Running an Effective Investor Relations Department

STEVEN M. BRAGG, CPA, has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young and an auditor at Deloitte & Touche. He received a master's degree in finance from Bentley College, an MBA from Babson College, and a bachelor's degree in economics from the University of Maine. He is also the author of Accounting Best Practices, Sixth Edition and Cost Reduction Analysis: Tools and Strategies, both published by Wiley.

• Preface xiAbout the Author xiiiChapter 1: Managing Investor Relations 1Why Have an Investor Relations Department? 1Investor Relations Objectives and Goals 2Investor Relations Tools 3Investor Relations Budget 6Float Management 8Managing Bad News 10Responding to Rumors 14Summary 15Chapter 2: Investor Relations Officer Position 16Key Aspects of the IRO Position 16IRO Job Description 19Investor Relations Team 21IRO as Management Representative 22Summary 23Chapter 3: Creating the Company Story 24Creating the Story 24Packaging the Story 26Strategic Credibility 29Clarifying and Mitigating Risk 30Company Reputation 32Matching the Company to the Story 34Duration of the Story 34Coordination with Public Relations 35Summary 35Chapter 4: Event Management 37Conference Call 37Road Show 41Non-Deal Road Show 46Annual Meeting 47Plant Tour 49Annual Analyst Meeting 49Analyst and Industry Conferences 50Podcast Dissemination 50Video Dissemination 52Blog Dissemination 52Event Disclosure Issues 53Practicing for Events 54Summary 55Chapter 5: Public Communications 57Constructing a Press Release 57Dealing with the Media 63Dealing with Electronic Message Boards 66Investor Relations Advertising 67Summary 68Chapter 6: Publications 69Fact Sheet 69Annual Report 74Product Pipeline Report 77Company-Paid Research Reports 78Independent Research Reports 78Welcome Kit 79Videos 79Other Publications 80Information Tracking Systems for Publications 81Legal Liability 82Summary 82Chapter 7: Investor Relations Web Site 83Basic Investor Relations Web Site 83Intermediate Investor Relations Web Site 84Advanced Investor Relations Web Site 87Web Site Layout 90Hyperlink Liability 91Sample Web Sites 92Summary 93Chapter 8: Management Discussion and Analysis Section 94MD&A Reporting Requirements 94SEC Guidance 98Examples of Enhanced MD&A Disclosure 99A Case for Full Disclosure 101Summary 102Chapter 9: Disclosure 103Form 8-K 104Disclosure of Non-GAAP Information 111Regulation FD 114Disclosure Policy 115Disclosure Procedure 117Ensuring Compliance with Disclosure Rules 118Disclosure During an Initial Public Offering 120Summary 121Chapter 10: Forward-Looking Statements 122Basis for Class Action Lawsuits 122Private Securities Litigation Reform Act 123Forward-Looking Statements 124Legal Liability for Past Statements 127Summary 127Chapter 11: Providing Guidance 128Whether to Provide Guidance 128Form of Guidance Issued 130Frequency and Timing of Guidance 132Aggressiveness of Guidance 133Guidance Policy 134Summary 135Chapter 12: Dealing with the Sell Side 136Analyst’s Perspective 136Finding the Right Analyst 139Dealing with Analysts 140Negative Analyst Report 144Dealing with Brokers 145Pump and Dump 147Dealing with Investment Bankers 148Dealing with Sell-Side Specialists 149Summary 149Chapter 13: Dealing with the Buy Side 151Types of Investors 151Dealing with Institutional Investors 153Travel Requirements for Meetings with Institutional Investors 156Dealing with Individual Investors 158Dealing with Investment Clubs 160Dealing with Foreign Investors 161Investor Presentation 162Managing a Private Investment in Public Equity 164Accredited Investor 164Dividend Reinvestment 165Direct Stock Purchase Plans 165Summary 166Chapter 14: Dealing with Credit Rating Agencies 167Credit Rating Agency Relationship 167Summary 169Chapter 15: Dealing with Short Sellers and Activist Investors 170How Short Sellers Operate 170How to Handle Short Sellers 172Monitoring Short Sellers 174Dealing with Activist Investors 174Summary 175Chapter 16: Dealing with the Board of Directors 177IRO and the Board of Directors 177Investor Relations Board Packet 182Summary 182Chapter 17: Major Stock Exchanges 183Listing Process 183American Stock Exchange 184Overview of the NASDAQ 187NASDAQ Capital Market 187NASDAQ Global Market 188New York Stock Exchange 190Comparing the Stock Exchanges 191Summary 193Chapter 18: Monitoring the Market 194Monitoring through Internet Services 194Monitoring through Individuals 195Surveying Investors 196Locating Investors 199Monitoring through a Stock Surveillance Service 200Monitoring through a Stock Transfer Agent 201Bloomberg Terminals 201Electronic Message Boards 201Activity Caused by Trading Strategies 202Summary 204Chapter 19: Blue Sky Laws 206Blue Sky Law Requirements and Implications 206Blue Sky Advice for the IRO 208Chapter 20: Proxy Solicitations 209Proxy Solicitation Concepts 209Online Proxy Voting 215Proxy Distribution Process 218NYSE Rule 452 222Summary 223Chapter 21: Dividends and Stock Buy-Backs 224Transition to a Dividend 224Dividend Policy 225Stock Buy-Back Alternative 227SEC Conditions on Stock Buy-Backs 228Disclosure of a Stock Buy-Back Program 229Odd-Lot Shareholdings 231Summary 232Chapter 22: Outsourcing Investor Relations 233Skill Set of an Investor Relations Consultant 233Managing the Consultant Relationship 236National Investor Relations Institute 237Summary 237Chapter 23: Investor Relations Metrics 239Internal and Financial Metrics 239Peer Metrics 244Company-Specific Metrics 245Metrics Consistency 246Explaining Results 247Summary 249Index 250