CEO Blog

Keeping investor relations professional abreast of industry issues and AIRA activities.

Your company blog is more than an indulgence – much more.

Global surveys show company blogs are the most used source of investor relations material on social media and that blogs are increasingly forming the basis of investment decisions as well as stories in the business press.

As many as 24% of professional investors have made investment decisions after reading a blog.

So you need to make the most of your blog.

How do you do that?

Let’s start by thinking about how social media works.

People love to share information that makes them look smart and well-informed. When they share information with links back to your blog, people will follow those links to your website and your traffic flow will increase.

This is a ‘hub and satellite’ model in which various social channels are the satellites and your website is the hub.

The ‘hub and satellite’ model of online communications, which uses social media to drive traffic to your website and engage investors - Source: Q4 Web Systems

Your blog can also point them to other parts of your website by talking about company announcements and planned events. Savvy companies are creating videos and information graphics – content that social media users like to share – to engage website visitors and tell their corporate stories.

When users of social media share information, your message can reach tens of thousands of people at a time.

That happened to us when we tweeted about our own blog item detailing hoaxes, rumours, and lies spread on social media about various companies. A dozen Twitter users retweeted the item and one of them alone had 30,772 followers interested in investor relations. That follower was Business Wire, a global leader in compliance distribution owned by Warren Buffett’s Berkshire Hathaway.

But Twitter is just one of the social media channels proving its worth in investor relations.

Slideshare is the place to host investor presentations and Flickr is good for photos of investor days and other corporate events.

Those savvy companies creating videos are hosting them on YouTube, which is the 2^nd biggest search engine behind Google.

If you want your corporate story heard, make sure it can be found. Start blogging and get investors talking about it.

Comment / Discussion (please note, AIRA's Online Discussion Group is only available to current members.  Participants must subscribe before they are able to post comments.  To subscribe, please click the "Register" link and follow the prompts)

Public and private companies are creating them, and professional investors and analysts are reading them.

Importantly, blogs are increasingly forming the basis of investment decisions as well as stories in the business press.

Separate global studies of listed companies, fast growing private companies, US stock exchanges, buy-siders, sell-siders and the business media by the Brunswick Group, Q4 and the University of Massachusetts Dartmouth all show astonishing growth in the use of digital and social media for investor relations. And UK brokers are starting to say sentiment on social media is affecting share prices.

Last year 52% of global investors and analysts read company blogs regularly and 24% of them made an investment decision after reading a blog. This makes company blogs the most used source of investor relations material on social media.

Source: Brunswick 2012 Analyst and Investor Survey

These figures are consistent with AIRA’s own survey in 2010, which also showed that professional investors are twice as likely as retail investors to use social media in their investment decisions. And they are not 20-somethings straight out of university. In last year’s Brunswick Group survey of professional investors and analysts, 81% were aged 30 or older and 40% were 40 or older.

For years, growth in the use of blogs was stagnant. But last year the 500 fastest growing private companies in the US reported that 44% of them were now using blogs – up from 37% the year before. Of those fast growing private companies that are publishing blogs, 63% have CEOs contributing to the blogs.

All this adds up to high-value content that is attracting the attention of the business media.

Almost three-quarters of business journalists in 35 countries said blogs prompted them to investigate an issue and 47% of them said they wrote a story that had been prompted by a blog.

Source:  Brunswick 2011 Social Media & Business Journalism Survey

If you want to reach the next generation of professional investors, the writing is on the wall. They don’t want you to communicate with them like you did with their parents. They want it online and social. They want to hear from you direct.

Next week: How to make the most of your blog

Comment / Discussion (please note, AIRA's Online Discussion Group is only available to current members.  Participants must subscribe before they are able to post comments.  To subscribe, please click the "Register" link and follow the prompts)

Share prices are proving vulnerable to attack through hoaxes, rumours, and lies spread on social media and, judging by global trends, the situation may well get more difficult.

In Australia during January, we saw the Whitehaven Coal hoax in which anti-coal activists circulated a fake press release purporting to announce the withdrawal of a $1.2 billion loan for Whitehaven’s Maules Creek project in NSW. More than $300 million was wiped off the company’s market cap before the share price recovered.

Overseas, social media is being used even more aggressively to attack companies and affect share prices.

In January, US company Audience fell 25% before rebounding after false rumours of a fraud investigation into the company were spread by a fake Twitter user. A US biopharma company, Sarapta, fell 10% before rebounding after rumours circulated on Twitter that the company had falsified test results.

Late last month, Burger King and Jeep’s own Twitter accounts were hacked. Burger King’s logo had been replaced by a McDonald’s logo, and announcements that Burger King had been sold to a competitor began to appear.

But there are ways to fight back – and having a strong password on your accounts is just the beginning.

The ASX says all listed companies have an obligation to monitor what is being said about them on Twitter, Facebook, LinkedIn and other social networks. That makes good commercial sense and it allows companies to respond when it is appropriate.

However, leading the conversation is better than just reacting.

With 30% of professional investors and analysts telling the Brunswick Group’s global survey last year that they use Twitter and 52% saying they read company blogs, listed companies should consider going onto the front foot to repel attackers.

Information generated by third parties is increasingly being seen as untrustworthy so companies should consider introducing their own social media presence as a trusted source of information about themselves.

And that can also influence the actions of market professionals.

The Brunswick Group survey revealed that 24% of investors and analysts said blogs prompted them to make an investment decision and 28% said Twitter prompted them to investigate an issue.

Social media can also help you get your story to the traditional media. A Brunswick Group survey of 1082 business journalists in 35 countries revealed that 1 in 7 published stories that had originated in social media.

For more details on the ASX’s position and global trends, listen to our webinar on social media for investor relations. It is free for AIRA members to view the webinar please click here.

Comment / Discussion (please note, AIRA's Online Discussion Group is only available to current members.  Participants must subscribe before they are able to post comments.  To subscribe, please click the "Register" link and follow the prompts)

The hard work of our members throughout 2012 has been acknowledged and rewarded at our ‘night of nights’ – AIRA’s gala dinner and award evening which followed our annual conference last month.

After a full day wrestling with the challengers facing investor relations professionals, members gathered in the evening at Sydney’s Four Seasons Hotel Grand Ballroom to relax, laugh and socialise with each other – and reward those who made outstanding contributions to investor relations during the past year.

The theme of that day’s conference was “Finding Focus in an Increasingly Boundless Role”.

The GFC has generated complexities that continue to redefine what’s expected of IR professionals. And yet, even as the boundaries continue to shift, increasing regulation and the intensity of the emerging competition for capital are creating a demand for highly detailed monitoring of market activity.

Throughout the day delegates heard from a number of leading industry practitioners who spoke on regulatory and capital markets issues and other significant influences that are shaping the role of the investor relations function within listed entities now and also explored how these influences would redefine the function over the next 10 years.

At the dinner and awards that evening, we were entertained by comedian and host of the Gruen Planet, Wil Anderson.

Guest speaker and award presenter was Grant Mizens OAM, an Australian men’s Paralympic basketball team medallist.

MC was Anne Fulwood, one of Australia’s best known and respected journalists.

As everyone mingled, our roving photographer snapped dozens and dozens of photos throughout the evening. See if you and your colleagues were snapped by clicking on http://bit.ly/TQ6uyB

For photos of the conference, click on http://bit.ly/UwyfdY

Award winners were determined by voting from domestic and international equities analysts and fund managers.

As I told the media: “These awards are part of AIRA’s programme to advance the awareness of investor relations in Australasia.

“Since the Australasian Investor Relations Association was formed 11 years ago, we have seen improvements from year to year in the investor communication strategies of listed entities.

“These awards are an opportunity to recognise and acknowledge leaders in the investor relations field.”

The Commonwealth Bank of Australia won the heavyweight title, picking up awards for overall best investor relations by by a company in the S&P/ASX 200 and a company in the S&P/ASX 50.

Elders won the emerging companies award.

Among the many other awards, there were also awards for websites and investor days as well as environmental, social and governance disclosure.

All placegetters in all awards are:

The aftermath of the global financial crisis has forced the role of investor relations officials to change rapidly - and it is changing in different ways at different companies.

Some companies see investor relations as a strategic role with very senior practitioners being on the management team. Other companies see investor relations as a compliance role.

As the boundaries of the role continue to shift and demand grows for highly detailed monitoring of market activity, this year’s AIRA’s conference in Sydney on November 20 will focus on these changes.

As an IRO, you have a dilemma: Keep an eye on everything that’s happening and evolving? Or focus on crucial specifics? The choice is width or depth.

Whatever choice you make for your company, one thing is certain. You have to work in an environment of increasing regulation and intense competition for capital.

So this year’s conference will ask the question that goes to the heart of the IR of tomorrow: Where do our responsibilities lie when they can no longer be systematically defined? Opinions, debate, controversy, ideas - expect it all as we confront the fallout from turbulence for Australasia’s IR community.

To help us answer the question, Gillian Karran-Cumberlege, a UK-based consultant who is uniquely positioned to provide insights into how the IR role will develop over the next decade, will lead a panel discussion entitled “The new look IRO: what could the role look like in 10 years?”

Gillian, a leading practitioner in investor relations and corporate affairs, founded Executive Search firm Fidelio Partners. She will be joined by John Murray, Amcor’s executive general manager, corporate Affairs; and Kevin O’Connor, Transfield Services’ general manager, investor relations.

The moderator will be Angus Guthrie, EnergyAustralia’s executive manager, investor relations.

You will come away with a clear understanding of:

• Industry developments that will fundamentally shape the investor relations role over the coming years
• What companies are looking for when recruiting investor relations professionals
• How the background of individual IROs have helped them shape the role within their respective organisations.

An interview with Gillian is also featured in a double page spread in our latest newsletter - to view a copy of the Newsletter, please click here.

In it, she reveals how the global, low growth environment that is beset by uncertain international macro factors affects IROs.

Unexpected benefit

Surprisingly, one of the unexpected benefits is an opportunity for corporations looking to boost their IR credentials by tapping the pool of European and US bankers, investment bankers, brokers and fund managers who have become available.

The keynote address from Warren Hogan, the ANZ’s chief economist, looks at the Asian century to see if it is simply the China century. If it isn’t, how will the economies of China and the rest of Asia evolve over the next decade - and what does this mean for Australia?

Other issues facing IROs to be dissected at the conference include

• Emerging issues in retail and institutional share ownership
• benchmarking investor relations practices against our global peers
• Managing capital in times of low growth
• The major challenges confronting Listed Entities
• The Government’s Reform Agenda

After we have taken a good look at how the future is likely to affect us as IROs, the fun starts. AIRA’s annual awards and gala dinner will recognise companies that have excelled with their practice of investor relations over the past year.

Weekend AFR columnist Anne Fulwood will be master of ceremonies with laughs from entertainer-Comedian Wil Anderson from the Gruen Planet and inspiration from Order of Australia member Grant Mizens, who is an Australian men’0s Paralympic basketball team medallist.

Awards that are up for grabs are:

• Best Investor Relations by a Company in the S&P/ASX 50
• Best Investor Relations by a Company in the S&P/ASX Mid-Cap 50
• Best Investor Relations by a Company in the S&P/ASX "Mid-Cap 100" (the first 100 companies in the S&P/ASX Small Caps Index)
• Best Investor Relations by a Company in the S&P/ASX "Mid-Cap 200" (companies who are ranked from 101 to 200 in the S&P/ASX Small Caps Index)
• Best Investor Relations by a Company in the S&P/ASX Emerging Companies Index
• Best Investor Relations by a New Zealand Company
• Best Investor Day by an Australasian Company
• Best Investor Relations Website by an Australasian Company
• Best Environmental, Social & Governance Disclosure by an Australasian Company
• Most Improved Investor Relations by an Australasian Company
• Best International Investor Relations by a Company in the S&P/ASX 200
• Overall Best Investor Relations by a Company in the S&P/ASX 200

How to book

Conference details: Tuesday, 20 November, The Ballroom, Establishment Hotel,252 George Street, Sydney, 8.30am - 5.00pm. To book your place at the conference, please click here.

Awards and gala dinner details: The Grand Ballroom, Four Seasons Hotel, 199 George St, Sydney 6.30pm-9.30pm. To join us for dinner and the awards, please click here to book your place.

Guest-of-Honour and Keynote Speaker
James Fazzino, chief executive officer, Incitec Pivot Limited
who spoke about his journey from IRO to CEO of a Top 50 Company

James Fazzino is a business leader that every IRO in Australia can learn a thing or two from. It was terrific, therefore, that James took time out of his busy schedule as CEO of Incitec Pivot Ltd, a top 50 company listed on the Australian Securities Exchange, to address AIRA’s Annual Sydney Cocktail Party held on 26 July.  There were plenty of his usual insightful quips, but the great value came from his explanation of how he drove his career from IRO to head the company.

The address began with James relating an experience that marked his first day on the job as IRO for Incitec Pivot’s former owner, Orica. At the time, Orica shares were trading at around $6 each. He accompanied his CEO and CFO to a meeting with their major shareholder, Perpetual, and was shown into a meeting room. They were told that management had lost control of the company, and that the trio should resign. They left shortly afterwards to find that Perpetual had dumped their shares. The price plunged to $3.95.

James had no time to settle in. He was in the hot seat. As he put it, for the first couple of months it was his job to visit frustrated investors – many of whom had bought at around $10 – and “bleed on the carpet in front of them”. At stake was not only his reputation, but also the reputation of his company.

Clearly, he did something right. Perpetual bought back in, and the share price began to climb in a long march that took it to $15 by the time James moved on. “While I would like to say that a lot of that was me, of course a lot of it was associated with the then CEO, Malcolm Broomhead,” James said. “My job went from the depth of the lows to the absolute highs. A lot of your reputation as IRO is how the company performs. It is one of the attractions of the job.”

He explained his career progression from IRO to CEO as resulting from developing a range of competencies and experiences essential in fulfilling his current role. That meant following a path that opened doors to different opportunities, and which would impress prospective employers. Being an IRO was ideal for garnering some of those essential skills.

Top of James’s list was financial acumen. IROs are ideally placed to gain such skills because they need to interpret their business by using financial metrics, and then selling those metrics to investors.

Second on his list was strategy. Successful CEO’s needed to make strategic choices that would either put their company on a successful path, or not. IROs role in relation to strategy is viewed by James as being part of the role played by CEO. They need to talk about a strategy that is attractive to investors. Within Incitec Pivot today, its IRO – Nick Stratford – is involved in developing and implementing strategy at a very early stage. “We are trying to execute strategy to create shareholder value, and bringing shareholders along for the ride is absolutely crucial,” James says.

Communication rates highly, too, on the list of a CEO’s essential skills. IROs, he says, are taught how to take sophisticated concepts and to break them down into messages that people can understand. CEOs make a range of pitches in order to bring along an organisation, and a key to being successful for him were the skills he learned as and IRO.

There is one essential skill required by CEO’s that is not learned by most IROs, and that is people management. When he first moved into the corner office, James realised that there was little that he could accomplish on his own. He could only succeed if everyone around him worked to his vision and were accountable.

Important to climbing to the top is for IROs to step beyond their remit to learn other skills and competencies. For James, this meant working in M&A and also volunteering to drive internal restructuring. He offered to make deep cuts in the corporate cost base at a time when Orica had lost its CEO and was underperforming. He successfully led the program, gaining invaluable experience at a stage in his career that would not normally be possible.

There was also the experience of working as works accountant at Orica’s chlorine plant. During the time, he did shift work and as a result “I never complain about the shift allowances we pay our people because when you are there at 3am of day seven of the shift rotation, you realise how people earn their money”.

Another example was moving into Treasury, a role that he described as being the flip-side of IR. He was encouraged to have a punt on currency markets, which taught him about risk and return. “That’s what business is all about,” he confided. “You only make money by investing money. If you have no risk, you have no return. If you have silly risk, you are going to blow the business up. That is the type of stuff you will learn from Treasury.”

To view photos from the evening please click here.

AIRA’s annual half-day seminar in Sydney on May 30 was well attended and delivered some very timely information on issues that currently pose significant challenges to our members. In no small way, the success of the event came down to the credentials of the speakers.

Two panel sessions heard from ASIC’s financial and reporting head, Douglas Niven; ASX’s chief compliance officer, Kevin Lewis; and CAMAC’s executive director, John Kluver. They were ably supported by Computershare’s Greg Dooley; Ownership Matters’ research director Martin Lawrence; Global Proxy’s Maria Leftakis; Argo Investment’s Jason Beddow; JP Morgan’s Paul Brunker; and Astro Resources director Graham Libbesson.

I’ve divided my take on the wide-ranging discussions into sections for ease of understanding.

Integration of non-IFRS information into financial reports: There has been a dramatic decline in the number of companies that included non-IFRS numbers in their December 31 income statements and other disclosures, according to Douglas Niven. Most followed non-IFRS reporting guidance, but a handful that didn’t is being followed up by ASIC. Some didn’t present reconciliations between IFRS and non-IFRS numbers and some didn’t explain why the non-IFRS numbers they reported were helpful to investors. Douglas also stressed that while a few provided audited non-IFRS numbers, that was an unnecessary and costly step.

Jason Beddow said his analysts generally like non-IFRS guidance, finding it helpful in quickly coming to grips with the nuances of financial statements during the reporting season when they are under considerable time pressure.

Consensus: Paul Brunker urged companies to reveal more consensus details to analysts so brokers could better understand other views in the market. Jason Beddow said consensus forecasts can be difficult to compare, particularly when there is a wide variation and when adjustments lag during the profit reporting season. When Argo has an interest in a company, but doesn’t have a long history of engagement, consensus issues can result in delays being made on his investment decisions.

Kevin Lewis noted that the ASX is proposing to remove the 10 - 15% consensus band often used to determine disclosure in its current review of Guidance Note 8 because it often had no significance and could be misleading.

Continuous disclosure: Kevin also gave some valuable insight into other disclosure matters related to Guidance Note 8. He foreshadowed that detailed guidance would be required on earnings guidance and surprises, saying that disclosure needed to be refocussed around what a “reasonable” person would expect. Some specific examples that currently are outlined in the Guidance Note would be removed in favour of more specific obligations. The focus is to be much more on market sensitive information, including a new definition of “immediate disclosure” of market sensitive information. Kevin’s view was that “immediate” did not mean “instantaneous”. But, he said that if a stock moved during trading, then the company should call a trading halt until the market was informed.

Proxy voting: John Kluver outlined a lengthy list of issues currently being considered by CAMAC in its much anticipated review of annual meetings. One issue was how the problem of lost or miscounted proxy votes could be overcome. The possibility of standardising proxy forms will be raised, as will the need to independently verify proxy votes, when the outcome of proxy voting should be disclosed, the possible use of alternative non-proxy voting systems, and whether post-AGM voting should be permitted.

Greg Dooley said that tick-a-box proxy forms should not be standardised because, on average, they have led to 66% of undirected proxies not being counted on the remuneration report resolution because shareholders did not tick the box when required to.

Shareholder engagement: John Kluver detailed a list of issues CAMAC will address, including examining the power of proxy advisors and how to handle conflicts of interest, how to streamline annual reports, how to provide XBRL information, and whether directors’ reports should be superseded by a strategic report that canvasses a company’s strategic direction and its major challenges.

Annual meetings: The issue of how to restructure annual meetings resulted in some interesting discussion between the panel and members, particularly on how engagement with retail shareholders could be improved. This is squarely in John sights. CAMAC is looking into whether retail shareholders are given the same rights to ask questions that institutional shareholders receive, and how meetings could be better run to allow more shareholders to speak. They are also looking into requiring companies to extend the notice of meeting period from 28 days to more than two months so that shareholders have chance to place matters on the meeting agenda.

Please click here for further information.