Making the Most of Year-End Communications

It’s that time again. Year-end communications – which take place in the first quarter of each new year – present an ideal opportunity to shape and showcase your company’s story. This is the time to share your company’s accomplishments, illustrate execution against your stated strategy, talk about the challenges of the past year, and outline the future plan for value creation.

That said, the process has become much more comprehensive and complex as companies are expected to tell their corporate story through a variety of reporting documents – from the annual shareholder letter to the proxy – to a diverse set of stakeholders who have different perspectives and interests. and information needs.

Today’s year-end communications should present a cohesive strategy and narrative across all materials, incorporate the IR story and value creation messages, and feel like they come from the same company in terms of voice, design and branding. In this context, many companies struggle to determine which documents to produce, what content to include in each, and – given that these documents are often created by different teams – who is responsible for coordinating the process.

Here are some tips for effectively navigating the 2021 year-end reporting process:

1. Conduct competitive research and analysis and create a plan of attack

In an era of rapidly changing communication requirements and best practices, it is extremely important to understand industry standard practices as well as emerging best practices. Today, companies are often surprised to learn that their competitors can surpass them in their communication practices. Stay on top of market developments. If your peers aren’t inspiring, seek ideas from relevant large-cap leaders.

Next, identify the target audiences for the materials you plan to produce. Remember that one size does not fit all, so consider trends and best practices to determine how best to meet your stakeholders’ needs.

2. Align all year-end communication materials around a narrative

Start with a clear narrative of your company’s strategy, key messages, performance over the past year, and outlook for the year ahead. This story begins with the fourth quarter and year-end earnings release, then goes through the rest of the material. Once your team is aligned on the content, determine the target audiences for each document and how the story should be tailored to meet their needs. A coherent message can be expanded or reduced depending on the audience.

3. Create a cross-functional team with a quarterback

With the expanded scope of year-end communications, there are many perspectives to synthesize, including finance, legal, investor relations, corporate communications, human resources and, of course, management and the board of directors. Assign a contact person to oversee the process and review all year-end communications to ensure consistency of messaging, look and feel.

Think of year-end documents holistically as a whole, not as individual pieces. For example, consider cross-linking rather than repeating duplicate content in annual shareholder letters and the proxy cover letter. This unified approach will drive consistent execution and ensure the delivery of documents that effectively tell the full story of your business.

4. Write an annual letter to shareholders

Trends in annual reports have continued to evolve over time. Today, practices vary enormously. Some companies issue a 10K without any shareholder letter. Others produce elaborate integrated annual reports that combine the traditional annual report with the sustainability report and address all stakeholders: investors, workers, suppliers, communities and customers. There is no one-size-fits-all solution, but in our view, not publishing an annual letter to shareholders is a missed opportunity, even for small and mid caps.

An expensive, glossy, full-color annual report can be a great piece of marketing, but sharing your story with stakeholders isn’t essential. What is Essential is a well-crafted annual letter to shareholders that summarizes your company’s financial highlights, key accomplishments and initiatives for creating long-term value. While few CEOs will achieve Warren Buffett or Larry Fink notoriety for their letters, there’s a reason everyone reads them: They provide meaningful insight beyond the four walls of their company’s operations.

Annual shareholder letters should be posted on your company’s website soon after the year-end results are released rather than waiting for the proxy to be mailed.

5. Upgrade your power of attorney

A decade after companies initially focused on using their proxies to win the vote of passive investors, a quick look at the hugely popular DFIN Guide to Effective Proxies provides plenty of evidence that proxy statements continue to thrive. evolve rapidly. Once strictly SEC-compliant, proxy statements now look much more like marketing materials with a clear call-to-action for investors to vote in favor of board recommendations.

Proxies are getting more and more appealing, with branded covers and themes now expected. Compelling infographics, charts and photographs that bring the story to life and humanize the picture have replaced the dense text. Board biographies expand to substantiate each director’s background, and skills matrices tell the reader at a glance whether the board collectively has the right mix of qualifications to effectively govern the company. .

Power of attorney cover letters have become table stakes, and many companies include more than one letter. For example, there could be one letter from the lead independent director and one from the CEO, or a second letter preceding the compensation discussion and analysis section from the chair of the compensation committee.

Extensive proxy summary sections allow investors to quickly understand and analyze key aspects of a company. Today’s top proxy summaries include business strategy, mission and values, key financial and operational metrics, ESG story, diversity, equity and inclusion initiatives, shareholder engagement and rewards and recognition. They also need to address hot topics that are in the news and on everyone’s mind, like cybersecurity.

Even if you produce a separate sustainability or ESG report, a summary of ESG goals, progress, challenges and recognitions should be included in your proxy. Adding a link to the sustainability report in your proxy is recommended, but not sufficient to satisfy the need to communicate your company’s commitment and progress on ESG issues in the proxy.

6. Start publishing a sustainability report

Although there is currently no regulatory mandate driving the widespread adoption or standardization of ESG reporting, institutional investors are demanding more detailed information. This includes passive funds like BlackRock, State Street and Vanguard as well as proxy voters in actively managed institutional investment firms such as Fidelity, Wellington or Capital Group. As a result, sustainability/ESG reporting has quickly become standard practice for public companies of all sizes. ESG is here to stay and companies that have not yet embarked on their ESG journey should start immediately.

Many companies have found that effective year-end communications drive stakeholder engagement, build corporate reputation, and provide a competitive advantage in the fight for capital, customers, and talent. While creating effective year-end communications takes time, companies that take the time to do it right should make the most of it. Rather than just posting your annual shareholder letter or sustainability report on your website, consider issuing a press release and social media post, then sending the materials to key shareholders and analysts with a note. of your CEO.

Year-end reports have become an overwhelming project and a team sport. This requires a holistic approach and IR’s involvement is critical to success because Wall Street investors – active and passive – are the recipients of all this important communication.

Moira Conlon is president to Financial Profiles

Comments are closed.