Table Of ContentINVESTOR RELATIONS
Palgrave Macmillan Finance and Capital Markets Series
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Investor Relations
Principles and International
Best Practices of Financial
Communications
ANNE GUIMARD
© Anne Guimard 2008
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accordance with the Copyright, Designs and Patents Act 1988.
First published 2008 by
PALGRAVE MACMILLAN
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registered in England, company number 785998, of Houndmills, Basingstoke,
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ISBN-13: 978–0–230–22108–6 hardback
ISBN-10: 0–230–22108–4 hardback
This book is printed on paper suitable for recycling and made from fully
managed and sustained forest sources. Logging, pulping and manufacturing
processes are expected to conform to the environmental regulations of the
country of origin.
A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Guimard, Anne, 1962–
Investor relations : principles and international best practices of fi nancial
communications / Anne Guimard.
p. cm.—(Finance and capital markets series)
Includes index.
ISBN 978–0–230–22108–6
1. Corporations – Investor relations. I. Title.
HD2744.G85 2008
658.15'224—dc22 2008035168
10 9 8 7 6 5 4 3 2 1
17 16 15 14 13 12 11 10 09 08
Printed and bound in Great Britain by
CPI Antony Rowe, Chippenham and Eastbourne
Contents
List of Illustrations x
Introduction xi
1 Competing For Capital 1
1.1 Why Go Public? 2
1.2 The Four Phases of Investor Relations in an IPO 6
1.3 Investor Relations for Private Companies 18
1.4 Private Equity Investor Relations 20
1.5 Debt Investor Relations 20
2 Seven Keys To Successful Investor Relations 24
2.1 Clearly Defined Goals 25
2.2 Importance of Senior Management Commitment 25
2.3 The Efficient Investor Relations Organization 26
2.3.1 A Flexible and Scalable Investor Relations Organization 30
2.3.2 Position in the Organization 31
2.3.3 Responsibilities of the Investor Relations Department 32
2.3.3.1 Coordinating financial and strategic
communications 33
2.3.3.2 Building internal awareness of Investor
Relations 34
2.3.3.3 Being the company’s spokesperson in the
financial markets 35
2.3.3.4 Keeping management aware of market’s
perception 39
2.3.4 Investor Relations: Profiles and Job Descriptions 40
2.3.4.1 Profiles 41
2.3.4.2 Job descriptions 42
2.3.5 External Investor Relations Service Providers
and Advisors 47
v
vi CONTENTS
2.3.5.1 Scope of assignments 47
2.3.5.2 Identification and selection process 49
2.3.6 Investor Relations Tools 51
2.3.6.1 Contact database 51
2.3.6.2 Monitoring tools 52
2.3.7 Investor Relations Budgets 55
2.4 Quality of Information and Reporting Systems 56
2.5 Understanding and Complying with Legal Requirements 58
2.5.1 Price-Sensitive Information 59
2.5.1.1 Main characteristics of price-sensitive
or privileged information 59
2.5.1.2 Insiders 61
2.5.1.3 Disclosure of price-sensitive information 63
2.5.2 Periodic Disclosure 65
2.5.2.1 Financial accounting information 65
2.5.2.2 Annual general meetings 66
2.5.2.3 Financial transactions 68
2.6 Anticipating Changes in Investor Relations 70
2.6.1 Endogenous Factors 70
2.6.2 Exogenous Factors 73
2.7 The Convergence of Investor Relations and Corporate
Communications 74
2.7.1 Convergence Is Here to Stay 74
2.7.2 Integrated Communications as a Value Driver 74
2.7.3 Ensuring Consistency across Communications 75
3 Implementing Best Practices in Investor Relations 78
3.1 Identifying Shareholders 79
3.1.1 Legal Means 79
3.1.1.1 Notification of threshold crossing 80
3.1.1.2 Identification by a central securities depositary 80
3.1.1.3 Analysis of voting results 81
3.1.2 Technical Means 81
3.1.2.1 Free shareholder identification techniques 81
3.1.2.2 Fee-based identification tools 82
3.1.2.3 Financial intermediaries 82
3.2 Attracting and Retaining Shareholders 83
3.2.1 Intelligent Targeting 85
3.2.1.1 Meeting with hedge funds 89
3.2.1.2 Activist shareholders or the limitation of
institutional targeting 89
3.2.2 The “Seed, Harvest and Lock” Approach to Investor
Relations 89
CONTENTS vii
3.3 Understanding Market Expectations 90
3.3.1 Form 90
3.3.2 Content 91
3.4 Developing the Financial Calendar 93
3.4.1 Who Prepares the Financial Calendar? 93
3.4.2 Financial Calendar Content 98
3.4.3 Publication of the Financial Calendar 99
3.4.4 Quiet Periods 99
3.5 Crafting Compelling Messages 100
3.5.1 Writing Clearly 102
3.5.2 Financial and Strategic Messages 102
3.5.2.1 The business environment 102
3.5.2.2 Organization 103
3.5.2.3 Human resources 104
3.5.2.4 Commercial, technological, and financial
performance 104
3.5.2.5 Business model 105
3.5.2.6 Strategy 107
3.5.2.7 Risk factors 108
3.5.3 Outlook 108
3.5.3.1 Forecasts, objectives, outlook and guidance 109
3.5.3.2 Selecting guidance indicators 109
3.5.3.3 Choice of time horizon 110
3.5.3.4 Updated outlook 111
3.5.3.5 Profit warnings and preannouncements 112
3.5.4 Shareholder Value Creation 113
3.5.5 Mergers and Acquisitions 115
3.5.6 Corporate Governance and Internal Control 116
3.5.7 Corporate Social Responsibility and
Sustainable Development 117
3.5.8 Investor Relations for Employee Shareholders 117
3.6 Selecting and Implementing Investor Relations Tools 118
3.6.1 Press Releases 119
3.6.2 Visuals, Presentations, and Slideshows 121
3.6.2.1 Form 121
3.6.2.2 Content 122
3.6.3 Online Investor Relations 123
3.6.3.1 Basic principles for Web site construction 123
3.6.3.2 Site content 124
3.6.4 Blogs and Social Media 126
3.6.5 The Annual Report 127
3.6.5.1 The purpose of the annual report 127
viii CONTENTS
3.6.5.2 Structure of the annual report 128
3.6.5.3 Distribution of annual reports 129
3.6.6 Shareholder Letter 130
3.6.7 Financial Advertising 131
3.6.8 Press Kits 131
3.6.9 Public Meetings 132
3.6.10 Solving the “Who Meets Who” Problem 133
3.6.11 Successful Investor Relations Meetings Tactics 134
3.6.12 One-to-One Meetings 135
3.6.13 Roadshows 136
3.6.13.1 Roadshow format 136
3.6.13.2 To go solo or to use a bank 137
3.6.13.3 Roadshow participants 137
3.6.13.4 Ten rules for successful roadshows 138
3.6.14 “Reverse Roadshow” 140
3.6.15 Conferences 141
3.6.16 Analyst and Investor Days 141
3.6.16.1 Objectives 142
3.6.16.2 Planning 142
3.6.16.3 Location 143
3.6.16.4 Content 143
3.6.16.5 Feedback and debriefing 144
3.6.17 Conference Calls 145
3.6.17.1 Making the best use of technology 145
3.6.17.2 Script and presentation 145
3.6.18 Open Days 147
3.6.19 The Annual General Meeting (AGM) 148
3.6.20 Factbooks 150
3.6.21 Written Disclosure Policy 150
3.6.22 The Shareholder Guide 151
3.6.23 Corporate Social Responsibility Report 152
3.6.24 Fact Sheets 152
3.6.25 Deploying Technological Innovation in
Investor Relations 152
3.7 Enhancing Shareholder Loyalty and Retention 153
3.7.1 Extracting Value from the Shareholder Base 153
3.7.2 Combining Financial and Corporate
Communications Strategies 154
3.8 Dealing with Crisis Communication in
Investor Relations 154
3.8.1 Anticipating, Just in Case ... 155
3.8.2 Joining Press Relations and Investor Relations Forces 156
CONTENTS ix
4 Measuring The Value Of Investor Relations 160
4.1 Quantitative Factors 161
4.1.1 Stock-Market Criteria 161
4.1.2 Equity Research on the Company 161
4.1.3 The Shareholder Base 162
4.1.4 Financial Criteria 163
4.1.5 The Investor Relations Program 163
4.2 Qualitative Factors 164
4.2.1 Perception Studies 165
4.2.1.1 Areas of focus 165
4.2.1.2 Methodology 166
4.2.2 Awards 166
4.2.3 Investor Relations Organizational Structure 167
5 Conclusion 170
Resources 171
Index 183
