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Guest ColumnCompanies Can Regain Credibility Through Upcoming Annual Report to ShareownersBy Gregory B. Powell, CFA -- CTA Public Relations As Corporate America heads into the home stretch of 2002, communications professionals working for public companies will probably be asked the following highly sensitive question by senior management. Our clients are already starting to ask us the very same question: ăWith the spotlight of public scrutiny glaring down on CEOs, coupled with our less than stellar financial performance this past year, not to mention our stock price, how should we approach our upcoming 2002 Annual Report to Shareowners?ä Hereâs some thoughts on how to approach this issue. First, use the Annual Report as a platform for your company to regain credibility. The majority of public companies saw not only their stock price go down this past year, but their credibility along with it. As the economy continued to head south, many CEOs were forced to back peddle on earlier predictions of better days ahead. The Annual Report still remains the most important communications tool between a company and its shareowners. It is true that the financials are old news by the time the Annual Report is printed. But the Annual Report provides shareowners with a tone and ăfeelä from the company that an earnings release cannot do as effectively. And yes, studies indicate most shareowners spend only three to four minutes reviewing the Annual Report that took hundreds of hours to prepare over many months. For this reason, we hear more and more from CEOs, ăWhy should we spend money on an Annual Report, nobody reads it anyway?ä The
answer is: ăTrue, most donât read it, but they do skim it, and form their perceptions from it. You have three to four minutes to get your message across, so get to work.ä And this year, rebuilding your companyâs credibility and trust with your shareowners should be a top priority. Letâs face it, as a public company, credibility is your most important asset. And yet this asset wonât be found on the balance sheet. If shareowners donât believe what you say, they will simply stay away from your stock. So use the platform of the Annual Report to regain any lost credibility with your shareowners. Shoot straight. Be honest. Tell them it was a disappointing year and why. Then tell them what your strategic plan is going forward. Talk candidly about the challenges in your market and your industry. But donât just hide behind the poor economy. Own up to where your company made mistakes or could have done better. Investors donât expect you to be perfect, just honest. As we tell our own staff at CTA, ăWhen you mess up, fess up.ä The Annual Report is not the place for a marketing tone of writing, full of hyperbole and glowing adjectives. Rather, it should be a fair, balanced assessment of where you have been, and where you are going and how you plan on getting there. One technique to accomplish this is to have in the letter to shareowners a subhead called ăChallengesä and another titled ăOpportunities.ä Under these headings, you can honestly address your positives and negatives with a credible tone. It provides a framework for communications. Your 2002 Annual Report is also an opportunity to communicate with shareowners that your company is cost-conscious during these challenging economic times. Over our 17 years in business, CTA Public Relations has seen many a CEO get grilled by a shareowner holding up the latest Annual Report and asking at the annual meeting, ăThis looks like it cost us shareowners a bundle·.how much did you spend on it compared to last year?ä By utilizing numerous printing techniques that can reduce your Annual Report costs by as much as 20%, without having to reduce the print run or quality of the book, you can smile when that question is asked at the next annual meeting. Other ways to save money include cutting back on the number of photos, the amount of text and the number of pages. Less is more. Most shareowners canât absorb it all anyway, so keep it simple, brief and honest. ----------- |
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