This "case study" is the latest in a series of articles aimed at helping public companies understand how other organizations are using technology to comply with new regulations and standards. These are not advertisements or marketing vehicles for the companies mentioned; Compliance Week's editorial staff speaks with the public company that has deployed the technology, and the article is written without the input—and in many cases the knowledge—of the vendor.

DETAILS

THE COMPANY

Company

FedEx Corp.

HQ

Memphis, Tenn.

Employees

195,838

Industry

Shipping

'04 Rev.

$24.7 billion

'04 Net

$838 million

THE CHALLENGE

FedEx Corp. wanted to bolster the corporate governance disclosures on its Web site, including the timely posting of SEC filing data and information on its board of directors.

SOLUTION CHOSEN

Corporate governance and financial communications solutions from Maynard, Mass.-based Shareholder.com.

New Disclosure Requirements

In mid-2002, FedEx executives were plotting ways to overhaul the company’s Web site. And the task of upgrading the investor relations portion of the site fell to Steve Hughes, director of investor relations at the shipping titan.

Hughes knew the Sarbanes-Oxley Act would impose new obligations of disclosure, and FedEx—long-renowned for its impressive Web sites and internal IT, and well aware of its high profile in corporate America—wanted to keep pace with its competitors as well.

“Even prior to Sarbanes, there was an increased focus on corporate governance and accountability,” says Hughes, “and we have always tried to be pretty cutting-edge in what we provide to shareholders … Regardless of what Sarbanes had handed down, we probably would have had a corporate governance site pretty much as it exists today.”

But SOX was pressing the issue. For example, at the time FedEx was planning its new Web site, the Securities and Exchange Commission had proposed to require that companies with Web sites post insider trades "by the end of the business day after filing."

As a result, Hughes wanted a fresh “transactions” page that allowed speedy posting of data from Forms 3, 4 and 5 onto the Web site. He also wanted standard-format pages that explained FedEx’s code of conduct, charted board composition, and highlighted committee charters and board principles.

In addition, the investor relations section of FedEx's Web site receives as many as 3,000 visitors per day, so the site had to be stable and reliable. On top of that, that content had to be simple and direct to accommodate the diverse information needs of its global visitors.

The company’s own IT department had designed some parts of the investor relations site, but Hughes didn’t want to burden them with a complicated Web site design project.

“Given the technical aspects of pulling some of the Edgar information, for example, it was really easier for us to have content experts manage that part of the site,” says Hughes.

No Limitations

Back in 2002, Hughes had only three content experts worth considering. The two most dominant players, both located west of Boston, were Shareholder.com and CCBN Corp. A third and late entrant into the Web-based shareholder communications market was IRchannel, a product launched by Thomson Financial.

FedEx had been a customer of CCBN since 1996, and Hughes is still quick to praise the company for its offerings. “I have no doubt they could have done it,” he says. “Whether they could have built it out exactly to meet my specifications, I don’t know.”

But CCBN had a template-driven approach, while Shareholder.com “had no limitations on what they could do for us … Shareholder indicated that they literally could do anything we wanted them to do, and that turned out to be the case.”

Thomson was decidedly in third place and quickly fell out of contention, Hughes said, as the product was generally considered weaker than the others. Thomson Financial had actually been an early investor in CCBN, and they ultimately acquired the company in early 2004.

Very Smoothly

As with many Web site-related projects, the implementation of FedEx's IR Web site—and its success—was premised heavily on providing the correct data to Shareholder.com, and subsequently reviewing the designed pages before they were made available to the public.

FedEx’s legal department provided most of the information Shareholder.com needs to create new pages. FedEx supplied its corporate governance guidelines and board charters, which Shareholder.com fashioned into an interactive format that Hughes approved. Conversely, Shareholder.com took existing pages of data, like those dealing with insider transactions, and populated those pages with fresh data from Section 16 filings.

The project began in November 2002, and the new site went live in February 2003. “It all went very smoothly,” Hughes says. Shareholder.com actually waived most of the startup costs, and now bills FedEx $900 monthly for updates and maintenance to the site.

FedEx’s legal department still works closely with Shareholder.com to provide content and documents slated for the Web site. Once Shareholder.com gets the data, it generates any new pages or links necessary, and uploads the changes to the FedEx Web site.

Alan Haguewood, a FedEx staff attorney who works on corporate filings, said that new disclosure obligations from Sarbanes-Oxley and NYSE listing requirements posed little trouble for FedEx or Shareholder.com. “We complied early on with those, and we would have posted them on the Web site regardless of the legal requirement,” he says. In addition, as Compliance Week covered in an article on "over-disclosure" published last August, FedEx has leveraged Shareholder.com to go above-and-beyond many of the SOX requirements. “There are many items on the site that are not required by law,” says Haguewood, such as a listing of directors’ committee assignments, and FedEx’ whistleblower policy.

Lessons Learned

Above all, Hughes says, executives need to have a very good handle on the types of data they need—and want—on their investor relations Web site.

“Look at award-winning sites to get a very good feel for what’s out there," says Hughes. "That’s not to say you want your site to look like everyone else, but … our intent is to be the best of any of the blue-chip companies, so I think it’s very important to know what those other companies are doing so that you can stay ahead of them.”

Executives should also know what they want to highlight, and what they want to feature; with modern software, technical obstacles are usually rare.

Hughes adds that executives should not hesitate to consult industry providers about the latest requirements, transparency standards, and interactive features. “I think any of the vendors can be excellent resources in telling you helpful ideas of what you can build into your site,” says Hughes.

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