"Put it before them briefly so they will read it, clearly so they will appreciate it, picturesquely so they will remember it and, above all, accurately so they will be guided by its light." ~ Joseph Pulitzer

In the extremely hectic world of IR, we are often stretched too thin – consumed with day to day tasks and putting out fires – to even consider adding to our workload with board reporting. Some of us barely make it through year-end with all our faculties intact! But in our constantly evolving profession, it has never been more important to implement some form of report to the board from the IR perspective. New and changing regulations, the advent of additional investment vehicles, laws, and market events – all impact our companies and are growing concerns for our shareholders. And your board needs to hear what you know, since you are closest to shareholders and the Street.

An issuer’s inability to accurately and quickly identify its shareholders has long been a subject of criticism in Canada. We certainly lack the transparency available in some other jurisdictions. Some people believe that institutional shareholders as a group actually like anonymity, and have thus resisted transparency initiatives, but I do not believe this is true. However challenging it may be, identifying your shareholders should be a key initiative of your IR program. You will find it difficult to qualitatively benchmark the success of your IR plan if you can’t ask for direct feedback from your investors. As well, gauging key changes in your ownership base will allow you to determine what is driving interest in your company – is it investment style, is it your industry, your strategy, your state of play, for example? Truly under-standing these things will also allow you to prioritize management time on road shows and enable you to be strategic about selecting your one-on-one meeting opportunities. You will also be better prepared in the event it becomes important to solicit a proxy vote.

The life of an IRO is rarely boring, and recent trends suggest that it could be getting a lot more interesting, given the increased activism of shareholders in Canada. For some time, the more exciting flare-ups between boards and shareholders were south of the border, but, as it has in other contexts, this extroverted behaviour has migrated north. Shareholders in Canada have always had various paths to make their voices heard in boardrooms. However, until recently these were viewed as dead ends and so were rarely traveled. That’s not so anymore. Coincident with the growth of institutional investors, the rise of hedge funds, and enhanced governance focus, we have seen a surge in the willingness of shareholders to speak up, either to demand accountability or to actually derail transactions.

Jeff Cossette looks at the heady game of stock surveillance

It’s hard out there for a stock watcher on the Street. Many of their traditional information sources have dried up, and their industry has been the subject of SEC investigations in the US. And with moves in various markets to increase shareholder transparency, the stock watcher’s business model is at risk.

But IR continues to hanker for faster and better information about who is buying and selling stocks. According to a global survey on shareholder transparency commissioned last year by the International Investor Relations Federation (IIRF), there is a clear appetite for change among investor relations professionals frustrated by the challenges of identifying who has ownership of their company’s stock. Eighty-one percent of the 346 investor relations officers polled would like the IIRF to push for greater transparency, according to the survey.

US companies are separating their top responsibilities at a faster rate than ever before. Elizabeth Judd investigates

In March, shareholder activists once again filed a proxy proposal asking Pfizer to split the roles of CEO and chairman of the board. Charles Raeburn, Pfizer’s senior corporate counsel, says a similar proposal garnered 41 percent of the shareholder vote last year, and this spring ‘it’s conceivable that it will attract an even higher vote.’

Electronic communication could soon replace annual shareholder meetings in Australia. What does this mean for companies and shareholders?

Now that they've reached the trillion-dollar tipping point, hedge funds are taking a more active role with management. Ian Sax reports

Last summer, UK hedge fund Laxey Partners succeeded in ousting three board members of Private Equity Investor, a publicly listed investment company. The fund installed its director and fund manager, Colin Kingsnorth, and two more of its own nominees, culminating in a public battle over stewardship of the company.

Australia is taking shareholder activism to a new level, reports Alexandra Cain

It’s a significant wake-up call for the Australian investor relations community: if you are not already actively engaging with your institutional shareholders, you could be making a dreadful mistake, one with far-reaching consequences.

Does adopting fair trade mean increasing shareholder value? asks Lucie Sinclair of CO3

Nestlé recently announced the launch of a Fairtrade-certified coffee, called Partners’ Blend. This development follows a surge in sales of Fairtrade products, which consumers buy in the knowledge that a fair trade price has been paid to farmers in the developing world. A recent Mintel survey of consumer awareness stated that one in two adults can now correctly identify the Fairtrade logo, and four out of five people say the independent guarantee is important to them.

Investors increasingly want companies to line their pockets rather than reinvest in growth or pay down debt. A recent study by Merrill Lynch reveals that 53% of 223 global fund managers would like companies to give money back to shareholders through share buybacks and dividends. Investors even think companies should issue debt to free up cash, the study shows. “The thinking is that companies are underleveraged and shareholders want them to take out debt to issue cash,” says David Bowers, Independent Consultant to Merrill Lynch.

When do you need outside help? Dea Katel looks at how companies work with IR and financial PR agencies

The scope of IR consultants’ relationships with both clients and the investment community is now broader than ever before. The hot competition for capital means more companies are seeking market intelligence like peer research, while others are doing more with less by outsourcing IR chores. Whether a company needs to get creative, diversify its shareholder base, go global with its message or survive a crisis, help isn’t far away. IR magazine talked to seven companies about how they use consultants.

For investors in the world’s second-largest capital market, it should be a historic summer. In fact, the year has already been historic thanks to developments sparked by Livedoor’s hostile takeover bid for Nippon Broadcasting System in February. After dominating business news for months, anti-takeover plans are dominating the agendas of shareholder meetings, which, in Japan, tend to be scheduled for the first half of summer.

There is a lot of confusion among companies about what sort of information they should be providing investors and analysts on climate change. Some companies have never been asked for this data by shareholders so the buy side’s expectations can seem obscure. ‘No-one ever, and I really do mean ever, has asked us about this,’ one IRO from a Eurotop 300 company said recently. ‘Not once. Not one fund manager or analyst has ever brought this up.’

His company is taking climate change and other corporate responsibility issues seriously. It tries hard to communicate what it is doing in this regard to its investors. But it is not convinced that more than a minority is at all interested in knowing about what the firm is doing in this area. So are climate change and other corporate responsibility matters really of relevance to IR? Or are these still marginal issues of interest only to parties with certain agendas and pro-socially responsible investment (SRI) groups?

San Francisco, CA -- After much speculation in the media, shareholders of Providian Financial approved its merger with Washington Mutual (WaMu) on Wednesday. The deal was the subject of much debate with one of Providian's biggest shareholders publicly opposing the merger and the company's proxy firm, Institutional Shareholder Services (ISS), being criticized in the media.

The media frenzy tipped off when Putnam Investments, one of Providian's major holders with 7.5 percent of shares outstanding, went public with its stance against the deal. In a very unusual move, Putnam published a press release saying the bid price was too low. 'In a consolidating industry and in light of the recently announced Bank of America/MBNA transaction, mono-line credit card companies such as Providian represent an increasingly scarce asset that should command a higher price,' wrote Putnam on August 1 about WaMu's offer.

Majority voting is taking off as the ideal model for director elections. The American Federation of State, County and Municipal Employees (AFSCME) Pension Plan recently submitted the first binding resolutions seeking majority voting at Paychex and Sysco.

The move is a significant change of strategy for AFSCME, which has been a major supporter of the SEC's proposed shareholder access rule. With that rule appearing to be dead in the water, the pension group is now pursuing the majority-voting path.

'We consider proxy access and majority elections as compatible. The problem is that, for the moment, we are not able to get proxy access on the ballot,' says Richard Ferlauto, AFSCME's director of pension investment policy. Non-binding shareholder resolutions calling for majority vote standards have become common place this past proxy season and over 20 companies have adopted some form of the scheme after a majority of shareholders voted in favor.

AFSCME is pushing for a stronger solution. Its position at Paychex and Sysco calls for a binding resolution requiring a majority vote rule. The pension group will get to test shareholders' appetite for the proposal at Paychex's AGM this fall. The company is encouraging shareholders to oppose the proposal on grounds that it is evaluating the idea and the changing legal environment relating to the principle.

The Council of Institution Investors recently submitted a letter to the Delaware State Bar Association asking it to press the state to alter Section 216 of the Delaware General Corporation Law to make majority voting the presumptive choice for Delaware corporations. The American Bar Association is currently examining the issue in a separate inquiry.

SYDNEY -- A major shareholder in Australian cotton manufacturer and marketer Namoi Cotton has publicly criticized the company's board for not treating the interests of capital investors the same as those of grower investors.

An unnamed spokesperson for Warakirri Asset Management, a small Melbourne-based investment house, condemned Namoi's board in the Australian Financial Review this week for not doing enough to increase liquidity in the stock and not encouraging investment from institutional shareholders. 'This is the weakest board of any enterprise we've ever invested in,' the spokesperson wrote.

The comments come in the wake of a takeover bid for Namoi from Queensland Cotton at 71 cents a share that was rejected by Namoi's board. Namoi's shares traded between 45 cents and 55 cents prior to the offer.

As a grower-controlled entity, Namoi faces a number of challenges more mainstream listed vehicles don't have. The share structure is designed so only cotton-growing members can vote on company resolutions, with capital investors unable to access these special voting rights.

Although Warakirri has expressed disappointment in Namoi's share structure, it was aware of the arrangement when it bought into the company.

Tim Powell, a director of Cox Inall Communications, says shareholders who buy into agri-business stocks need to understand the unique situation these companies are in. 'These stocks generate good dividend returns and capital growth over time,' says Powell. 'While 'farmer boards' are bound by the Corporations Act, there is an unspoken tug on them from their political base; this makes them unusual boards to deal with.'

Namoi's board comprises a majority of grower directors, who are elected by cotton growers.

KUALA LUMPUR -- It's been less than a month since the government released guidelines demanding strong performance and good corporate governance from local firms, but foreign investors are already impatient for results.

LONDON -- Misys, a Worcestershire-based software and services group, is planning to pay two of its top executives 'retention bonuses' of £1.2 mn ($2.16 mn) each to prevent them from resigning if they are passed over for the company's CEO position. However, major institutional shareholders are rebelling against the unusual compensation package.

Misys fears it will loose its top divisional directors Tom Skelton, head of healthcare, and Ivan Martin, head of banking, if it doesn't chose them for the CEO post. Misys' CEO Kevin Lomax, who is also founder and chairman of the board, is to become a non-executive chairman by 2008.

Negative earnings surprises or downward changes in guidance from companies often cause stocks to suffer an almost instant and sometimes significant loss in value. While these falls can just be transitory, sometimes they signal a longer lasting change in the rating of the stock and consequent cost of capital for the firm.

It is, therefore, in the interests of company directors to reduce the risk of such an event. There are four basic steps they can take to minimize risk. First, identify what the possible risks are and assess their consequences. Second, decide whether the potential risks are acceptable. Third, if they are acceptable, decide on a strategy for managing the risk. Finally, communicate the process well to the investment community.

ShareGift USA benefits companies, shareholders and charities, writes Neil Stewart

US companies cleaning up their shareholder registers have a new, CSR-friendly option in ShareGift USA. This British import, established in 1996, is based on a simple but effective idea: companies invite investors with a small number of shares to give those shares to ShareGift, then ShareGift bundles up the shares and sells them to raise cash for charity.

In the ever-evolving corporate arena, the weight of new disclosure rules is leading many companies to realize they have to do more than just provide their shareholders with endless pages of dull financial and legal information. Designers and creative consultants are helping companies turn their IR web sites and annual reports into effective marketing, advertising, recruiting and PR tools as well.

According to the IR magazine-commissioned Investor Perception Study, US 2005, company IR web sites continue to be the primary information source for retail investors, while institutional investors put more stock in the printed annual report. But companies are moving beyond a bare-bones compliance approach to one that seeks to maximize the potential of their communications.

One share can be voted numerous times by different investors, skewing results and hurting shareholder rights, finds Adrian Holliday

One share, one vote. It’s a simple principle. But in reality, it may be one share, two or three votes – perhaps even more. Brilliant blue skies may mark the start of proxy season, but that time of year can also bring a disruptive dimension to shareholder democracy: over-voting.

SUNNYVALE, CA -- In a recent conference call, John Gifford, CEO of Maxim Integrated Products, a California-based tech company, said he doesn't care how the company is going to expense stock options. On the company's earnings call on August 1, an analyst asked how options expenses would be sprinkled through the company's income statement from a Gaap point of view and Gifford said: 'I don't even care. I'm going to report earnings per share, cash flow and do what whatever they require us to do for Gaap, but I don't pay any attention to it.'

Q. We’re concerned about the growing cost of servicing our thousands of retail shareholders, given their negligible holdings (below 5 percent). It makes better business sense in the long term for us to buy back as many shares as we can at a premium, but what factors should we consider before moving ahead with such an offering?

LONDON -- Hedge funds are becoming the new face of activism. This week investors praised a group of US hedge funds for orchestrating the takeover of Medidep, a French operator of retirement homes. The group found the right buyer for the firm after unseating a board member at the company's annual meeting, allowing shareholder to obtain the best gain on their holdings.

CHARLOTTESVILLE, VIRGINIA -- The CFA Centre for Financial Market Integrity is urging the Delaware Bar Association to support a majority voting system for electing directors in response to a discussion paper released earlier this summer by the American Bar Association's (ABA) committee on corporate law. The paper analyzes majority voting as an alternative to the current plurality voting system for director elections and actually suggests that the best solution is an improved plurality voting system.

SYDNEY – A recent Australian Federal Court decision could give shareholders financial recourse in instances in which listed entities are placed into administration. In his decision, Justice Arthur Emmett found that Luka Magnetic, a former shareholder of defunct mining company Sons of Gwalia, was entitled to make a claim against the company in the same way other creditors are able to.

SINGAPORE -- As shareholders react to corporate scandals, companies listed on the Singapore Exchange (SGX) may find directors' and officers' (D&O) insurance harder to access.

IROs who have been through major transactions offer these five practical tips on handling shareholder communications in an M&A situation:

First, let’s take a look at what has happened recently in the stock market. It was a rough second quarter. Following on the heels of April, when the S&P/TSX Composite Index rose 0.9%, the market dropped 3.6% in May and 0.8% in June. Readers of the May Newsline may recall that I expected “increased volatility in capital markets” and recommended that investors with a more conservative risk profile “increase cash holdings and defensive positions in their stock selection and industry weights”. Not a bad call as it turned out. But where do we go from here and what does this all mean to IROs?

“You have to make sure you have control of the pen as your operating environment will change overnight,” cautions Greg Martin, Vice President and CFO of Vancouver-based Zincore Metals. This is Martin’s advice to an IR person suddenly thrust into a hostile takeover bid, which is exactly what happened to him last November when Barrick Gold went after Placer Dome, where he headed investor relations. “You are used to working with a select group of people, and all of a sudden you are sitting at the table with 25 people who are all trying to prove their worth,” Martin adds, referring to the entourage of legal, banking and communications advisers that accompanies a sizable deal.

Investors are interested in quantifying the effects of climate change but a consensus on what companies report and what shareholders measure is necessary.

The Canadian Society for Corporate Secretaries (CSCS) together with Georgeson Shareholder is pleased to present a series of cross-country roundtable discussions on:

CIRI’s 2004 Executive Insight series featured interactive discussions in Vancouver, Calgary, Toronto, and Montreal. Panelists included: Sylvia Groves, Assistant Secretary and Corporate Governance Officer of Nexen Inc., who racked up frequent flier miles by traveling to all four locations; Jason Milne, Corporate Governance Analyst at Phillips, Hager & North; John Lawlor, Vice President Corporate Relations at Cognos Inc.; Lou Thompson, President and CEO of NIRI; Chris Bart, Lead Professor and Founding Member of The Directors’ College; Norman Raschkowan, Senior Vice President and Director of Standard Life Investments Inc.; and Jane Watson, Vice President Investor Relations at CGI Group Inc.