The world of shareholder communications is in a “Twitter” about what to do with the new social media. To tweet, or not to tweet … that is the question. As most Compliance Week readers likely know, the dominant social media platforms (today) include blogs, Twitter, Facebook, LinkedIn, myriad chat rooms, multimedia sites such as YouTube, and even services such as RSS feeds and Mobile Investor.
For years, companies have used traditional media to communicate with investors; more recently, the Internet has become a primary means for communicating with shareholders through the company’s Website and interactive features such as investor Webcasts. The Securities and Exchange Commission, in Regulation Fair Disclosure, authorized the Webcast as a means for full and fair disclosure, providing it is fully accessible and investors are notified of its availability in adequate time.
Two years ago, the SEC urged companies to create shareholder e-forums, so long as they were not used for proxy solicitation; the Commission exempted companies from liability for what others might say in these forums. Nevertheless, companies have been reluctant to adopt e-forums, believing they can become the “devil’s playground” for shareholder activists.
The Media vs. The Message
The array of new social media offerings raises some obvious questions; namely, which platforms to use or ignore, and what risks might be involved in communicating investor messages in cyberspace.
But there’s another question: Are we focusing on the media and losing sight of message content? This is, synchronously, a phenomenon that is occurring in schools of journalism and communication. A September 21, 2009, article in The Chronicle of Higher Education noted that journalism schools are scrambling to retool their curricula to focus on the new media. As a result “hordes of students” are enrolling at a time when traditional media are in freefall because of declining circulation and advertising revenue.
Applications to master’s programs in the top four journalism schools were up 24 percent at Stanford University, and 44 percent at Columbia University. Yet, in 2008, graduates in journalism and mass communication had far fewer job interviews than the year before, and full-time employment was at its lowest point since 1986.
So, what’s happening? Obviously, the current generation of university students has come of age with social media, and they see opportunities far beyond traditional journalism; they view a journalism/communication degree as an entrée to many career fields in today’s digital age. Yet several professors quoted in the article expressed concern that the focus on the new media is happening at the expense of concentrating on the importance of content.
I would submit that we have a similar challenge in shareholder communications. Not only must we confront the issue of whether to use social media, but we must do so without losing control of the content of our messaging, and without subjecting ourselves to the liability of selective disclosure.
Here are some examples of ways that social media might be used in shareholder communication, and the companies that are experimenting with the platforms:
Blogs. Blogs are probably the most widely used of the social media. A rapid self-publishing platform, blogs offer not only a more personalized form of investor communication, but the platform is bi-directional, enabling investors to interact with your communications by—among other actions—posting comments and reactions. Many business-unit leaders and department heads have established successful and well-trafficked blogs for years, such as one managed by Best Buy’s Chief Ethics Officer Kathleen Edmond, and several CEOs have their own blogs to communicate with shareholders and employees. Other companies use blogs to publish expert commentary by senior executives on areas of interest, inviting comment from readers. According to Francince McKenna, who writes the popular “re: The Auditors” blog, Dell is among the many companies that maintain investor relations blogs. Its “Dell Shares” blog sometimes features Webcasts with executives on the company’s outlook, and recently featured information on the company’s decision to acquire Perot Systems. Chief blogger is Director of Investor Relations Robert L. Williams.
Twitter. Twitter is a unique platform for engaging in two-way communication between companies and shareholders. Because Twitter enables shareholders, the media, and other individuals to follow and react to “tweets,” the platform offers rapid-fire outreach and response. However, Twitter limits each message to 140 characters, so long communications with legal disclaimers are impossible; most companies use the platform to make brief announcements, alerting investors that new information is available on the company’s Website or in an SEC filing. Others provide brief news updates, with links to the complete information or release. Importantly, one must ensure that the company’s tweets do not communicate new material information, or information that might trigger insider trading. In addition, Twitter does not have a shareholder or investor focus, so experts argue the platform is not the most appropriate outreach vehicle. Chevron is among the many companies that not only hosts an official IR Twitter feed, and promotes it on the company’s “Media Resources” page online. Chief Twitterer is Chevron media adviser Justin Higgs. Cisco is another company that hosts an IR presence on Twitter; the company has myriad Twitter sites (including ones such as “CiscoGeeks” and “CiscoEvents”), and also has one managed by Marty Palka, chief intelligence analyst, investor relations.
Facebook. If Twitter is limited by its lack of investor focus, then Facebook is even more limited as a means for investor communication. Traditionally, the platform has been geared at a younger audience (high school and college students), and—generally speaking—sophisticated and even novice investors are not using Facebook for investment research or communication purposes. According to McKenna, companies such as GM and Cisco Systems have an investor relations presence on Facebook, but neither are robust or frequently updated. At press time, for example, Cisco’s corporate communications Facebook page hadn’t been updated in over seven months.
DIGITAL DESTINATIONS
What follows are specific company examples of the media they’ve used to enhance investor communications:
Blogs:
Dell’s Blog by Director of Investor Relations Robert L. Williams
Twitter:
Chevron’s IR Twitter feed, which promotes the company’s “Media Resources” page online, by Media Adviser Justin Higgs
Cisco Twitter feed, “CiscoGeeks,” manged by Marty Palka, chief intelligence analyst, investor relations
Facebook:
Cisco’s Facebook page
RSS Feeds:
Sun Microsystems has five IR feeds that provide real-time updates on IR events, earnings releases, breaking news, SEC filings, and even the CEO’s blog
Comcast offers one unique RSS feed for periodic reports, and another for Form 4 filings
Bayer offers multiple investor-relations RSS feeds, including one that enables investors to stay aware of upcoming podcasts that are hosted by the IR department
Chat Rooms:
HERA SpA’s weekly one-hour live chat with its investor relations team
Germany’s LPKF Laser & Electronics AG’s regular IR chat with the company’s CFO
Argentinian energy giant Petrobras S.A.’s regular chat with the IR manager
E-mail:
Sign up for Comcast’s e-mail alerts
Sign up for Tyco’s e-mail alerts
Mobile Investor. Mobile Investor is a platform that enables shareholders and investors to check their investments via mobile devices. Though not bi-directional, the platform has taken off as companies like Johnson & Johnson and Intel seek to reach investors anywhere, anytime.
RSS. RSS or “Really Simple Syndication” feeds are like personal wire services, and they have evolved into an excellent mechanism for disseminating news releases, according to Forrester Research. Investors and shareholders who subscribe to the feeds can get real-time headlines and content summaries from your company, with links to your Website to read the full content. RSS feeds can be viewed through RSS readers, or through software that is built into many browsers and e-mail programs. Sun Microsystems is one company that utilizes RSS feeds well; the company has five unique IR feeds that provide real-time updates on IR events, earnings releases, breaking news, SEC filings, and even the CEO’s blog. Comcast goes one step further with regulatory filings, offering one unique RSS feed for periodic reports, and another for Form 4 filings. In addition, Bayer offers multiple investor-relations RSS feeds, including one that enables investors to stay aware of upcoming podcasts that are hosted by the IR department.
Chat Rooms. Chat rooms are another means for two-way communication. Among the most highly trafficked is Yahoo! Finance Message Boards, which include literally millions of comments on almost every publicly traded company. Raging Bull, which is part of Interactive Data Corporation, is another popular investment chat site, as are offerings from The Motley Fool and myriad other publishers and Websites. Unfortunately, these discussion rooms are rampant with market rumors, and companies are often advised to stay clear of them entirely. Specifically, securities lawyers typically advise companies not to respond to market rumors under any circumstances. The theory? If a company denies a specific rumor on a chat site, but does not comment on another rumor on the chat site, than an investor might assume the second rumor to be true. That being said, many European companies offer their own customized chat rooms for investors and shareholders. These online discussions are more controlled, as they are hosted on the corporation’s Website, and lack the “free for all” more typical of online investor chat rooms. Italian energy company HERA SpA, for example, hosts a weekly one-hour live chat with its investor relations team, Germany’s LPKF Laser & Electronics AG hosts regular IR chats with its CFO, and Argentinian energy giant Petrobras S.A. hosts a regular chat with its IR manager. Still, while these custom-hosted chats are more controlled within the IR framework of the company’s Website, few U.S. listed companies seem to utilize them.
E-mail. While e-mail alerts are not normally considered a social medium, many companies tell their shareholders if they want to receive e-mail alerts of upcoming news or events, they may provide the company their e-mail address so they can receive these alerts. Many companies utilize this tactic, including Comcast, Tyco, and others.
The array of social media platforms provide companies a variety of supplemental ways to communicate with their investors. Yet most of these platforms have limited audiences, and the objective of shareholder communication is to get maximum exposure for the company’s messages. As a result, most companies still rely heavily on the primary communication means: SEC filings, news releases, Webcasts, and the investor relations Website to disseminate information to investors.
Successful companies will not get lost in creating a digital community for the sake of being trendy. Instead, companies should carefully examine the nature of its investors, understanding the platforms and tools they utilize to obtain information. This will help determine corporate communication strategy by integrating the platforms that are most effective in achieving maximum message dissemination. However, the primary focus of an effective communication strategy should be on message content—ensuring regulatory compliance and full disclosure of transparent information, and doing so in plain English.
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