Evaluating NIRI's Do's and Don'ts for IR websites

THE US National Investor Relations Institute (NIRI) has issued a 5-page briefing on investor relations website practices based on a review they did of the largest 100 US companies’ sites.

On one level I can’t help but applaud the guidelines because they are long overdue. Investor relations websites have been around for more than 10 years, and this is the first time NIRI has tried to provide research-based guidelines that go beyond the usual compliance focus.

But on another level, I’m disappointed that NIRI didn’t use the opportunity to do more. The organization should have been more forthright in urging its members to start putting more effort into their sites, as investors and regulators increasingly expect them to.

But more worrying is that some of the guidelines are simplistic, not major issues, or just plain wrong. Of the 14 Do’s and Don’ts the briefing provides, I feel comfortable endorsing only six. In this post, and one more that will follow tomorrow, I will explain which guidelines I support and which I don’t.

This post kicks things off by looking at the general tone of the Executive Alert and highlights a couple of key issues.

Too much weasel language

The guidelines use some politically correct language that doesn’t quite go far enough to get IR departments to pay attention. Having reviewed most of the same companies that NIRI’s researchers have, I know what they saw was mostly bland, compliance-focused repositories of virtually unusable content. But instead of coming out and saying as much in clear terms, NIRI has chosen to couch its comments in vagaries vagueness. (Update: James Gould, in a comment, correctly points out my incorrect use of the word vagaries.)

Take these two paragraphs, which are essentially all that NIRI has to say about the overall standard of the IR websites the organization observed in its study:

“It is clear that no single Web site format will satisfy the needs of all public companies. However, by viewing regulatory compliance satisfaction as a minimum baseline from which to build, and by relying on the central tenants of richness and intuitive ease of use, IR departments have the opportunity to improve their efficiency and the satisfaction of their Web site visitors by making their IR sites an engaging destination and indispensible [sic] resource.”

“Even for this echelon of companies that all have a wealth of resources, the application of data, Web design and site functionality came to a wide range of ends. Those Web sites that appeared most visitor-friendly during this review had a wealth of information but were also very easy to use. Clearly every IR Web site need not and should not include every conceivable element or piece of data, nor should features be added for their own sake to make a site feature-rich. The user should nevertheless be able to quickly and easily identify from the layout of the site what is and what is not available.”

There is no emphatic call-to-action in the guidelines and the message is too vague. It allows those who don’t really want to make improvements a way to do nothing. Most important, weasel language doesn’t create the sense of urgency that is required for NIRI members to wake up to the reality that this web thing might actually be important and they’re missing the boat in most cases.

Email alerts and RSS feeds are NOT just “bells and whistles”

As I said at the outset, there is a lot I don’t like about these guidelines, but I am particularly concerned with the briefing’s characterization of web feeds and email alerts as “bells and whistles.” I cannot understand how NIRI can lump these two technologies into the same category as some truly nice-to-have features, such as blogs, interactive charts, “E-mail page” features and text resizers.

Web feeds and email alerts, which provide a more precise, cheaper and more effective way for companies to keep investors updated, are core features for any IR website. Without them, companies are limited to expensive mailings, paid newswires or SEC filings to get information out to the market, and to their most interested investors in particular.

The value of email alerts, and more recently RSS or Atom feeds, is widely recognized internationally. More than 70% of the companies we track around the world already offer email alerts. Indeed, in 2005 the Swiss Exchange issued a directive that required listed companies to provide email alerts on their websites. And in its recent guidance for IR websites, the US Securities and Exchange Commission (SEC) drew attention to e-mail alerts and RSS feeds as interactive technologies.

It surprises me then that NIRI has been so quick to overlook the obvious benefits of web feeds and email alert utilities, especially given the attention that I and many others have been giving to the topic of PR wire service releases and disclosure.

This is a hot topic of debate in the profession, so NIRI’s classification of RSS feeds and email alerts as “bells and whistles” shows they’re either out of touch or they’re taking sides with PR wire services, who just happen to be among their biggest financial sponsors.

Microsoft is NOT best practice

There is a myth that has developed amongst people who don’t know what they’re talking about that Microsoft has pioneered a great new way to present financial information on the web. This all started with the SEC’s advisory committee on financial reporting, of which Microsoft CFO Chris Liddell was a member.

He got some people at Microsoft together to design a new interactive quarterly report for the company’s website that uses some XBRL data. For some strange reason, they decided to call it Investor Central, instead of the more common label “interactive quarterly report.”

Liddell then showed this off to his fellow SEC committee members and they got all excited. The committee’s final report (PDF 2.7 MB, 172 pages) includes an appendix labeled “Examples of Corporate Website Use” that only includes Microsoft and some screenshots of an early iteration of what is today Investor Central.

But the truth is that what Microsoft did is neither new nor particularly good. Unlike other companies that post high-end interactive quarterlies on the same day they announce their results, Microsoft doesn’t update its report until a week or more later. By then, the information is old news and few will care. That’s not best practice.

Another problem is that most people can’t even view the Investor Central report because they don’t have the free Silverlight plug-in installed on their computers. Silverlight is Microsoft’s competitor technology to the far more ubiquitous Flash technology. While Silverlight is free and not that hard to download and install, a lot of people can’t or won’t install new software on their computers.

But even if you do have Silverlight installed, there’s a good chance that you still won’t be able to access Investor Central if you’re using the non-Microsoft browser Firefox. Due to poor coding, the navigation menus in the current report don’t work in Firefox — even if you have Silverlight installed. And without the navigation menus, Firefox users can’t access anything other than the front page. Again, that’s not best practice.

Finally, it strikes me as rather silly that Microsoft’s Investor Central is still only a concept when other companies are doing similar or better things as part of their official communications with investors.

I’m not saying Investor Central is a complete bust. It does have some good features. But it is not, as NIRI says, “one of the most innovative IR Web site features.” There are much better examples available if you know where to look.

In the second part of this review, I go through NIRI’s 14 Do’s and Don’ts and explain which are good or bad.

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