Christmas cards are the old social media – of the printing press era. But they say something to us about the new social media – our current interactive networks.

Personally, I love sending and receiving greetings this time of year. It’s a chance to touch old friends and colleagues with a personal wish of peace and well-being. I even like reading Christmas letters of faraway friends for news of their families and work lives.

A Wall Street Journal column on the history of Christmas cards this weekend made me reflect on how far we’ve come since Henry Cole printed up and mailed the first Christmas cards back in 1843. (No, Hallmark didn’t invent seasonal greetings.)

What’s this have to do with investor relations? Consider …

• Relationships are built by communicating with people, repeatedly, often in different ways, over time. A Christmas card may be one touch. An email note or “retweet” on Twitter another. A phone call or one-on-one even better.
• Social media are like Christmas cards. To play, you have to commit time and resources. You can’t say we’re going to do interactive media and then not put in the time – it’s like intending to send Christmas cards, but never getting to it.
• Personal messages, even short ones, speak volumes. Just as the seasonal card is about letting someone know you’re thinking of them, any note or call tells an investor (or in-house colleague, for that matter) that you care.

So now’s the time to start on “social media” for 2010, whether your plan is to tweet your earnings, blog your strategy, engage in online conversations on your industry, upgrade your website, or just touch more people personally in the new year.

Oh, by the way, if you celebrate Christmas – Merry Christmas! If it’s a different holiday, best wishes in this beautiful season and all the best for the new year!

Sooner or later something blows up for every company, so every investor relations professional ought to consider crisis communication as a critical skill. We should be in training. Two business professors offer a pretty good primer in “Let the Response Fit the Scandal” in the December 2009 issue of Harvard Business Review.

In the article, Alice Tybout of Northwestern University and Michelle Roehm of Wake Forest focus on the response of management – specifically CEOs – to reputational crises. But their guidance also fits corporate staffers and others who offer counsel.

The profs lay out four steps in the response to any crisis:

1. Assess the incident
2. Acknowledge the problem
3. Formulate a response
4. Implement the response

These are familiar, common sense steps, but the important thing is that a company must execute well on all four stages of crisis response – or risk losing brand loyalty and value for years rather than weeks – say Tybout and Roehm.

The profs have a couple of suggestions specific to communication in a crisis.

Rapid response is the key to establishing credibility early. After assessing the incident’s impact on the company and its customers, go to Step 2:

If management concludes that the company is likely to be affected by a scandal, it should immediately acknowledge the problem, expressing concern for any parties harmed and outlining the steps the firm is taking to investigate and prevent further damage.

Details aren’t appropriate in early communications, the profs say. In Step 2 the company expresses concern and describes initial actions – how it’s investigating the issue and what it’s doing to contain the problem from spreading. This is about management saying we know a problem exists and we’re on top of it.

That quick “acknowledgement” to the public buys a little bit of time for the company to determine the facts and formulate a comprehensive response. At that point, the company communicates more fully what went wrong and how it is responding to correct the problem.

And this is the plan for how the brand will bounce back, and value will be protected or restored for investors – which is what we’re in business to do.

The Cisco Corporate Communications organization is looking for college juniors and seniors to support several communications functions at Cisco to develop strategy, messaging or collaborative tools for the business.  This is an excellent opportunity for a college student to begin their career through an internship in corporate communications in a Fortune 100 environment.

Possible areas for internship positions:

• Public Relations
• Analyst Relations
• Community Relations
• Investor Relations
• Internal Communications
• Executive Communications
• Web Development & Design
• New Media
• In House Video Production
• Audio Visual Engineering
• Technical Demonstration Support

If you are interested, please bring your resume to the Cisco table at the upcoming SJSU Expo’10 Job and Internship Fair on Wed., 2/24/10, 12:00 – 5:00 p.m. in the SJSU Event Center. If you can’t attend the Career Fair, please apply for the Corporate Communications Intern position through the SJSU Career Center.

Earlier this week I moderated a NIRI webinar with three senior-level investor relations officers representing the finance, real estate and retail industries.  The panelists highlighted some new initiatives that IROs should consider in 2010 which, according to the Chinese calendar, is The Year of the Tiger. This just might have been the world’s only “Tiger”-related discussion in the past few weeks that had nothing to do with a certain golfer with a PR problem. 

Within Chinese culture the number six is auspicious and considered good for business.  So in keeping with this theme, here are six ideas that arose from the panel discussion that are worth considering as you develop your investor relations plan for the coming year.

Image source: Wikipedia

1) Provide deeper context for your guidance:  The age-old debate on whether companies should provide quarterly, annual or no guidance rages on, but one thing is clear.  If you do provide guidance, make sure that you provide the assumptions underlying that guidance.  This not only helps investors and analysts get a better sense of how you derived your estimates; it also provides a layer of protection if any of your assumptions do not materialize.

2) Post quarterly prepared remarks online:  Try posting your prepared remarks for quarterly conference calls on your company’s website either in advance or immediately after the call.  This way, analysts won’t have to ask as many of the “housekeeping” questions that typically crowd out the more desirable strategic dialogue during Q&A sessions and the follow up calls.  Adding supplementary tables and data to the quarterly press release can reinforce this effect.  

3) Consider recording prepared remarks in advance:  Companies that pre-record their management team’s prepared remarks for quarterly conference calls are convinced that this not only reduces management’s stress level the day of the call, but also eliminates last minute wordsmithing, allowing the team to be more prepared to tackle the important Q&A session.

4) Harness the power of your website:  The buy-side wants to see more information posted on companies’ IR websites.  One of the IROs on the panel said they are embarking on a complete overhaul of their site to ensure that it remains fresh and appealing.  Another panelist noted that her company is now posting virtual facility tours on their IR website – thus eliminating travel costs for the Street and saving management’s time.  Thus far, these online tours have been very well received.  

5) Maximize the value of your marketing outreach:  Some IROs believe that participating in investor conferences where management delivers a standard 20-minute IR pitch is not the most effective use of their time, especially since most companies post their investor presentations on their IR websites.  A better alternative is to attend conferences with a “fireside chat” format.  Fireside chats are often more valuable for both management and investors because they facilitate an interactive dialogue.  Another way to maximize management’s time in one-on-ones is by thoroughly screening meeting candidates.  Make sure that the sell-side or your IR firm is putting you in front of investors who are most likely to take a position in your company. 

6) Get in front of your board of directors:  The more you interface directly with your board of directors – by providing them a quarterly IR update, for instance – the more you will amplify the value of your position as IRO.  Update topics could include competitive intelligence, industry trends and analysis, investor feedback and concerns, share price performance and shareholder identification and trends. 

Wishing you good fortune in the coming year.

Maureen Wolff-Reid
President & Partner

HSN CEO Mindy Grossman will present at the Citi 20th Annual Global Entertainment, Media & Telecommunications Conference in San Francisco on Jan. 6 at 12:50 p.m. and the Cowen 8th Annual Consumer Conference in New York City on Jan. 11 at 8 a.m.

To listen to a live broadcast of Grossman’s presentation, you can visit the investor relations section of HSN’s Web site at www.hsni.com. An archived broadcast will be available shortly following the presentation.

The battle over health care policy, regardless of its outcome, offers a number of important lessons for those who work in investor relations. Accept, for sake of argument, the following substitutions:
Investors = patients
CEOs = doctors
Boards of Directors = health insurers (or Medicare)
Government (federal and state) = government (federal and state)

The question in both health care and in investing is, “What course of action best balances the interests of each individual, and the majority? And, who gets to decide that?
Naturally, each group has a point of view:

• Patients (investors) think they should decide. After all, they can take their dollars (or benefits) and spend them where they want. Or keep them and do nothing at all.
• Doctors (CEOs) think they should decide. They make decisions on each case based on the facts at hand, as well as the big picture, which is what their expertise and experience tell them is the right course of action, given all the risks and benefits.
• Insurers (Directors) think they should decide. They set the boundaries on what the doctors and CEOs can do, balanced against what investors/patients need and can afford. They decide, in general terms, whether to make the money available.
• Governments think they should decide. They set and enforce the rules of the game, which are complex and change constantly. But market participants ignore them only at their peril.

So, who’s right?

If you have the vantage point of an IRO, you can’t help but conclude that the answer is none of them. And, that each must acknowledge the rights and privileges of the other three for the system to work effectively.

What should IROs do when these corporate interests clash? IROs should speak up:

• When CEOs ignore or avoid input from investors and directors on the grounds that they don’t know all the facts, and because lawyers and lobbyists exist to deal with the government.
• When Boards set policies or compensate CEOs in ways that investors are likely to disapprove, and may cause them to invest elsewhere.
• When governments make rules, or enforce existing ones, in ways that are not in the long-term best interest of the investing public.
• And when investors aren’t being told, don’t understand, or simply disagree with what the CEO or Board is doing, and why it’s in their interest.

By keeping those principles in mind, we might all be a little wealthier, and maybe even a little healthier, in the New Year.

This weekend’s Wall Street Journal has a readable piece on what Warren Buffett didn’t invest in during the financial and economic crisis (“In Year of Living Dangerously, Buffett Looked ‘Into the Abyss’”) … Bear Stearns, Lehman Brothers, AIG, Wachovia, Freddie Mac and others.

Besides making the point that deciding not to invest can be as important to a portfolio manager as pulling the trigger to buy, the story contains this nugget of side interest to those of us who labor in investor relations:

That night, in his offices in Omaha, Neb., Mr. Buffett pored over Lehman’s annual financial report. On the cover, he jotted down the numbers of pages where he found troubling information. When he was done, the cover was dotted with numbers. He didn’t bite. Six months later, Lehman filed for bankruptcy protection.

So Buffett reads annual reports. Oh, I know, he’s a seventy-something sage, and many of us get most of our information online or on our phones. But Buffett is an investor with influence over market-moving sums of money. And apparently he digs into financial reports, marks them up and then makes his decisions.

Not that a nice annual report would have saved Lehman or AIG. But in the normal course of investing, quality of disclosure and clarity of explanation do matter.

Some CEOs and CFOs don’t believe, in their heart of hearts, that investor relations makes a difference. The numbers speak for themselves, they say – it doesn’t matter if you commit time and resources to doing a good job of IR vs. complying with the minimum requirements for disclosure. So why do IR?

A neat little video on the value of IR surfaced yesterday on Bradley Smith’s IR/PR Product Blog – published by Shareholder.com and NASDAQ OMX. The clip is Brian Rivel, president of Rivel Research Group, sharing a result from a recent survey in institutional investors. What Rivel says about IR:

• 74% of buy siders surveyed say good IR does has a real effect on valuation.
• How much does good IR help a company’s valuation? Median answer is +10%.
• How much of a discount does bad IR impose? Median answer -25%.

Rivel sums up:

So the difference between good IR and bad IR in this environment is 35% of a company’s valuation. So the answer to the question, Does IR make a difference? Absolutely. IR makes a difference.

This is a perception study, not scientific proof of causation. But it’s interesting, considering that buy side investors aren’t overly inclined to dispense praise, to see that they perceive the quality of investor relations as a real factor in valuation.

If for no other reason than the feel-good experience of having someone say your job is worth doing, you should take a look at the Rivel video – and while you’re there, browse Smith’s blog for interesting comments on other topics.

Chairman Mary Shapiro’s recent crackdown on insider trading spurred on by the Galleon Management case reminds me of a conversation I had with Borg-Warner’s CEO, Jim Bere′, many years ago.  We had just completed a strategy meeting on how to handle a media blitz covering two simultaneous takeover attempts on the Company. 

To my surprise, Bere′ said he was very concerned that employees with inside information about the offers might trade the stock, or tip off others who might deal on it, not knowing that both are illegal.

Out of that conversation evolved a communications program that first told employees securities laws pertain to all of them. We reviewed in simple terms, using a very broad brush, how and why each employee must follow these laws.  Our premise for the communications program was simple: “Provide a level playing field on material information coming from the Company in order to provide all investors a fair opportunity to realize a gain in their investment in the stock.” 

Our concern then was the attention the company was getting from the media and investors.  Phone calls were being placed into secretaries, middle managers and even the mail room to see who was in meetings or out of the office. The callers were trying to eke out the slightest trading edge through information some unsuspecting employee might provide.

Today, the threat of material information leaking out to investors through e-mails, message boards and social networking is far beyond anything we could have comprehended back then. For this reason, we make sure our clients have strong disclosure policies, and explain to their employees how securities laws can affect them directly.

‘Twas the night before earnings, when all through accounting,
Not a number was crunching; the pressure was mounting;
The toy company’s financials were all prepped with care,
In the hopes that the SEC would not soon be there;

The auditors were huddling on how to avoid the Feds,
While visions of lawsuits danced in their heads;
The CEO in a gray suit, the CFO in blue,
Had just settled down for a financial review;

When out in the lobby there arose such a clatter,
People ran from their cubes to see what was the matter;
All down the hallway the questions arose,
Someone had spotted a man in red clothes;

“Was it a lawyer threatening class action?”
“And if so, what would be the media’s reaction?”
“Was it a dissident shareholder holding a grudge?”
“But just what he looked like, no one could judge.”

The CEO blustered, “Who the devil could it be?”
“He won’t learn our quarterly profits from me.”
“Not sellside, not buyside, brokers or spies.”
“Not analysts, investors or any of those guys.”

To the top of the building, to the bottom of the stair,
He instructed us all to find out who was there;
So up to the rooftop the employees did go,
To seek out the man in red that no one did know;

And then, in a twinkling, we heard at the top,
“I’m here on important business, I order you to stop.”
But before we could respond or make a single sound,
He leapt in the chimney and disappeared in a bound;

We returned to our desks with a news release to write,
Thanks to our auditors, we’ll be here all night;
Pens moved across paper and fingers began pushing lead,
As we again focused on earnings, forgetting the man in red;

Who would email the NYSE? Who would call the Dow?
These were questions that investor relations had to answer now;
We carefully drafted our conference call story,
In the hopes that it would lead our stock price to glory;

I was proud of our messaging, our writing was grand,
I went to deliver the script to the man in command;
I rushed into his office, not pausing to knock,
He would understand – this affected our stock;

What I saw at that moment hit me real quick,
There, in a chair, sat jolly old St. Nick;
It’s true, – his eyes did twinkle! His dimples were merry!
His cheeks were like roses, his nose like a cherry!

And his round belly did roll as he let out a laugh,
When I blurted the question, “Is Santa now on staff?”
I turned to the CEO, my guidance provider,
Who told me, “It’s true, Santa’s now an insider.”

“He came here to give us some last minute advice,”
“Our numbers look great, St. Nick checked them twice.”
“He fixed up our tables and adjusted a number or two,”
“He even helped the compliance guys draft the 10-Q.”

“We certainly hope this will help our price per share.”
Suddenly St. Nick rose from his depths of his chair,
He walked quickly to the window and said not a word,
Then he whistled and soon jingling bells could be heard;

He opened the curtains and threw up the sash,
Then out on the ledge, he flew in a flash;
He would fall to his death was what I did fear,
Til I saw the red glow of his trademark reindeer;

Then we heard him exclaim as he rode out of sight,
“Happy earnings to all, and to all a good night!”

Jim Buckley
Executive Vice President & Partner

Penney announced a new “fast fashion” initiative with Mango this week, and Retail Wire commentators had a chance to weigh in. Here’s my point of view:

I’m a skeptic about JCPenney’s latest “reinvention.” So far, American Living hasn’t moved the comp-sales needle although it was also accorded a “store-within-the-store” treatment. And JCP has been painfully slow rolling out its Sephora shop concept, considering its stated success so far. Now JCP intends to launch Mango shops on top of its aggressive push in 2010 to become the exclusive retailer of the Liz Claiborne brand.

Meanwhile, JCP’s women’s apparel area looks unfocused and cluttered with too much “exclusive brand” proliferation to begin with. Clearly the results so far in 2010 (at least as far as top-line sales are concerned) show that Penney is mixing its “style/quality/price” messages and losing share in the meantime.

We could be in for a significant day on Monday, December 7, 2009, as the U.S. Supreme Court considers a case that could have significant ramifications for U.S. listed companies and investor relations, including opening up the 2002 Sarbanes-Oxley Act for review by Congress.  

 The case challenges one of the Act’s central features—the Public Company Accounting Oversight Board’s (PCAOB) legal right to be the watchdog over public-company auditors. 

The Nevada accounting firm of Beckstead and Watts, LLP, and a small-government advocacy group, the Free Enterprise Fund, will argue that because PCAOB exercises significant regulatory authority, it should be directly controlled by the President. The Act gave the SEC, whose commissioners are appointed by the President, the power to appoint PCAOB members. 

PCAOB replaced a system of self-regulation by the accounting profession with a so-called private organization.  But one has to question the private classification of a Board that dictates accounting standards for public companies, has the power to take enforcement actions against them, and imposes fines and collects fees to cover its budget, which includes salaries ranging from $672,676 for its chairman to $546,891 for its members. 

Those arguing that the PCAOB should stay as-is say that a 1935 court ruling held  independent agencies are constitutional even if the president has only limited power to fire their leaders.  The SEC power to appoint the PCAOB’s board members and remove members for “cause” constitutes a limited power of the president, they say, because the president appoints SEC commissioners.  But that’s a stretch in our mind.   The president can remove an SEC member, but only for “cause,” and has no direct power whatsoever over PCAOB. 

No matter how it rules (a federal appeals court in Washington already ruled 2-1 that the PCAOB was constitutional), a Supreme Court decision is a good thing for public companies and investors alike. It might prompt changes in some of the troubling parts of the Act that have been controversial since its passage in 2002, including provisions that exempt smaller companies from some requirements, even though they are more apt to bend the rules.

Equity analysts have been shipping out from sell side firms on Wall Street and establishing their own independent analysis shops – in droves - according to “Research Renegades” in the November 2009 Bloomberg Markets magazine.

The ongoing transformation of the sell side – through the financial crisis, the bear market and assorted tribulations still taking shape in Washington – is a big change that calls for investor relations professionals to flex with the times.

If we are to connect with our companies’ audiences in the investment markets, we must pay close attention to boutiques and independent analysis firms, as well as the old-line brokerage houses that have traditionally provided research coverage.

Bloomberg writer Edward Robinson quantifies the shift:

The number of independent research firms in the U.S. has soared to 2,667 from 1,012 in 2006, according to Integrity Research Associates LLC., a New York-based consulting firm.

The article notes that traditional investment banks (mostly) aren’t going away. Their underwriting and ability to allocate securities offerings undergird relationships with institutional clients. The buy side sends 70% of commission dollars to giant firms, and only 3% to the independents, according to Bloomberg.

“There is a symbiotic relationship between the bulge-bracket bank and the typical institutional investor, and I can’t see that being displaced,” [Jay Bennett, a consultant with Greenwich Associates] says.

Yet many sell side analysts are departing, starting up their own shops or joining small firms. The article focuses on analysts leaving to avoid conflicts of interest at investment banks, but the broader Wall Street meltdown and dearth of offerings in the past couple of years must also be contributing to the exodus. Economics trump philosophical purity in most job moves on Wall Street (or elsewhere).

Point is, we must follow the analysts, learning about their world as they study ours. Our contacts must extend to the independent firms – without giving up on the big guys. And most IROs probably should focus a lion’s share of attention directly on the buy side. (See earlier post on declining sell side coverage.)

What’s your experience with independents? Any ideas to share with IR colleagues?

To whom is the corporation accountable? Before SOX, majority voting, proxy access and “say on pay,” director elections were democratic in name only, and the lines between board and management were blurry at best. Except for the occasional gadfly at an annual meeting, boards rarely communicated with shareholders directly.

Today, after nearly a decade of turmoil in the markets and changes in the regulatory environment, the insulated board is a thing of the past. Shareholders are coming to view directors as leaders whose perspectives may diverge from those of management, who are empowered to exercise independent judgment on matters of consequence, and who are accountable for corporate performance.

A small but growing number of boards, recognizing that investor expectations have changed, have made dialogue with shareholders a formal priority. They are experimenting with new approaches for nurturing this interaction and learning from the experience. Although systematic programs for board-shareholder communications are still atypical in Corporate America, it is not too early to make some observations about what the more successful efforts have in common.

First, nurturing dialogue with investors – as with other corporate stakeholders – requires the establishment of systematic processes for outbound communications with shareholders. At a minimum, companies need to develop a board-shareholder communications policy and method for flagging the inbound shareholder inquiries that should be elevated to the directors themselves. The screening process usually involves two key questions: Does the investor have a significant position in the stock? And, is the matter more appropriate to be handled by the investor relations officer or another member of management?

What kinds of investor concerns are, in fact, appropriate, for board-level response? A blue ribbon commission convened by the National Association of Corporate Directors (NACD) identified several areas as appropriate topics for board-shareholder communications, chief among them CEO evaluation and succession. Another topic is executive compensation, which is not surprising at a time when CEO pay is constantly in the headlines. Other suitable areas identified by NACD are corporate strategy, board structure and director nominations, as well as social, environmental and labor issues.

A number of boards recently have begun meeting personally with proponents of shareholder proposals before they are filed or, once filed, before they come to a vote. Contacts like these provide opportunities to dispute the claims of dissident investors, potentially averting the spread of misinformation as well as personal embarrassment – particularly at the annual meeting.

Today’s forward-thinking boards approach the annual meeting as a serious venue for investor dialogue. A state-of-the-art annual meeting is a well-publicized event held at an accessible location at a convenient time, webcast live on the Internet, and structured in a way that encourages shareholder participation whether in person or online.

Whether the venue is an annual meeting, investor road show or meeting with proponents of a shareholder proposal, the directors who participate need to be prepared. This preparation includes a prior understanding of any underlying issues specific to the company. What are the likely questions, and how should they be answered? This can often depend on the shareholder’s investment style and longevity as an owner of shares. When directors are caught off-guard, the consequences can damage their credibility as well as that of the company.

In practice, learning how to conduct candid and productive face-to-face conversations with shareholders – responding appropriately to their unique psychologies while staying within the confines of Regulation Fair Disclosure – can require considerable training. It also necessitates an understanding of the company’s shareholder base. To help directors stay informed, every pre-meeting board package should include a report on management’s investor relations program, including a detailed analysis of the company’s shareholder base as well as any recent ownership changes, investor feedback and topics of investor interest or concern.

An effective process for encouraging board-shareholder dialogue should include mechanisms for tracking and reporting the resulting communications and their outcomes. A company that is truly committed to this effort will make these reports a regular agenda item for board or governance committee meetings and, thus, a formal element in the board’s annual work plan.

Communicating proactively with shareholders on a regular basis can lead to a variety of positive corporate outcomes. Adding channels for outbound messaging and improving board transparency can strengthen shareholders’ understanding of the company’s governance policies and its strategies for driving growth and profitability. In addition, boards that demonstrate a commitment to open shareholder communication often find that their reputation has been enhanced – not only within the company’s investor base, but more broadly on Wall Street and in the media community.

At a time of heightened demand for accountability, open communication with shareholders enhances the value that service as a director brings to both the corporation and society at large.The alternative is considerably less attractive. Boards that keep investors at arm’s length are risking the independence of their companies and their personal reputations as trusted fiduciaries.

Maureen Wolff-Reid
President & Partner

I recently had the opportunity to speak with Chris Lahiji, Founder and President of LD MICRO, a by-invitation only newsletter firm that focuses on finding undervalued companies in the micro-cap space and providing research for its clients. Since 2002, the firm has published an annual list of recommended stocks as well as comprehensive reports on select names throughout the year.  We touched on a variety of topics from corporate access, annual reports and even the future of sell-side coverage.  Chris’ unfiltered views on these subjects are refreshing and insightful for any investor relations practitioner. 

Disclaimer: On occasion, The Podium will publish interviews with professionals not employed by Sharon Merrill Associates to provide their opinions on topics of interest.  The views expressed by the interviewee do not necessarily reflect the views of Sharon Merrill Associates.

DW: Could you tell our readers a little bit about yourself and how you became interested in specializing in small-cap stocks?

CL: I come from humble means. No one in my immediate family or extended family worked in the world of stocks, bonds, and mutual funds.  Getting bought by “Goliath” is acceptable depending on the buyout premium.

What fascinated me at the beginning is the simple ability for a person to own a single share of stock, and technically consider themselves to be a part owner in that specific company. I would go into Toys “R” Us and tell horrified staff and customers that I owned the company and to please call on me if any questions arise. That’s because my father was a tiny shareholder and I was the custodian. We were rightful owners.

Investing was a hobby that ultimately turned into a profession.  To me, I consider small company investing to be my passion, and something that never gets tiring or old.

The reason I focus intently in the micro-cap world is because our country’s success depends on it. Small businesses hire people, invest massive amounts of money back into the system, and continually innovate. My job is to back “David” and hope he does not get killed by “Goliath”.

DW: On December 3, you are hosting the second annual LD MICRO Conference in Los Angeles.  What can attendees expect to take away from the event?

CL: Since the systemic crash we had late last year, many companies in the financial world decided to leave micro-cap and focus on larger companies. We never left, and grew even stronger in the process.

Liquidity to me is the biggest problem a small investor faces. Good research allows for good visibility, and if done correctly, creates liquidity.

Since we rarely talk to people outside our client base, I wanted to have an annual event that would encompass everybody in the micro-cap universe.  One where a wealth of information gets shared, analyzed, and discussed.

Last April, it was our first time, and the only other event I had planned to that point was my little brother’s birthday party. 60 companies presented, over 400 people showed up, and no one got anything stolen from their cars when parked in valet.

This year, we have 77 names attending. What makes me most proud is the quality and the diversity of the companies. Over 75% are profitable or cash flow positive, market caps range from $5 million to $500 million, and they are spread throughout all industries.

In every 30 minute interval, four companies will present, and they will all be different. The biggest problem attendees will have is choosing which names to go see, because they all possess wonderful qualities.

DW: At age 20, you became the youngest person ever to professionally manage a mutual fund and were often referred to as a “Wall Street Wiz Kid.”  How would you say the markets have changed since then?

CL: In six years, the markets are fundamentally the same. The only drastic change is the proliferation of information, which is not always an advantage. You have to sort through a lot of junk on the Internet and databases nowadays, looking for a few pieces of key information.

DW: Many sell-side firms have eliminated or cut back on small cap coverage as a result of the financial crisis.  As these companies lose coverage, they are also being invited to less investor conferences.  How would you suggest small-cap companies looking to gain more visibility do so in this market?

CL: Be proactive and don’t get discouraged. Hire a good investor relations firm that has made money for its clients over the years. Write a letter to shareholders at least once a year, have a one-page fact sheet showcasing why you would make a good investment, get management to buy some shares in the open market, be persistent, attend a couple high-quality conferences and navigate both the pros and cons. It takes time to build relationships and for people to get comfortable with you. Companies need to be open and responsive at all times. Above all, it’s all about the pudding (a.k.a. numbers). If you are profitable and growing, it won’t take long before a bunch of bloggers start salivating over your 10-Qs.

DW: Do you believe that companies should be using social media as a means for communicating with investors?

CL: No. Social media is used for socializing. I would have an “online journal” that would from time to time talk about a remarkable employee or discuss charitable giving, or all the things that are more important than profits. But please, no Facebook page. I can only imagine 12 year olds trying to “friend” Lockheed Martin.

DW: It is challenging for micro-cap companies to identify potential investors willing to take the time to meet with management and consider making an investment.  What are some steps that thinly-traded small-cap stocks can take in order to differentiate themselves from the competition and attract buy-side attention?

CL: Very tough question. Start with the private investors and work your way up. Much easier said than done. The trick is to be open, and offer a steady stream of information that catches the attention of investors and gives them a reason to track you. It goes from small investors, to regional broker dealers, to bigger broker dealers, to boutiques, and then hedge funds and mutual funds.

DW: In 2002 you ordered and read every annual report published in the U.S.  The annual report has evolved since that time.  What is missing and what would you like to see more of in these annual filings?

CL: I think anything that gets people away from reading annual reports is a good thing. They are long, repetitive, and boring. Unless you are Warren Buffett and have the discipline to read for days on end, I think a condensed “USA Today” type setting with distracting photos and small charts is the way to go.

Someone should invent a “CliffsNotes” for annual reports. I have someone I trust read them and get back to me nowadays.

DW: Small- and micro-cap stocks have long been victims of aggressive short selling.  How do you think the SEC should handle the short-selling issue?

CL: Enforce it! Just start in Florida and go north.

DW: If you could offer one piece of advice to an investor relations practitioner for a small-cap company trying to develop an effective IR plan for 2010, what would it be?

CL: My one piece of advice for my IR friends in 2010…establish trust early, and never stop providing insight (not to be mistaken with insider information). Investors talk to you seeking questions to their answers. Give it to them promptly, but also make a connection. One that lasts.

I make and lose money all the time. Regardless, I do business with people that I like and respect. Get their trust and protect it.

Don’t read off a script.

Make me laugh.

For more information on the list of presenting companies or to register for the LD MICRO Conference, please visit http://www.ldmicro.com/. 

Dennis Walsh
Senior Associate

잘 만든 자료는 아니지만, 옛날 자료긴 하지만
벤처 시작하셔서 투자유치를 준비하시고 계신 분들께
조금이나마 도움될 수 있지 않을까 하는 마음에 올립니다.
필요하신 분들은 고쳐쓰시라고 PPT도 올립니다.
맘대로 갖다 쓰세요. 도움만 되면 좋겠습니다.
허접하다고 욕하기 없기입니다. -.-

@sbroh

• 2000년 3월 작성
• 이 장표로 투자가에게 30여 분동안의 프레젠테이션 진행
• 이후 2000년 7월 Chase Capital과 1170만불 투자유치 계약

◆ 홍익인터넷 투자유치용 회사소개서 Google Docs로 보기
◆ 홍익인터넷 투자유치용 회사소개서 SlideShare로 보기
◆ 홍익인터넷 투자유치용 회사소개서 (PPT)다운로드

Recently, Sharon Merrill Associates President Maureen Wolff-Reid and I spoke on “Navigating the New Proxy Access Rules” at the NYSE Euronext’s “Building Blocks for Successful Investor Relations” conference.  The event attracted great attendance from CEOs, CFOs and investor relations officers – despite some obstacles getting downtown with the Yankees World Series victory parade taking place at the same time about a block away.  Some things you just can’t plan for.  As a life-long Red Sox devotee, it was rather painful to hear the million-plus Yankees fans lined up on Broadway cheering for A-Rod and company.  Wait ‘till next year I guess. 

When investor relations practitioners get together these days, we tend to discuss the same general questions, gripes and concerns:  When will we see an upturn in the economy?  Why can’t we have a better understanding of who owns our stock?  Will the Yankees buy another championship next year?  What effect are dark pools having?  But one topic that should be getting significantly more attention in the IR world is the inevitable change in shareholder proxy access.  If two proxy-related proposals from the SEC are implemented, the changes in proxy access will have a profound effect on the boardroom and board/shareholder communication.  It’s time to get ready.

The first set of SEC proposals deals with the rights of shareholders to nominate directors and to allow shareholder proposals to vote on nominating procedures or nomination disclosures.  As of this post, the SEC expects to address this proposal in early 2010 – too late to have an effect on the upcoming proxy season. 

Should this set of proposals pass as written, shareholders owning a certain level of stock for one year (1% of shares outstanding for a large accelerated filer, 3% for an accelerated filer and 5% for a non-accelerated filer) would be able to nominate their own candidates for director on the company’s proxy ballot.  The shareholder would need to certify that they are not nominating directors in order to change control of the company or gain a majority of the board.  Shareholders would be able to nominate one director or up to 25% of the board seats – whichever is greater. 

Since shareholder nominees would be listed along with company board nominees on the same proxy, we may be looking at what is tantamount to a political campaign for the board every proxy season.  And if a bill in congress to mandate the election of each board member every year passes, we could see frequent and major changes to corporate boards every year.  To further confuse the issue, dissident shareholders still would have the opportunity to nominate directors on their own proxy cards. 

The second set of SEC proposals deals primarily with proxy disclosure issues and we may see this pass just in time for the 2010 proxy season.   This set of proposals would require enhanced disclosure about director and board nominees.  Companies would need to disclose the “experience, qualifications, attributes or skills,” that qualify the director or nominee for the board and for each committee on which they sit.  Their risk assessment skills, area of expertise and why their service is relevant also would need to be explained. 

Another key element of the second set of proposals requires that a company explain its board leadership structure.  For example, why are the CEO and chairman titles combined or separated?  Whether there is a lead director and what specific role do they play?  Why is this leadership structure the best for the board at this time? 

Other items within this second set of proposals include accelerating the announcement of proxy election results (to an 8-K within four days), disclosure of risk relating to compensation, enhanced compensation consultant disclosures, and changes to the proxy solicitation process. 

Within this blog post we only have space to review a few highlights of the proposed proxy changes, but you can review the details of the proposals to “Facilitate the Rights of Shareholders to Nominate Directors” and “Proxy Disclosure and Solicitation Enhancements” on the SEC’s website.  I should note that there are also bills in Congress that would institute majority voting for directors, establish an independent board chair, mandate “say on pay” and compensation clawback provisions, among others.  Congress also could act on Proxy Access bills prior to the expected SEC vote in 2010. 

Many of the proposed SEC and legislative changes probably will not be in place for the upcoming proxy season.  However, the winds of change in the area of corporate governance are blowing hard, and investor relations will need to play a key role in helping companies deal with the inevitable. 

So what can we do now?  At a high level, the answer is clearly better communication about corporate governance and the implementation of a comprehensive board/shareholder communication policy.  Sharon Merrill Associates President Maureen Wolff-Reid will be offering advice on board/shareholder communication on this blog soon.  This is an area of critical importance.  Companies with proactive, progressive policies may avoid costly and time-intensive proxy fights, or even the loss of corporate control. 

David Calusdian
Executive Vice President & Partner

After Macy’s released its 3rd quarter earnings last week, Retail Wire panelists weighed in on the subject. Specifically, there is a lot of discussion about the merits of the “My Macy’s” program, intended to deliver more market-specific product to stores coast-to-coast. My bigger issue is that the May Company acquisition and other recent strategic moves are taking too long to deliver consistent profitability. My comments:

The “My Macy’s” initiative is worthwhile, and other national retailers have figured out how to tweak their local assortments in the context of a centralized buying office. However, if I were an investor in Macy’s I would have a few pointed questions after the latest earnings release:

1. If “My Macy’s” is an apparent volume driver, what’s taking so long rolling it out to the entire organization? Wouldn’t a couple of extra points of comp sales move the company closer to profitability?

2. When will Macy’s return to consistent profitability, not just in the fourth quarter but on an ongoing basis? Several of Macy’s key competitors (Kohl’s, for example) have delivered profits every quarter during a difficult 2009. Will Macy’s ever get out from under the crushing cost of its interest expense?

If you inspect the latest quarter closely, Macy’s continues to bleed from “division consolidation costs,” which have been going on at least since the May Company acquisition. It seems to me that “My Macy’s” needs to be a front-burner initiative, in order to start leveraging these acquisitions and division mergers once and for all.

The word of the year for 2009, according to the New Oxford American Dictionary:

unfriend.

This says something about our society and the social media we’re all embracing. Relationships of a certain sort are, well, un-doable. Someone can friend or follow you on Facebook, Twitter or LinkedIn, and either person can exit just as easily. Friending and unfriending can be entirely impersonal.

Now, I won’t say crack any cynical jokes about relationships with investors. My observation for the day is simply that we are all looking for real relationships – in our personal lives, business dealings … and our investor relations jobs.

Social media play a role in supporting all of these relational areas of life. But the simple act of friending or following or connecting isn’t much of a relationship. Talking with each other over time using whatever medium, listening, supporting – dare we say, investing time and effort in each other – makes a relationship.

Let’s be social in our investor relations outreach, but let’s build real relationships.