To the uninitiated, creating a good IR web site doesn’t seem like rocket science. In reality, providing valuable information in an easy-to-access format to a variety of stakeholders is a complex and demanding task. Of course every company faces particular challenges in terms of using the web to further IR goals and each takes a different approach to tackling them. There is no cookie-cutter solution. Still, certain basics apply.
Each year, IR magazine commissions independent surveys of analysts and investors to identify the best in investor relations across eleven regions: the US, the UK, the Eurozone, Asia, Canada, Latin America, Australia, Central and Eastern Europe, the Nordic region, South Africa and Ireland. Among a number of categories, survey respondents are asked to choose the best IR web site or the best use of the internet in a given region and provide commentary. Certain commonalities among winners of these categories shed light on the basics of a successful IR web site.
Active communication
Let’s begin with networking giant Cisco Systems. You might think a company as focused on the internet as Cisco would run its IR web site from soup to nuts. You’d be wrong. Cisco outsources several tasks including web-hosting, thus allowing it to concentrate on driving content. ‘We try to work with our core strengths,’ says Blair Christie, senior director of investor relations at Cisco. ‘Our IR group’s core strength is not managing a web site. Rather, it is pulling together content.’
For Cisco, along with a growing number of other award winners, that content is increasingly presented as an active, not passive, tool. ‘Visitors to our web site won’t find just a filing cabinet of our SEC filings, news releases or a calendar of events,’ says Christie. ‘They’ll find active tools like webcasts with audio, video and PowerPoint, our educational speaker series, and all sorts of other information that allows investors to interact with Cisco. All in all, the success of our IR site is a function of the active information we provide.’
Christie adds that Cisco’s overall online IR strategy is based on educating investors, not selling them stock. ‘When you have a better educated consumer, you have a better consumer,’ notes Christie. ‘The same applies to shareholders. Pushing education out to investors is extremely helpful.’
And for Cisco, the push is global. With only 10 percent of its shares held overseas, Cisco’s overall IR goal is to reach a broader, international audience. It accomplishes much of that task through its annual analyst conference in San Jose. While some 500 people attended its most recent gathering in person, Cisco reached thousands others (in over 60 countries) via live webcast.
‘In an environment where people do not want to travel either because of budgetary constraints or safety concerns, we could still get our message out clearly and consistently to our entire investor base,’ says Lisa Magalby, Cisco’s online communications manager for investor relations. ‘There is a lot of opportunity for asset managers to get interested in Cisco.’
Indeed, for any global company, a key challenge is making its web site useful for visitors from all over the world. Cisco accomplishes this with different language sites in different countries. Nokia, which tops IR magazine’s web ranking in both the Eurozone and Nordic region, has embarked on the same process. Financial statements are currently provided in Finnish and English, but earlier this year Nokia created a whole new look and feel for its site and soon it will be categorized by geographic regions. ‘We will continue to evaluate the availability of additional languages in the future,’ says Jennifer Banken, IRO at Nokia.
In the loop
Meanwhile, Nokia’s new IR site has sections specifically tailored to professional or retail investors. The ‘stock information’ section gives answers to questions commonly asked by individual investors, while the ‘reports’ section has current and archived financial information for the professional investor. A personalized electronic IR ‘kit’ allows visitors to choose which type of report they would be interested in downloading.
Earlier this year Banken attended a web site improvement workshop where results from user surveys were shared. ‘Following suggestions from our users, we implemented various changes,’ says Banken. ‘We do surveys on a continuous basis with all suggestions taken into consideration.’
The success of Finnish forest products company Stora Enso’s IR web site (which was highly commended at this year’s IR Magazine Nordic Awards) also has much to do with feedback from users. ‘We never stand still,’ says Ulla Paajanen-Sainio, vice president of IR and financial communications at Stora Enso. ‘Our improvement process is continuous. We carefully monitor our peers’ web sites and get feedback from perception studies.’
One thing Paajanen-Sainio learned was that investors do indeed appreciate interactive tools when they visit an IR web site. ‘On our site you will find the resources to receive e-mail alerts, subscriber services and an investor register,’ says Paajanen-Sainio. ‘We are still planning some other interactive tools, one of which will target the debt market. But I don’t want to be too detailed because our competition may pick up on it.’
With 70,000 retail investors in Finland and Sweden alone, Stora Enso uses its web site to reach the masses. But Paajanen-Sainio notes that analysts and professional investors are also frequent web visitors. For now Stora Enso has not categorized its web site content to appeal to different sorts of stakeholders, but Paajanen-Sainio says it is definitely something worth investigating.
Stora Enso also considered ‘internationalizing’ its IR web site – translating it into Finnish, Swedish and English. However, that idea has been left on the shelf. ‘Having the web site in three languages would require considerable resources,’ notes Paajanen-Sainio. ‘Most Finns have a good grasp of English and we feel that’s the best way to reach the broadest number of shareholders. Otherwise we’d be devoting resources to translation and away from content.’ Still, any news in terms of press or stock exchange releases can be found on the web site translated into Finnish, Swedish and German.
International review
Assessing the relative credibility of its web site has also helped leverage Australian finance giant AMP into the winner’s circle. While AMP has had an IR section on its web site since 1998, it originally contained only the barest basics such as the annual report and FAQs. Determined to get a handle on best practice in terms of content and usability, AMP started a review of international IR sites in February 2001. Since then it has progressively improved its web site with features such as e-mail distribution, webcasts and video files. The web site was relaunched in February 2002 with a new look and navigation structure and it immediately scored a big hit with investors.
One reason for the applause is that AMP designed its site to provide a quick overview at the top level with detailed information further down for those keen to learn more. ‘We wanted to cater to all web site users from individual shareholders to institutions and analysts,’ says Scott Young, AMP’s IR web administrator. ‘We believe this is one reason why the site is highly regarded by both retail shareholders and analysts who have different needs.’
For its almost 1 mn individual investors (many of whom are first time shareowners having received shares following AMP’s demutualization), AMP provides easy-to-follow information on owning shares and answers other housekeeping type questions. Institutions and analysts, on the other hand, are supplied with detailed information on the business and tools to help understand its accounts (which can be complicated due to the industry it operates in). AMP’s site also provides financial statements in Excel to allow for downloading and easy analysis.
The characteristics of AMP’s shareholder base play a major role in its use of the net and its assessment of new bells and whistles. AMP’s adoption of new technology has been a gradual process with new features introduced when it believes shareholders want them.
‘A few years ago, using video and Flash animation showed that you were up-to-date, but the technology was often lost on shareholders who either did not have the hardware to view such formats or simply couldn’t use it effectively over a dial-up internet connection,’ Young points out. ‘Over the past three years we have increased our use of webcasts so that all open briefings are now on the net, live and on demand. Webcast archives are used mainly by our overseas investors who are unable to view the event live due to time differences.’
One common error of IR web sites that Young has noticed is the apparent belief that if it is online then it needs to be ‘over the top’. ‘More often than not, an investor visiting your web site is there for a specific purpose rather than merely surfing,’ says Young. ‘If the user is lost in graphics and other flashy features they will find it hard to access the information they came for and soon leave. There must be a delicate balance between making your site more engaging and visually appealing and ensuring it is set up in a user-friendly manner.’
AMP has also pushed its online shareholder communications program as a cost-saving initiative. It now has the ability to send all shareholder communications by e-mail (including dividend notices, newsletters, the annual report, notice of annual meeting and proxy forms). ‘Our experience has been that if you don’t deliver on shareholder expectations with online communications then interest is rapidly lost,’ says Young. ‘For example, a shareholder would prefer to receive communications by post if we can’t deliver quicker by e-mail or if we provide the communication in a hard to use format – large PDF files, for example.’
Pacific rim
Five years ago, Singapore’s banks offered exceptionally limited disclosure and slender annual reports. Following the 1997 Asian financial crisis, the mentality changed. ‘Transparency was seen as more healthy for the system as a whole,’ comments Anthony Raza, head of investor relation for DBS. ‘Within that context, DBS has led the way, making a big effort to become more transparent and credible.’
Evidence of that effort can be found in the fact that last year DBS became the first Singapore bank to begin quarterly reporting. ‘Every quarter we would have press releases, financial statements and other information to distribute to investors,’ says Raza. ‘It dramatically increased our information dissemination burden.’
With lots more additional information, the web site has been a vital communications tool. DBS has been an Asian pioneer in recording its webcast analyst presentations, making them available for three months after the release. While DBS outsources design, it hosts its own IR site, leveraging the bank’s experience as Singapore’s highest-traffic internet banking operation.
With at least half its shares held by foreigners around the globe, DBS relies on its web site to reach them. Most information is published in English, as 90 percent of its shareholder base is institutional. However, in an effort to gain credibility in the Chinese market DBS offers a selection of information translated into Chinese.
Credibility is also an issue when it comes to corporate governance and DBS has been ahead of the curve on this as well. While Singapore has not experienced the same problems as the US, DBS has had a dedicated section describing its corporate governance philosophy for two years.
Across the ocean, mindsets are changing as well. Take Brazil, which can look back at many failed attempts to create an investment culture and boost its stock market. With the benefit of hindsight, the explanation is obvious – companies did not give individual investors enough of a sense of trust and transparency. Today, restoring retail confidence is perhaps the greatest challenge facing any Brazilian IR program.
‘Our major goal is to access the Brazilian retail market so as to build a more long-term shareholder base,’ says Geraldo Soares, superintendent of IR at Banco Itau Holding Financiera. ‘Our use of the internet reflects that ambition. Our web site must communicate with retail investors as well as analysts, brokers and institutions. Because of the huge variety of needs among these groups, our site is segmented to meet the demands of each group.’
Itau’s efforts have paid off. Its web site has garnered a slew of accolades including an IR magazine award in May 2002 for best IR web site in Latin America. Since then Itau has twice overhauled its site in terms of both design and content. Gratuitous animations are gone while sections on US Gaap conversions and governance have been added. At the same time, a recent corporate reorganization prompted Itau to create a special section aimed at keeping shareholders up-to-date on the concurrent share exchange.
However, it is in the area of corporate governance that this emerging market bank shines most brightly. Itau’s constantly updated governance section includes six years of quarterly income data, a comprehensive description of management and the ownership structure, corporate bylaws detailing shareholder rights, stock option plan information, and more. ‘Corporate governance is a key part of our IR strategy,’ says Soares.
Globalization is a fact and IR programs must adapt themselves to this reality. When Itau launched its IR web site in April 2000 it had three versions: Portuguese, English and Spanish. ‘We would list on the NYSE only two years later but we had already recognized the need to provide the same web site in other languages,’ says Soares. ‘Both English and Spanish versions are updated simultaneously with the Portuguese.’ Itau has been holding conference calls on a quarterly basis since 2000, all in Portuguese and English with transcriptions made available on the web site.
While you won’t yet find retail-oriented online products like dividend reinvestment plans in Brazil, the level of IR web site excellence achieved by larger Brazilian companies is comparable to anything found elsewhere. ‘There is little in the way of state-of-the art technology, design or navigation techniques that is not used by Brazilian companies,’ concludes Soares.
Ultimately, with such a vast amount of information to convey, the key challenge for any company is to decide what information should be available and the easiest yet most engaging format in which to display it. The real challenge however is finding a balance between the two.
Corporate governance
Curiously, despite the increased scrutiny from regulators and shareowners, most public companies still fail to provide basic corporate governance information on their web sites. A study of 250 North American and European companies conducted in March by Toronto-based Blunn & Co found that only 34 percent provide such basic information as director biographies; only 24 percent publish their corporate governance policies online; and just 10 percent post information on their web sites about insider transactions.
‘It’s clear that companies must do more to communicate the corporate governance and internal control changes they’ve been making in the wake of corporate scandals and new regulations,’ says Dominic Jones, an analyst with Blunn & Co. ‘They may be making important improvements, but they are doing so largely behind closed doors and not keeping the investment public informed.’
Best on the web
IR Magazine Awards 2002-2003
Asia
DBS Group Holdings
Singapore Airlines
PCCW
Australia
AMP Limited & ANZ
BHP Billiton
Woolworths
Canada
Royal Bank of Canada
Bell Canada Enterprises
Nortel Networks
Central & Eastern Europe
MOL
Agora
Eurozone
Nokia
Telefonica
Royal Philips Electronics
Ireland
Allied Irish Banks
Irish Life & Permanent
Bank of Ireland
Latin America
Banco Itau
Cemex
Petrobras & Telemar
Nordic region
Nokia
Stora Enso
SCA
South Africa
AngloGold
Harmony
Investec
UK (2002)
Unilever
BP
ICI
US
Cisco Systems
IBM
Intel
