Running an Effective Investor Relations Department: A Comprehensive Guide

Preface xi

About the Author xiii

Chapter 1: Managing Investor Relations 1

Why Have an Investor Relations Department? 1

Investor Relations Objectives and Goals 2

Investor Relations Tools 3

Investor Relations Budget 6

Float Management 8

Managing Bad News 10

Responding to Rumors 14

Summary 15

Chapter 2: Investor Relations Officer Position 16

Key Aspects of the IRO Position 16

IRO Job Description 19

Investor Relations Team 21

IRO as Management Representative 22

Summary 23

Chapter 3: Creating the Company Story 24

Creating the Story 24

Packaging the Story 26

Strategic Credibility 29

Clarifying and Mitigating Risk 30

Company Reputation 32

Matching the Company to the Story 34

Duration of the Story 34

Coordination with Public Relations 35

Summary 35

Chapter 4: Event Management 37

Conference Call 37

Road Show 41

Non-Deal Road Show 46

Annual Meeting 47

Plant Tour 49

Annual Analyst Meeting 49

Analyst and Industry Conferences 50

Podcast Dissemination 50

Video Dissemination 52

Blog Dissemination 52

Event Disclosure Issues 53

Practicing for Events 54

Summary 55

Chapter 5: Public Communications 57

Constructing a Press Release 57

Dealing with the Media 63

Dealing with Electronic Message Boards 66

Investor Relations Advertising 67

Summary 68

Chapter 6: Publications 69

Fact Sheet 69

Annual Report 74

Product Pipeline Report 77

Company-Paid Research Reports 78

Independent Research Reports 78

Welcome Kit 79

Videos 79

Other Publications 80

Information Tracking Systems for Publications 81

Legal Liability 82

Summary 82

Chapter 7: Investor Relations Web Site 83

Basic Investor Relations Web Site 83

Intermediate Investor Relations Web Site 84

Advanced Investor Relations Web Site 87

Web Site Layout 90

Hyperlink Liability 91

Sample Web Sites 92

Summary 93

Chapter 8: Management Discussion and Analysis Section 94

MD&A Reporting Requirements 94

SEC Guidance 98

Examples of Enhanced MD&A Disclosure 99

A Case for Full Disclosure 101

Summary 102

Chapter 9: Disclosure 103

Form 8-K 104

Disclosure of Non-GAAP Information 111

Regulation FD 114

Disclosure Policy 115

Disclosure Procedure 117

Ensuring Compliance with Disclosure Rules 118

Disclosure During an Initial Public Offering 120

Summary 121

Chapter 10: Forward-Looking Statements 122

Basis for Class Action Lawsuits 122

Private Securities Litigation Reform Act 123

Forward-Looking Statements 124

Legal Liability for Past Statements 127

Summary 127

Chapter 11: Providing Guidance 128

Whether to Provide Guidance 128

Form of Guidance Issued 130

Frequency and Timing of Guidance 132

Aggressiveness of Guidance 133

Guidance Policy 134

Summary 135

Chapter 12: Dealing with the Sell Side 136

Analyst’s Perspective 136

Finding the Right Analyst 139

Dealing with Analysts 140

Negative Analyst Report 144

Dealing with Brokers 145

Pump and Dump 147

Dealing with Investment Bankers 148

Dealing with Sell-Side Specialists 149

Summary 149

Chapter 13: Dealing with the Buy Side 151

Types of Investors 151

Dealing with Institutional Investors 153

Travel Requirements for Meetings with Institutional Investors 156

Dealing with Individual Investors 158

Dealing with Investment Clubs 160

Dealing with Foreign Investors 161

Investor Presentation 162

Managing a Private Investment in Public Equity 164

Accredited Investor 164

Dividend Reinvestment 165

Direct Stock Purchase Plans 165

Summary 166

Chapter 14: Dealing with Credit Rating Agencies 167

Credit Rating Agency Relationship 167

Summary 169

Chapter 15: Dealing with Short Sellers and Activist Investors 170

How Short Sellers Operate 170

How to Handle Short Sellers 172

Monitoring Short Sellers 174

Dealing with Activist Investors 174

Summary 175

Chapter 16: Dealing with the Board of Directors 177

IRO and the Board of Directors 177

Investor Relations Board Packet 182

Summary 182

Chapter 17: Major Stock Exchanges 183

Listing Process 183

American Stock Exchange 184

Overview of the NASDAQ 187

NASDAQ Capital Market 187

NASDAQ Global Market 188

New York Stock Exchange 190

Comparing the Stock Exchanges 191

Summary 193

Chapter 18: Monitoring the Market 194

Monitoring through Internet Services 194

Monitoring through Individuals 195

Surveying Investors 196

Locating Investors 199

Monitoring through a Stock Surveillance Service 200

Monitoring through a Stock Transfer Agent 201

Bloomberg Terminals 201

Electronic Message Boards 201

Activity Caused by Trading Strategies 202

Summary 204

Chapter 19: Blue Sky Laws 206

Blue Sky Law Requirements and Implications 206

Blue Sky Advice for the IRO 208

Chapter 20: Proxy Solicitations 209

Proxy Solicitation Concepts 209

Online Proxy Voting 215

Proxy Distribution Process 218

NYSE Rule 452 222

Summary 223

Chapter 21: Dividends and Stock Buy-Backs 224

Transition to a Dividend 224

Dividend Policy 225

Stock Buy-Back Alternative 227

SEC Conditions on Stock Buy-Backs 228

Disclosure of a Stock Buy-Back Program 229

Odd-Lot Shareholdings 231

Summary 232

Chapter 22: Outsourcing Investor Relations 233

Skill Set of an Investor Relations Consultant 233

Managing the Consultant Relationship 236

National Investor Relations Institute 237

Summary 237

Chapter 23: Investor Relations Metrics 239

Internal and Financial Metrics 239

Peer Metrics 244

Company-Specific Metrics 245

Metrics Consistency 246

Explaining Results 247

Summary 249

Index 250