ANOTHER year has come and gone and IR Web Report will be entering its fifth year of continuous publication with more relevance and resonance than ever before.

Usage continues to grow. We are now nearing 5,000 regular monthly users. We are particularly thankful for the profile and support given to our work by the National Investor Relations Institute (NIRI) and others in the IR community, including high quality vendors like Alert IR in Sweden and IR Group in the United Kingdom. We didn't solicit their support, so the fact that they took it upon themselves to highlight our work to their members and clients makes the recognition all the more special.

We are on the cusp of dramatic changes in how information about companies is published and distributed.

Our primary motive at IR Web Report is to help investor relations professionals help their investors make better investment decisions by smoothing the way for them to find, use and understand Internet-based disclosures. Typically, this means we put the interests of investors first in everything we write, believing that if it works for investors it is good for companies, too.

The fact that the users of this site have nothing to gain except to be better in their jobs speaks to the high caliber of the people who use this site. You continue to demonstrate a strong commitment to doing the best you can for investors, even if your efforts are not immediately recognized.

The past year has been one of the most interesting in many ways. We are on the cusp of dramatic changes in how information about companies is published and distributed. Slowly but surely, it is becoming critical for companies to communicate their positions on important issues directly to their online stakeholder audiences.

Web audiences are becoming more sophisticated and more influential. New technologies and applications are making it easier for companies' critics to gather and process information. New technology is also making it easier for these audiences to air their views and opinions and to efficiently distribute their messages to those interested in them.

For online investor relations communications, 2004 was the year the IR website entered a new phase of innovation. Our IR Web Report Global Rankings™ survey is beginning to pick up a growing trend among companies to upgrade their sites.

But there is still a long way for most companies to go before they can claim they are using the Web effectively to communicate and reach out to investors. That's why we thought it would be good to review what we think were the most important items published during the past year.

We're providing a few key points from each item for your convenience, but recommend that you read the complete versions of each article for a more complete picture.

1. Web-based campaigns a wake-up call for corporations
This article offers a glimpse into the future of shareholder campaigns on the Web. It chronicles two proxy battles in which individual shareholders took on mighty corporations and were highly successful in meeting their objectives.

Obviously, we are talking about the 2004 Save Disney Campaign, which may well go down in history as the first time the Web was used successfully by dissident shareholders to humble a board of directors.

Money is no longer an obstacle to unhappy shareholders being able to challenge companies and their boards.

However, we also chronicle a lesser-known campaign launched by a lone, but influential shareholder from California, ex-congressman Michael Huffington, who single-handedly embarrassed aircraft maker Bombardier of Canada with public accusations of management incompetence.

It is this second campaign which for us was most significant because it showed how even one person can make a noise and be noticed in the media and by the public. In both cases, of course, the dissidents had deep pockets which allowed them to harness the Web and other media in their campaigns.

However, new technologies like blogging software, news feeds and search-based advertising are making it easier and cheaper for individuals to get their messages out to vast audiences. Money is no longer an obstacle to unhappy shareholders being able to challenge companies and their boards.

For companies that are dealing with unhappy shareholders and even those that aren't, this article and the recommendations we provide at the end is a must-read. Best of all it's free. Get the complete picture>

2. New perspectives on online annual reports
This was the year we finally figured out what to do with online annual reports. Although annual reports have lost their stature as a key disclosure resource in recent years, key parts of them remain as relevant, if not more relevant than ever.

We highlighted research showing that when it comes to online annual reports, both institutional and retail investors have very limited needs. Companies are wasting their time trying to use their reports to market their companies. They would do much better to focus their attention on making their financial reports — including their Financial Statements, footnotes, MD&As or OFRs and their shareholder letters — easier to use and more understandable.

Companies should focus on making their financial reports easier to use.

In December, we published a new report on how to design and publish a highly usable online financial report using HTML. These reports have the potential to add substantial value to investors by making it easier for them to keep abreast of a company's financial results and to use annual reports as reference documents, which is what they're most useful for on the Web.

We also published new guidelines for making PDF annual reports more usable. These guidelines can and should be applied to all PDF documents on IR websites, including proxy statements, presentations and corporate governance documents.

3. Preparing earnings releases for the Web
This article, which also ran in NIRI's IR Update magazine November, describes how to format earnings releases so that they will grab investors' attention and communicate the company's essential information is an environment where average page views are typically less than 60 seconds.

Some of the tips offered in this report include:

5. Communicating executive compensation on the Web
Of all the corporate governance issues that have caused storms of protest from shareholders, none elicits as strong a response as bloated executive pay.

Compensation concerns have provoked more shareholder proposals in the past two years than any other. They have resulted in embarrassment and humiliation for boards at organizations as diverse as The Walt Disney Company, GlaxoSmithKline and the venerable New York Stock Exchange.

And even though no company is fully immune from scrutiny, executive pay is not a topic which companies and their boards appear comfortable talking about. It may be the biggest issue on the governance agenda, but it is one of the last topics you will see discussed openly on corporate websites.

Burying pay details on the Web makes it look like you have something to hide.

The guidelines provided in this article cover eight printed pages and offer up-to-date advice on how companies can communicate more clearly and transparently with investors and other stakeholders about executive and director compensation via the Web. Examples are provided from forward-thinking companies in several countries.

6. Investor relations contacts pages vital for credibility
Good investor relations contacts pages demonstrate companies' accountability to their shareholders and give potential investors confidence that they have a reliable avenue to get answers to questions that might come up down the road.

Poor IR contact information makes you look disorganized and disinterested.

Currently, fewer than 20 per cent of companies in the IR Web Report Global Rankings™ are providing credible IR contact information on their websites. Most contacts pages are impersonal and make companies look bureaucratic, disinterested and even arrogant.

Poor IR contacts pages also leave the impression that companies are disorganized or that they don't have resources to effectively manage their communications with investors. This in turn can undermine investors' confidence in the site as a source for current, relevant information and cause them not to use the site again.

These best practice guidelines for IR contacts pages cover the basics of an effective IR contacts page and a number of innovations that can enhance the experience of investors using the information. We also discuss how to balance being approachable online without opening yourself up to a deluge of spam.

7. Why outbound links are good
In this article, we challenged the common misconception that linking away from your website is a bad idea and that it will land you in hot water with the law. We showed how well-chosen outbound links can assist investors to make more informed decisions about your company, and how they can also strengthen your company's credibility with investors.

Unfortunately, such misconceptions continue to be furthered by small-minded thinking and organizations and individuals who have only a rudimentary understanding of investors and investor communications. There is a tendency in investor relations to kowtow to fear mongering consultants and overly cautious lawyers. When you listen to these quarters and ignore the best interests of your investors, the results are almost always bad.

Why outbound links are good, which also highlights the double-standards of vendors like Thomson Financial, was almost certainly one of the most important items we published over the past 12 months.

8. Website accessibility matters
One of the mandates we have given ourselves at IR Web Report is to raise the alarm when we think IR departments are being ripped off or taken advantage of by vendors and web designers whose products don't meet proper standards of quality and usefulness.

Accessibility standards have been well known to the Web development community since 1999, yet many continue to build shoddy sites.

The accessibility of websites to users with various forms of disability became a big concern for many companies during the past year, particularly companies in the United Kingdom, where it is illegal to discriminate against disabled users on the Web. The issue for us is that the practices required to make sites accessible have been well known to the Web development community since 1999, and yet many vendors continue to provide products that don't meet these standards.

To avoid a crisis down the road when Web accessibility becomes a requirement in other countries, as it surely will, we think IR departments need to start insisting that vendors provide assurances that their products meet recognized accessibility standards. Subsequent to our article, the U.S. Securities and Exchange Commission put making SEC filings more accessible as one of the priorities in its IT strategic plan.

In Is your IR website accessible, we also make the point that accessible web design is a minimum standard, so companies should show no sympathy for vendors who try to dress up accessibility as a value-added service that requires additional fees. Indeed, we think there's a strong case for companies to demand a refund of the fees they've been charged for non-accessible websites.

The issue of making websites standards compliant also arose again with the introduction of the new Firefox web-browser. In Is your site fit for Firefox, we highlighted how some IR websites do not render properly in this browser because they were not designed to meet accepted web standards, but rather have been tailored to the non-compliant Internet Explorer browser.

This problem is more widespread than we first thought. Again, we urge you to download the new browser and test every page of your site with it. You may be surprised by what you see.

9. European IR websites set the pace
Spearheaded by German, Swedish, British and Swiss companies, European investor relations professionals led the world in producing highly effective and credible IR websites in 2004.

Based on detailed reviews of more than 500 large-cap companies' IR websites for our IR Web Report Global Rankings™, we found that European companies generally take an investor-centric approach to their IR websites and are more prone to best practice, while companies in other countries appear to be oriented more to meeting minimum mandatory requirements.

Many U.S. and Canadian companies are now making significant improvements to their IR websites.

Geographic differences were clearly evident. There was a big difference in the average scores between the top and worst ranking countries. Germany had the best IR websites while Japan had the weakest. One of the most improved performances was among Italian companies, which may be responding to the sharp focus on their practices in the wake of the Parmalat debacle.

Subsequent to us announcing these results, we have noticed that standards seem to be improving across the board, with many U.S. and Canadian companies making significant improvements to their sites. The result is that we expect the geographic gap between North America and Europe to narrow, while companies in Japan and elsewhere may fall even further behind.

10. Annual meetings put governance theory into action
When companies fail to treat their annual meetings properly on the Web, their statements about being responsive to shareholder interests and good corporate governance practices tend to come across as little more than PR fluff.

Since annual meetings typically are the only occasions where shareholders get to express their views on the performance of the board and management, firms which downplay their meetings on the Web risk creating the impression that the board and management have little regard for the role of shareholders. This is antagonistic and ill-advised in an environment where corporate governance is of prime concern to an increasingly strident and well-organized shareholder constituency.

Now more than ever, companies should be concerned with encouraging rather than suppressing open dialogue with shareholders. The Internet offers forward-thinking companies a number of opportunities to provide investors and shareholders with tangible evidence of companies' commitment to open and honest communication. A fundamental first step must be for companies to return the annual meeting to the prominence it deserves.

In Best practices for online annual meetings, we provided guidelines for effective annual meeting pages on IR websites. These were based on observations drawn from our research over several recent proxy seasons.

So there you have it, a few highlights from 2004. Thanks again for supporting us through your purchases, feedback and by recommending this site to your colleagues, members and clients. We greatly appreciate your support.

 

---

IR Website Audits How effective is your company's IR website? What can you do to improve it? Get a confidential, expert review from IR Web Report's experts.