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Can a CEO Opt-out of Earnings Calls?
October 21, 2013

In case you missed it, last week Google’s CEO announced that he may not be joining future earnings calls. Some news reports are citing vocal chord troubles, while Page himself suggested it was a need for him to “ruthlessly prioritize.” But how can Larry Page be a CEO if he can’t talk? Do they do all of their strategy meetings via Google Hangout? And if it is a question of priorities, shouldn’t his shareholders be a priority four times a year?

Many are citing the precedent of Steve Jobs opting out while battling cancer, which was obviously an extreme example. Others may recall Jeff Bezos who was very clear that he wasn’t going to concern himself with Wall Street’s short term priorities. But that didn’t mean he didn’t show up.

What are the implications of a CEO stepping back from investor relations commitments like a 4-times-per-year call? I’ve had many a client over two decades that would prefer to decline the quarterly firing squad known as the analyst call. And I’ve had a few that probably would have been doing their Company, and their shareholders, a service by playing hooky on those days.

We know that at least one-third of a Company’s valuation is tied to intangibles. When pressed to get specific about what those things are, quality of management, leadership and vision are the most frequently cited variables. Perhaps Google feels that the CEO-investor version of playing hard to get will increase his perceived value?

Woody Allen said it best, “Eighty percent of success is just showing up.” My view:  if you want to be the CEO, you have to show up.

Carreen Winters brings nearly two decades of corporate communications expertise to her position at MWW Group with special emphasis in corporate and executive positioning, reputation management, crisis communications, restructuring and financial transactions, employee communications and labor relations.

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Top Companies Explore Social Media For Investor Relations, As Most Still Lag Behind
September 5, 2013

Top companies explore social media for investor relations, as most still lag behind.

Since the SEC approved the use of social media for announcements in compliance with Regulation FD in April 2013, a few U.S. companies have answered the call by integrating social media platforms to help communicate financial information and engage shareholders.

This is highlighted by Yahoo and Netflix “breaking the staid tradition of executives huddled around a speakerphone” and utilizing live video conference and tweets for their recent quarterly results and Zillow soliciting questions submitted via Facebook and Twitter during their earning call.

Nonetheless, social media adoption by companies for investor engagement and financial communications remains in its early stages.

According to relatively recent research from NIRI “72 percent of IR professionals don’t use social media as part of their IR program” but almost half will reassess the issue within the next year.  Reasons cited range from regulation, perceived lack of interest by investors and overall demand.

However, given Bloomberg has integrated live twitter feeds with its financial platform and Carl Icahn’s recent “multibillion dollar tweets,” IRO’s will need to be at least monitoring – if not engaging with – investors who are increasingly social media savvy.

Joe Calabrese is a Senior Vice President with approximately 20 years of investor relations experience.   Working closely with publicly-traded and private companies, Joe provides strategic counsel, message and collateral materials development and has in-depth experience assisting IPOs, M&A transactions, restructurings, restatements, analyst days and management changes.

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CEOs Getting Social, Albeit Slowly
August 27, 2013

The power and influence of social media is undeniable.

It has risen to be the No. 1 activity on the Internet (I’ll let you figure out what it overtook…). There are now over 1 billion users on Facebook. If it were a country, it would be the world’s third largest. Every second, two new members join the LinkedIn club. And the fastest growing social network in 2013…Twitter, with the fastest growing age demographic of 55-64 year olds, registering an increase in active users of 79 percent.

So considering that, in today’s social-dominated world, CEOs of top corporations must be tapping in to these networks to uncover invaluable insights regarding their customers, competitors, and well just about every one else, right?

Well, no, not really it seems.

According to a new report released by Domo and CEO.com, 68 percent of Fortune 500 CEOs have absolutely no presence on any major social network.

When compared to last year, things look slightly better on the surface. A whopping ten new CEOs – a 56 percent increase from 2012 – joined the Twittersphere in 2013, most notably Warren Buffet from Berkshire Hathaway (who hasn’t tweeted since his first day on the site and still amassed over half-a-million followers). Presence on LinkedIn, the most popular channel for CEOs, also grew slightly, with a modest 9 percent increase since last year.

But look a little deeper, and things go from bad to worse. Of the 28 CEOs on Twitter, only 19 of them are “active”…that’s less than 4 percent of all Fortune 500 CEOs.

Why more CEOs aren’t rushing to “get social” remains a mystery. But considering the proven benefits, CEOs may want to at least start by wading in the pool.

Carreen Winters brings nearly two decades of corporate communications expertise to her position at MWW Group with special emphasis in corporate and executive positioning, reputation management, crisis communications, restructuring and financial transactions, employee communications and labor relations.

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Rating S&P’s Words
April 24, 2013

As practitioners of crisis communications, we regularly work closely with legal counsel to make sure that the communications strategy is closely aligned with the legal strategy.  Our objective is to help protect brands and while the lawyers look toward winning in the court of law, we public relations practitioners aim for success in the court of public opinion.  Words matter for each of us in arguing our case and we seek to be in sync in legal filings and corporate messaging.  Yet, there are some times when friction can emerge between the road the lawyers are taking and what we believe may be best for our client’s reputation.

That rub is now being played out in fabulous fashion in a civil fraud lawsuit filed by the United States Department of Justice against Standard & Poors Ratings Service regarding S&P’s ratings and the 2008 financial meltdown.  As The Wall Street Journalreporter Jeannette Newman points out in her excellent April 23 story on the case, S&P has long focused on the words “independent” and “objective” in selling itself as the grand arbiter of the quality and safety of corporate debt and a host of financial instruments.  “Independent” and “objective” went hand in hand with “Standard” and “Poors” in how the Company described itself to investors and sold its expertise for very big bucks to its clients.  The words are ubiquitous in the materials produced by S&P’s marketing and public relations teams and frequently repeated by company executives.

But facing the DOJ in court, S&P’s lawyers are now saying those words are just “puffery” and were never meant to be taken at face value.  The company’s legal team, which includes First Amendment super-lawyer Floyd Abrams, cites recent Federal court rulings that call into question whether S&P’s watch words can really be depended on.  Or as Ms. Newman recounts, the lawyers’ point is that “S&P’s ratings were objective, independent and uninfluenced by conflicts of interest. That, however, is beside the point.”

Whether this legal strategy will win in the court of law is yet to be seen but it looks like a very shaky argument in the court of public opinion.  Ms. Newman’s quote in the story from Duke Law professor Samuel Buell sums up the issue quite well. He states that “Even if it’s a viable legal argument, it’s a pretty unattractive argument for S&P to be putting forward since they’re basically in the business of charging clients for their reputation.  What they’re saying here is, ‘When we’re talking to investors about our own reputation, we’re engaging in meaningless puffery.’”

Now I do not know how and if S&P’s communicators were involved in litigation support, but this is a pretty big hole for the company to dig itself out of reputation-wise, especially when it is the subject of a front page WSJ article.  Lawyers have their job to do and public relations professionals have their job to do.  In the realm of litigation support, we must not be shy to argue our case to executives/boards and make sure they know all the potential ramifications of the legal strategy and words counsel are using.  What may win the day in court could lose in the court of public opinion and impact business and the bottom line.  That is why, particularly in the digital age when legal documents are more accessible than ever, it is important to review court filings from a brand and reputation perspective and provide communications counsel to executives/boards.  At the end of the day, it is up to them to decide which way to go when lawyer words and brand messages conflict but a seat at the table when those decisions are made is crucial.  Time will tell if S&P made the right decision.

Rich Tauberman is Executive Vice President of MWW and a leader of the firm’s Corporate and Financial Communications practices.  He directs some of MWW’s top professional services and financial services accounts.  Rich’s background includes managing communications activities for law firms, accounting firms, banks, brokerages, asset managers, insurance companies and healthcare organizations.  He possesses an expertise in crisis/issues management, litigation support and investor relations.

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“Stupidest” and “Most Embarrassing” – Phrases You Wouldn’t Expect to See in an Annual Letter
April 10, 2013

That is until JP Morgan published Jamie Dimon’s annual letter to shareholders today. It’s a good read, all 29 pages of it, but what immediately caught my attention was Dimon’s blistering quote, “The London Whale was the stupidest and most embarrassing situation I have ever been a part of.” He followed that up with, “We had a gap in our fortress wall. For a company that prides itself on risk management, this was a real kick in the teeth.”

Dimon’s reputation, as well as the bank’s, has certainly taken numerous hits since news of the London Whale incident first broke. But the stock has made a roaring comeback since its bottom last summer. Of course, operating results have a little something to do with that run, but you have to give Dimon credit where credit is due in the repair of both his and the company’s reputation, which has certainly contributed to the stock’s performance as well.

This refreshingly frank annual letter commentary is quintessential Jamie Dimon. We applaud him and his IR team for owning up to the gravity of the issues they have faced, to mend the relationship with their shareholders and rebuild JP Morgan’s credibility.

Stacy Feit is a Senior Vice President at Financial Relations Board with over 10 years of investor relations and Wall Street experience.  She provides strategic financial communications counsel and helps clients increase their visibility within the financial community.  She has guided numerous clients through major milestones, including IPOs, spin-offs, acquisitions and restructurings.

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Could 2013 Be the Year IPO’S Have Waited For?
April 2, 2013

IPOs in the U.S. got off to a good start in the first quarter of this year with companies raising $8.91 billion according to data compiled by Bloomberg, a rise of 44%. Globally, public offerings raised almost $20 billion, up more than 18% over the prior year’s period. European companies generated $3.66 billion, a 25% increase over last year. Amongst the largest players was Pfizer’s $2.6 billion sale of Zoetis (ZTS), its animal health unit and Goldman Sach’s offering shares in German apartment landlord LEG Immobilien AG, which raised $1.6 billion.

Globally, IPO volumes rose 37 percent to $21 billion, as the surge in U.S. activity and a rebound in European volumes offset a 56 percent decline in Asia.

So what does this mean for the balance of 2013? From what we are seeing, the pipeline for 2013 in the U.S. is robust with private equity firms driving much of this activity across various sectors including industrial, retail and consumer, and healthcare as they seek to exit investments. Blackstone Group’s Pinnacle Foods – think Hungry-Man frozen dinners and Bird’s Eye frozen vegetables – went public on March 28, raising $580 million. Other large buy-out firms planning IPOs later this year include eye care company Bausch & Lomb Inc., technology products retailer CDW Corp., theme park operator Sea World Parks and Entertainment, and testing services company Quintiles Transnational Corp.

Further, in March the Dow Jones rose to a record level and the MSCI World Index rose to its highest in almost five years. Global economic growth is expected accelerate to 2.4 percent from 2.3 percent in 2012, while China is expected to tick up to 8.1 percent from 7.8 percent and Europe from contraction to expansion. If market gains can be sustained and projected economic recovery continues, we will hopefully see an increasing number of companies emboldened to pull the trigger on their IPOs which would ease the biggest global backlog of IPOs since 2007. While there are contrarian views, we are optimistic that this will indeed take place.

Marilynn Meek is a Vice President at Financial Relations Board and brings over two decades of experience as an officer of Wall Street securities firms and IR agencies. She provides strategic communications programs that include IPOs, M&As, capital raising initiatives, shareholder and analyst communications, and financial crisis communications for micro-cap to Fortune 500 companies.

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The Fiscal Cliff – Some Companies are Softening the Blow for Dividend Investors
December 5, 2012

It’s difficult to look at any news outlet today and not hear coverage on the impending “Fiscal Cliff” that looms over our nation. The implications of ending the Bush era tax cuts and potential tax increases and spending cuts are numerous, but specifically for one class of investors it raises a pointed question – what are the implications for dividend investors?

The simple answer is of course already on paper. Shareholders pay taxes on their dividend income according to their respective tax brackets. At present, taxpayers in the 10- or 15-percent tax brackets pay no taxes on their dividend income. For all other taxpayers, the tax rate on dividend income is capped at 15 percent. These rates are set to expire on December 31.

Bottom line – if nothing is done to avert this deadline then the maximum tax rate on dividend income will rise to 43.4 percent in just under a month. For individuals, the maximum individual tax rate will be 39.6 percent, with additional Medicare tax added on for households earning more than $250,000 or $200,000 if you’re single. It does not end there. For those lower income taxpayers in the 15 percent income tax bracket, who now pay zero taxes on dividend income, will pay 15 percent; and those in the 28 percent tax bracket – individuals making over $35,500 in 2013 – will see their dividend income tax almost double from 15 percent to 28 percent.

Companies’ responses to this potential issue have varied. In some cases, companies have tried to take action now to minimize near-term impact to their shareholders. As discussed in a recent Wall Street Journal article, several companies such as Oracle, Costco and Wal-Mart have accelerated dividend payments to allow investors to take advantage of existing lower tax rates. Others such as Las Vegas Sands have announced special dividends that will be paid before year-end to try and offset the potential impact.

While these acts have received praise from many investors, they also bring their own host of questions and its best companies are prepared to answer them beforehand. As some media outlets are highlighting, the big question is “if companies that have declared special dividends or accelerated dividend payments could have used the cash to fund growth opportunities instead?” Also, are “insiders the ones that will benefit the most from special dividends or a shift in regular dividend payments?”

The ultimate fate of the U.S. government’s fiscal plans is still unclear as bipartisan politics continues to fuel the uncertainty. From a financial communications standpoint, it requires at least a temporary reshaping of communications for affected companies to help their investors understand the potential impact. For the longer-term, this has the potential to significantly alter the investment thesis of companies that rely heavily on dividend / retail investors. If enacted, these companies will have to take a hard look at their core messaging strategies and possibly revisit them to ensure they remain attractive to dividend investors in the face of this new paradigm.

Scott Eckstein is a Director of Account Services at Financial Relations Board and brings over 15 years of experience in financial communications both in agency and corporate roles. Scott has worked with a number of companies developing integrated communications programs as well as developing targeted institutional and retail branding campaigns. He has also provided advisory services for a variety of small- to large-cap companies.

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Markets Are Closed but the Beat Still Goes On For Many Including Our Favorite Fruit
October 31, 2012

U.S. markets were closed again today as Hurricane Sandy continued to wreak havoc on the Eastern Seaboard.  This is the first time inclement weather has closed markets for consecutive days since 1888 when a blizzard shut the NYSE for two days.  With third quarter earnings season in full swing, many management teams and IR departments have been debating whether to postpone earnings announcements and conference calls or move forward anyway despite the frozen markets.  While over 50 opted to postpone, a number of companies, including big names like Burger King Worldwide and Valero Energy, moved forward as planned, neither of which was to mask weak results.  In the meantime, our friends in Cupertino chose to announce a major management shakeup yesterday.  As one of the most actively traded stocks, making an announcement of this magnitude during this virtually unprecedented market closure smells of a classic attempt to bury the news.  We’ll have to wait until tomorrow to see if the strategy pays off…just about everyone’s eyes will be on Apple at the open.

Stacy Feit is a Senior Vice President at Financial Relations Board with over 10 years of investor relations and Wall Street experience.  She provides strategic financial communications counsel and helps clients increase their visibility within the financial community.  She has guided numerous clients through major milestones, including IPOs, spin-offs, acquisitions and restructurings.

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Is it Time for Companies to End Earnings Guidance?
September 19, 2012

Companies have long struggled with – do we, or do we not provide guidance. Throughout the 1990’s and early 2000’s, forecasts were a central aspect of share analysis and investor communications. However critics have long maintained that quarterly EPS forecasts support an unhealthy emphasis on short-term results rather than long-term value. Certainly, valid arguments can be made on both sides of the issue, but we believe that corporate management might do well to visit or re-visit the advisability of providing quarterly earnings guidance – and whether in the long term it best serves their company and stakeholders.

Warren Buffet for one has long been a strong proponent of not providing guidance. In his year 2000 Letter to Shareholders of Berkshire Hathaway, he looked to make his case (or maybe warned us, given events that have followed) stating: “The problem arising from lofty predictions is not just that they spread unwarranted optimism. Even more troublesome is the fact that they corrode CEO behavior….. I have observed many instances in which CEOs engaged in uneconomic operating maneuvers so that they could meet earnings targets they had announced. Worse still, after exhausting all that operating acrobatics would do, they sometimes played a wide variety of accounting games to ‘make the numbers.’ These accounting shenanigans have a way of snowballing: Once a company moves earnings from one period to another, operating shortfalls that occur thereafter require it to engage in further accounting maneuvers that must be even more ‘heroic.’ These can turn fudging into fraud…”

Having worked with publicly traded companies for many years, I have also seen the focus that some companies place on meeting forecasted numbers in line with their analyst consensus. Given this, is it any wonder that some CEOs and CFOs (focused on the short-term) spend a lot of time (that might better be spent in building long-term value) to ensure they make a forecasted target. We have all witnessed a share price drop when a company misses its target, sometimes by no more than a penny or two?

Beyond this, according to a study by Harvard Business School it would appear at least some corporate executives feet have been held to the fire on making those quarterly numbers by their board of directors. The study found that CEOs and CFOs who missed their targets were more likely to be punished with lower bonuses, smaller equity grants – and potential dismissal. In other words, it would appear that some executives are being incentivized to make their quarterly numbers.

Are companies and investors best served by such short-term views? I think not, and would suggest rather that companies and investors would be better served by management’s communicating their focus on growing their company’s value over the long term. Providing a strategic plan and identifying and discussing in detail long-term value drivers for the company on a consistent basis will help to attract long-term investors as opposed to short-term investors or traders. After all, shouldn’t a company be judged on its steady performance and not one quarter’s?

Marilynn Meek is a Vice President at Financial Relations Board and brings over two decades of experience as an officer of Wall Street securities firms and IR agencies. She provides strategic communications programs that include IPOs, M&As, capital raising initiatives, shareholder and analyst communications, and financial crisis communications for micro-cap to Fortune 500 companies.

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Socializing Investor Relations: Why You Should Be Doing It, and How You Can Get Started
September 13, 2012

Have you heard (or made) any of these statements lately?

The Street doesn’t get our story.
Why don’t we get credit for all of our strengths/accomplishment/ideas/successes/strategies?
We get the same questions, from the same few people, every quarter
Our roadshow didn’t get us anywhere.
We are undervalued.
How can we differentiate ourselves from our peer group?

If the answer is yes, then you should be thinking about how to “socialize” your IR and financial communications programs. I could tick off all of the reasons why you haven’t done it yet, beginning with concerns about Reg FD and some recent social mishaps resulting from some ill-conceived CEO commentary.

Those who think that social media is the land of brand promotion, and brand promotion only should recall the cautionary tales of some other channels that were initially shunned by those tasked with financial communications – like live TV. Once the domain of the consumer brand and shunned by CEO’s, live broadcast was too “uncontrolled”, too “scary” and too “dangerous”. Now, CEO’s fight to be on CNBC to reach their investor audience. Sounds very similar to the current perception of social media. When used correctly, social media can be a powerful addition to your financial communications. And using it correctly means using it in complete regulatory compliance.

The conversation is going to happen, with or without you…all of the “social buzz” around Apple’s Q3 earnings miss was just one recent example.

Not sure where to start? Here are a few easy steps to get you socially active:

  • Listening & Insights: Social media can be a powerful “eavesdropping device” – tune in to hear what your individual shareholders are saying, about you, and about your competitors. Twitter recently launched cashtags – $ + your stock ticker. The conversations are happening – and they can inform your messaging and keep you aware of what is being talked about.
  • Earnings 2.0: Your quarterly earnings cycle is one of the most important communications vehicles you have. Similar to a school report card, investors use this time to tell how a company is performing and what the future holds. Social media can serve as an additional layer of distribution to your investors by “live-tweeting” your earnings and providing links to your release, conference call webcast and investor presentation. Social media provides the platform to include and engage individual shareholders, as well as the larger, institutional investors. Some of the more progressive companies like Dell are even taking questions via twitter to be answered on their calls, which can come from any shareholder, not just an analyst or major investor.
  • Start a Dialogue: One of the biggest challenges companies face is continuing the conversation with investors between quarters. Social media provides the platform for you to create an IR “channel” for easily sharing your Company news, releases, reports, presentations and company videos which can serve as the stimulus for true conversation, where you can get feedback in real time. So while pushing content and news is good, engaging in real dialogue is better. Social engagement – from responding to investor inquiries, reacting to online posts, or following the conversation – will give you the ability to respond or react to comments and questions online, gauge the sentiment of the financial community, and assist in building a broad, diversified base of holders by strengthening and building trust among your current and potential investors.
  • Lead the Conversation: Research repeatedly shows that a larger portion of your share price than you may think is attributed to intangibles, with quality of leadership, vision and strategy as major factors. Social media platforms like Twitter, Slideshare and Youtube provide forums where you can tell the “softer side” of your company’s story. And unlike a feature story in major media, you have 100% editorial authority over the content, the timing and the photos. Use social media to help people get to “know” your leadership team, understand your strategy, and follow your news and developments, because a social CEO is perceived as more relevant. Maintain a blog to share thoughts and comments about industry trends and financial news. Get your content out there, build your company’s reputation and become a voice for your industry.

Social media isn’t going to pass. The conversations are happening, with or without you. You can use it as a strategic tool to build trust, relevance and long term shareholder value. Or not. Competition for investment dollars is just that, competition. And the savviest companies will be using every tool at their disposal to attract your investors.

Get social. Or get left behind.

Carreen Winters brings nearly two decades of corporate communications expertise to her position at MWW Group with special emphasis in corporate and executive positioning, reputation management, crisis communications, restructuring and financial transactions, employee communications and labor relations.

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