understandable information in an accessible size.  In addition, press releases are also already vetted by the legal and compliance departments before their release, so there is no worry about the information being improper in some way.  In other words, they are the perfect information pieces for our Main Street investor.  Make such news articles and press releases and integrated part of your IR site without pushing them off to the corner where they look like something no one really wants to see and the accessibility issue is already much improved.

Just Talk to Us

The other major focus for dealing with Main Street investors is accessibility.  The image of large companies standing in their towers behind guarded lobbies is a powerful one.  An Investor Relations site can reinforce this image by having contact information buried under various link levels, or silently placed elsewhere on the web site.  To provide the maximum benefit for the common investor, contact information specific to investor relations should be prominently displayed on the IR pages.  This information should include both email addresses (a general catch-all email account is fine) as well as a regular mailing address and if possible a phone number.

Also helpful is the method for ordering standard printed versions of investor related material.  Since many investors may be working from knowledge gained in the world of mutual funds, a similar concept to the prospectus can be a comforting idea to someone branching out into direct stock ownership.  The three lines of text on an IR site stating how and where to order such materials will be of much use to these investors.

Remember, many people are still more comfortable with a phone call than an email, and the number of people who feel better if they have something “in writing” is still significant.  You can reach out to both groups with a nice contact list.

Demographics, Twitter and Virtual Meetings

While browsing through some archives recently, I came across … ArcelorMittal using Second Life to hold retail investor meetings – or at least, to hold a mixed reality meeting, with some people present in real life, and others present in a virtual life.

Now, I’ve talked before about using live chat for retail investor meetings, and I’ve mentioned companies using Second Life for recruiting before.

But the use of Second Life for investor meetings is interesting, and – not surprisingly – this caused a fair stir a few months ago.

Not only is the use of this technology for this purpose interesting, so too is the underlying reason: that ArcelorMittal have an aging group of retail shareholders. Apparently the average age is over 65, and, quite rightly, ArcelorMittal have identified this as a problem. (Good for them for recognising this – HR data was covered by Infohrm at their recent conference, but shareholder data is very important too).

I wonder how successful this venture was for ArcelorMittal? Apparently 50-70 avatars (or representations of people) came to the event. I’d like to know the numbers that turned up to the real-life section of the event – and how many of the people that came to the Second Life version were already investors, or were seriously interested in investing.

Is Second Life really full of people who might invest – using real life money – in ArcelorMittal?

There is some information available about age-ranges, and some on how many people regularly use Second Life, but no clear indication of whether these are likely to be investors.

However, Quantcast tells us that 56% of Second Life visitors, at least in the US, earn less than $60k/year (27% earn less than $30k), and that 33% are under 18.

Possibly not ideal investor recruitment territory, then.

Nevertheless, ArcelorMittal deserve kudos for trying this out. But what else could be tried?

The average age of shareholders in the UK is (or was, back in 2006) between 35-54, and 42% of shareholders are classed as A/B (or middle/upper middle class).

The Twitter demographics from Quantcast seem to indicate that Twitter users are more likely to be shareholders: the average age of Twitter users is higher (only 1% of under 18’s), they are wealthier (29% earn over $100k/year compared to 20%) and better educated (63% college-educated compared to 52%).

Now, Twitter isn’t the same as Second Life, but it can be used as part of an online conference, so that the audience is at their desk (as for a webcast), and can see what you are displaying (perhaps a mix of webcast/video/audio/slides) and simultaneously see and participate in the related Twitter stream of comments and questions.

This takes some doing, for all parties:

The company has to

  • arrange for technical control of multiple media streams
  • chair the meeting of those people physically present
  • incorporate the questions and comments being raised by those not physically present.

In order for this to work, the company would have to have someone dedicated to watching the Twitter stream, and summarising it for the chair, who could then invite responses from the Board members/IR team.

The participants who are not physically present have to handle multiple input streams simultaneously. Possibly, the participants who are physically present could have the Twitter stream presented on a large screen too, so that everyone has the same material available … and the same quandary about multiple simultaneous input streams. It isn’t easy to watch a webcast and simultaneously keep on top of the discussion happening on Twitter. I know, I’ve tried!

However, if your potential market is using Twitter, then I think it is worth a try – and I think ArcelorMittal is up to the challenge. I wonder if they’ve considered it?

SEC Interpretive Release Part 1 Section 1

As mentioned here previously, the Securities and Exchange Commission recently released an “Interpretive Release” regarding SEC guidance on the use of company web sites.  The document totals 47 pages and can be found here in its entirety.

As reported in my prior post the release is intended to address four specific parts:

  • Clarification of how information posted on a company website can be considered “public” and guidance on complying with Regulation FD.
  • Clarification of the liability framework for certain types of electronic disclosure.  Of note, is that companies cannot require users to waive any protections from federal securities laws as a condition of participating in forums or blogs.  Also, included is guidance on linking to third party information without having to “adopt” such information.  How companies can provide historical data without it being considered “republished.”
  • Clarification of how anti-fraud positions apply to postings by the company or on behalf of the company in blogs and forums.
  • Clarification of which information is not generally subject to the Sarbanes-Oxley Act regarding “disclosure controls and procedures.”
  • Clarification that information may not need to satisfy the “printer friendly” standard in some cases, which would free companies to use “dynamic” technologies.

We’ll start by breaking down the release into each attempted clarification.  It should be noted that in addition to being an interpretive release, the document is also a Call for Comment.  As such, those involved in the production and maintenance of Corporate Websites and the Investor Relations section thereof, should carefully study the release in order to make relevant comments to the SEC.  Such comments are the best way to influence the course of any further action or clarification.

Part 1 Section 1

The first 15 pages of the release primarily cover prior actions by the agency.  So, we’ll jump right in at the first section of “new” information entitled: “Application of Certain Provisions of the Federal Securities Laws to Information Presented on Company Web Sites”

The first section is: “Whether and When Information Is “Public” for Purposes of the Applicability of Regulation FD”

Now, let me just say that if you are looking for some straight forward, “Do this”, but “Do not do this”, then you have the wrong document.  Still, there is some valuable information in here for those charged with maintaining company websites and compliance with regulations.

The information in this first section pertains mostly to when information that is posted on a company’s website can be considered “public” for compliance with Regulation FD.  Specifically when disclosure of information in a private manner to a specific individual or group of individuals can be considered acceptable based on the information having been public.  In order to be considered “public” information must be “disseminated in a manner calculated to reach the securities market place in general through recognized channels of distribution, and public investors must be afforded a reasonable waiting period to react to the information” (see note 1)

The catch here has long been whether or not the company’s website constitutes a “recognized channel.”  As the SEC notes, they have stated previously that such a website could someday be a recognized channel.  Is today that day?  Well, sort of.

The SEC notes that in order to be a recognized channel, investors must know the website’s location, that the company should let investors know that it does now, and intends in the future, to publish important information on its website, and that such information be easy to find, as well as the information be made available for a long enough period of time before any subsequent non-public disclosure.

So, how does a company go about making its website a recognized channel.  Ah, welcome to the gray area.

That is where we are headed next.

Note 1: From page 18 of the release, which cites Faberge, Inc. in footnote 48.

Google Invites Investors Home

google-earnings-release-on-ir-website-page-1

When Google speaks, people listen. Whether it is the enormous market capitalization, the global reach of the company’s well-known brand, or simply the expectation that the company will continue to be a worldwide innovator, when Google does something new, it matters to more than just Internet searchers.

Recently, Google released its first-quarter earnings in a manner that broke the traditional mold for releasing financial information. Instead of posting the actual press release and financial numbers via one of the financial newswires, Google released only a short statement saying that its earnings statement had been posted on the company’s investor relations website. A link to the IR website at was provided. However, no actual numbers or commentary was included in either the release text or its headline.

The full text of the statement released on Marketwire was just 50 words.

MOUNTAIN VIEW, CA–(Marketwire – April 15, 2010) –   Google Inc. (NASDAQ: GOOG) has released its first quarter 2010 financial results. Please visit Google’s investor relations website at http://investor.google.com to view the earnings release. Google intends to make future announcements regarding its financial performance exclusively through its investor relations website.

Releasing Financial Information on Company Website

This is not the first time Google has published its earning press release and materials on its investor relations website. In fact, Google and most other corporations routinely post such information on the IR websites in order to make it easily accessible to investors and potential investors. It also reduces the workload of the IR Department by freeing them up from responding to routine investor requests for publicly available information.

However, until this quarter, Google had always followed the time honored tradition of releasing earnings information via financial newswire. Like most other corporations, Google orchestrated a carefully timed dance in which a press release with the earnings data was submitted to one of the financial newswires. Then, they waited for the release and its contents to begin showing up in additional news streams to verify that the release had been done correctly. Only then, did the company release the earnings data online, thereby ensuring that the information had been publicly released in an unquestionable manner first.

With its first-quarter earnings, Google took a different track by simply releasing a notification that the information had already been released (or likely simultaneously released) on the company’s own website.

Google is not the first publicly traded company to release its earnings information on its corporate website, however, it is the first worldwide household name to do so. Ironically, the updated guidance giving companies like Google the green light to do just that came almost a year and a half ago. So, why did it take so long for companies to start using their websites to release financial information, and will other companies follow in Google’s footsteps.

Slow Moving Regulation Meets Internet Speed

In 2008, the U.S. Securities and Exchange Commission updated its Internet guidance for publicly traded companies using websites and electronic media for the first time since 2000. The update brought the agency’s Internet guidance up from archaic to merely out of date. However, in doing so, it opened the door for exactly the sort of thing that Google did with its first-quarter earnings for 2010.

The SEC Interpretive Release addressed several issues, and just as tellingly, specifically did not address even more issues. However, the interpretation did bring acceptance to the concept that a publicly traded corporation’s website could be used in certain circumstances to release information and communicate with stockholders. As long as the company’s website was a “recognized channel” for distributing information, then publishing material on that website would count as publicly releasing the information.

The criteria for considering a company website to be a recognized channel included that investors know the website’s location and that the information be easy to find. Most importantly, the guidance required that the company inform investors that it publishes important information on the website and that it plans to do so in the future. Google has already been stating in its financial filings that it has a website, where it is, and that it does publish financial information there.

Despite this go ahead from the SEC, the vast majority of companies continued to operate under the old financial news release first, website second model. The question was whether companies were just that slow moving, or whether there was some fear about changing a paradigm that was already working.

Penguins must leave the safety of the ice in order to find food in the oceans. However, there is no way of knowing whether a killer whale or other predator is lurking in the waters below. The only way to find out is to jump in and see what happens. Of course, no one wants to be the first on into the water, so the penguins inch closer and closer to the edge until finally, one of them drops into the water below. If nothing happens, then the rest of the penguins jump quickly into the waters to feed. If, on the other hand, a predator appears, the penguins move back to try again another time.

In the case of corporate financial earnings, many companies figured why take the chance of angering shareholders or provoking the wrath of regulators. At issue were both the inertia of a long-used methodology, as well as the pesky problem of letting investors know exactly when and where financial information would be released in the sometimes unreliable world of the Internet.

Google’s press release, it seems was designed to take care of that last problem. The company did not abandon the press release altogether, it just changed what it said. Moving forward, the company has indicated that it will continue to release financials on its own IR website. The interesting piece of the puzzle is whether or not it will issue another mini-press release telling everyone that the data is ready, or if it will skip that step altogether and rely exclusively on its own company website.