Professional Documents
Culture Documents
INVESTOR RELATIONS
The arena of investor relations has had a relatively short history, only springing up as an
important factor in a corporation’s communications in the 1960s. In concept, a publicly
owned corporation is based on an ideal of consensus, where shareholders, employees,
community neighbors, suppliers, and customers all have a voice in its operations.
Unfortunately, it is not possible for all who have a stake in the outcome of an enterprise
to take an active part in the decision processes of that business entity. Many of the
decisions are made by management or board members who run the company.
Financial relations practitioners have the difficult task of mediating between all the
publics that may have an interest in the financial success or failure of an organization.
Practitioners have, as prime audiences, millions of small investors who do not control the
market, as well as leaders of publicly owned corporations who can make decisions that
are short-term expedients or long-haul and public-interest based. These choices can be
helpful or harmful to the rest of the corporation and its success. Other audiences that play
important parts in a financial practitioner’s efforts include regulators, media, economists,
and legislators.
The authors have described three specific areas where a financial relations practitioner
needs to focus his/her energy:
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2. Preparing public literature such as reports required by law and establishing press
contacts.
3. Managing relationships with the financial community, including analyst meetings,
tours or visits, etc.
2. In many organizations the role of financial relations has been given to legal
counsel. How can this help an organization’s financial communications? What
are the downsides of using legal counsel to accomplish the task of financial
communications?
Case 5 - 1
BANKRUPTCY: COMMUNICATING FOR FUTURE SUCCESS
ATLANTA, Sept. 14, 2005 – Delta Air Lines (NYSE: DAL) today announced that to address its
financial challenges and support its ongoing efforts to become a simpler, more efficient and cost-
effective airline, the company and its subsidiaries have filed voluntary petitions for reorganization
under Chapter 11 of the U.S. Bankruptcy Code.
Delta’s Board of Directors, in a unanimous decision, directed the company to take this action after
determining that a Chapter 11 reorganization is in the best long-term interest of the company, its
employees, customers, creditors, business partners and other stakeholders.
Delta expects to continue normal business operations today and throughout the reorganization
process. Specifically, it expects to continue to:
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• Operate its full schedule of flights worldwide;
• Honor tickets and reservations and provide refunds and exchanges as usual;
• Maintain the SkyMiles program and other customer service programs;
• Provide amenities like Crown Room Clubs and international lounges in select cities;
• Provide employee wages, healthcare coverage, vacation, sick leave and similar benefits
without interruption; and,
• Pay suppliers for goods and services received during the reorganization process.
Companies declare bankruptcy for two reasons, normally. Most prevalent is the
need to “reorganize” in the face of debt that can’t be paid. For whatever reason, a
company’s income stream doesn’t meet its need for capital, so Chapter 11 gives
the business an opportunity to get its house in order and allow it to stabilize its
affairs. In so doing, the company’s creditors are more likely to, ultimately, be
paid in full.
The second cause of Chapter 11 filing is to allow the company to deal with a
catastrophic legal verdict. Celotex, Dow-Corning, Johns-Manville, etc. have
found this route beneficial after losing legal decisions related to health concerns
tied to their products. Many times, meeting these legal obligations would prevent
the company from continuing as a functioning business.
2. Doesn’t the stigma of being bankrupt damage the company’s reputation and
business?
No one wants to declare bankruptcy, but nearly 1.5 million (individuals and
businesses) did in 2011. Of course, this might influence consumer behavior. On
the plus side, however, most consumers just want a good product at a fair price.
A company under the protection of Chapter 11 is probably more able to meet
consumers’ needs than one struggling to meet its daily obligations.
3. How does bankruptcy affect the publicly held company’s relationship with
the SEC?
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The Securities and Exchange Commission requires “full and complete disclosure
of any material fact in a timely manner.” Thus, any bankruptcy filing, any
petitions for relief, any change in a company’s financial structure, any shift in
business direction, any change of leadership, etc. would have to be fully
disclosed to the investing public and to the SEC. The SEC’s prime role is
protecting the interests of equity investors, and it is in the best interests of those
investors to see the company emerge from bankruptcy as a thriving entity.
Therefore, the SEC would not put unreasonable demands on a company in
bankruptcy.
4. How can a reputable company “take bankruptcy” and avoid its legitimate
debts and obligations? Is this good PR?
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communities in which it operates. Never is good communication more important
than in a bankruptcy situation.
Case 5-2
AFLAC GIVES SHAREHOLDERS A SAY ON PAY
Aflac promotes its name with a large, loud duck screaming its name. But it attracted
attention from the financial community with its initiative to invite shareholder input on
executive compensation. Its groundbreaking efforts set the stage for many other
companies to follow.
Being first usually gives an organization a leg up on the competition. It’s up to the
organization to not squander the lead. In Aflac’s case, it stepped out at a time when there
was intense interest—in the media, with social critics and financial types—in executive
compensation and the widening gap between what the CEO took home versus what the
average worker was paid. By leading the way, Aflac established itself as a leader, as an
organization open to new ideas, as a company unafraid to address the tough issues, and
by some accounts, a good company to employ or in which to invest.
2. In terms of media strategy, what role did third parties play in the Aflac Say-on-
Pay episode?
Third-party endorsements have long been a valuable tool of the public relations trade.
Getting publicity via media placement was valued because of its supposed “third-party
endorsement.”
Aflac was able to get that same boost from Boston Common and other shareholder
advocacy groups. Partnering with a respected advocacy group increased the credibility of
Aflac’s actions because Boston Common has no profit motive, but rather is there to look
after the interests of the public. People are more inclined to accept concepts that come
from those with no axe to grind.
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3. How did Aflac’s Corporate Communications team extend favorable national
business media coverage over a period of nearly two years based on a single
corporate announcement?
So, Aflac was able to keep something new and interesting on the table. Making the CEO
available, adding credible partners, and introducing new topics such as the
announcements leading up to the vote all helped keep Aflac’s story alive and well for a
long time.
4. Regarding corporate reputation, what are the lasting effects of such a flurry of
positive business media coverage?
The durability of any public relations program lies in its continuing influence. If Aflac
had made one announcement and let it die, the corporate reputation would have received
a momentary boost, then interest would have waned.
By being a leader, by keeping the story alive, and by continuing to be an opinion leader
on the subject of executive compensation, Aflac was able to keep its halo on.
5. Why did the Corporate Communications team insist that the CEO be the lead
spokesperson on this initiative? Why not the CFO? Or the COO?
Having the CEO as a corporate “face” on this issue was a good tactic because it was his
compensation that was being considered. He could have hidden behind his personal
interests being at stake, but by not doing so, he gave more weight to the company’s
commitment to transparency and fairness. It helped that he was a facile communicator,
something that always has to be considered before putting a CEO on the stump.
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Case 5-3
MONEY SMART WEEK: GETTING AMERICA TO SPEND WISELY
The crash of 2008 will probably affect modern Americans as much (and as badly) as the
Crash of 1929 impacted our grandparents and great-grandparents. No one escaped the
ravages of lost jobs, lost homes, lost savings, and dashed hopes and dreams.
How and why the crash happened will take years to sort out, but some obvious clues
come from a review of personal spending: people bought houses and other things that
they could not afford to pay for over the long haul. The “instant gratification” generation
saw its chickens come home to roost in a painful and permanent way.
Hoping to get Americans to make better decisions with money was the purpose behind
the Chicago Fed’s efforts to create “Money Smart Week.”
Every planned program of public relations needs to have specific, measurable goals
stated in terms of what behavior the program is supposed to elicit from primary publics.
Unfortunately, many PR efforts miss this important step.
In this case, the measurement was more related to awareness than outcomes. It is good
that thousands of people attended, and that media found it newsworthy, but without
specific, measurable goals to track, the behavioral impact is unknown.
The Fed could have set some behavioral standards—reduced unemployment, more
savings or investing accounts, for example—then it would have had something to
measure and evaluate.
2. Do you believe this program alone can impact the Fed’s reputation or the
reputation of the financial industry in general?
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Again, if enhancing the reputation of the Fed is a goal, then the existing reputation needs
to be established via research and then measured after specific time periods to see if the
needle has moved forward.
Certainly, one program can’t do all the work. But if Money Smart is part of a larger,
overall effort, then it can certainly contribute to a more positive atmosphere for the Fed
and the industry in general.
3. What social media sources would you recommend it adopt and how would
you suggest they be used?
This program was firmly rooted in “traditional” media from the start. That’s not a bad
thing, because the money-management audiences it was addressing were likely not fully
engaged in social media. But as the community moves away from print, and younger
audiences become part of the primary public for Money Smart, the Fed is going to have
to include social media if it expects to bring these new audiences into the program.
The problem is, social media is such a flexible, dynamic entity, what works today might
be outdated by the time it is included in the program. Look how quickly My Space
became nearly obsolete!
Future generations of Money Smart would be wise to include younger input in any future
plans to be sure social media are (a) part of the plan, and (b) relevant to the audiences
being targeted.
Probably not. Any public program might want a sponsor, and Visa certainly has a high
profile and deep pockets. Most consumers have multiple credit cards (and debit cards) so
having one of the industry leaders has a marketing partner shouldn’t harm credibility.
Having said that, if the Money Smart program becomes an advertisement for Visa, then it
loses all credibility.
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Case 5-4
WHEN ACTIONS OF A FEW CAN LEAD TO ORGANIZATIONAL FAILURE;
WHAT IS PR TO DO?
In tackling the world of investor relations, practitioners are faced with a different class of
information and communication obstacles, which require a new school of public relations
that is specific to investor relations.
Like those outside the financial arena, stockholders and investors need effective and open
communication in order to operate successfully, and consequently, they have a need for
public relations practitioners.
1. What if the TSG case happened today? How might things have been handled
differently with today’s technology? Do all the recent “insider trading”
scandals make this case seem less or more problematic?
This case wouldn’t have happened in today’s modern media climate. The rules are much
more precise and well-defined. Social media would have made this a hot topic, one
which any company would have recognized the need to speedily address. The SEC
would have more access to facts, rumors, reports and comments from company officials.
With the recent emphasis on catching and punishing insider trading, no company today
would allow insiders to trade on material information yet unreleased to the public.
Today’s electronic police would have spotted the trades and kicked them back.
Yes, violations do still occur, and people probably get away with sophisticated insider
trading, but it’s harder to get away with it now.
This scenario is not fictitious. Years ago, a printer whose company printed copies of
Business Week realized he had prior knowledge of which companies and stock were
going to be favorably reflected in the weekly pages of BW. He made some trades, made
some money, but eventually got caught and lost his job and his reputation.
Anyone who trades on material information yet unreleased to the public is subject to the
penalties of the SEC and the law. Anyone in the “stream” of information is subject to the
law. Making a profit isn’t what the law is about. The goal of the regulations is to keep
insider trading from happening. Anyone who abets insider trading will have to answer
for his or her actions.
3. Objectively, was the initial TGS news release about the ore strike at
Timmins misleading based on what was known at the time the news was
released? Or did it go only as far as a cautious, prudent management was
willing to go for fear of overstating and getting in trouble for that? Or, what
else does your objective evaluation say might have been the determining
consideration?
Who knows what was in the hearts of the people who signed off on that release? Absent
that information, one can look at what was said, weigh it against what is known now, and
see that the release did not come close to being accurate.
Looking back on the time when the release was issued, it’s hard to believe that the
management team at TGS didn’t know there was a high likelihood of there being a major
ore strike in the offing. Was management being cautious or misleading? Again, no one
knows. But executives with knowledge of what was in the ground were buying stock.
That should tell something about what was known and when it was known.
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4. A reputation for being honest in economic matters, civil in social relations,
and honorable in character has long been said to be a precious and fragile
possession. And the reputation of communications people is generally
perceived by critics and supporters alike as being a reflection of those they
serve and associate with. If we accept both premises, how can we stay clean
and honorable, earn a good living, and advance in a career when we are cast
in an atmosphere that many moralists, historians, intellectuals, journalists
and some government officials describe as a “moral morass”?
The principle behind professional ethics is that one’s actions are designed to create
the greatest good for both the client and community as a whole, rather than to
enhance the position and power of the practitioner. With this in mind, public relations
professionals must, at all times, ensure that their actions are ethically (and
professionally) correct. While it is difficult to stay “clean and honorable” in an
environment that is morally lacking at times, the PRSA Member Code of Ethics gives
us a guide for what is acceptable, and reminds us of our moral obligation to society,
above anything else.
If, indeed, public relations falls into that “moral morass” atmosphere, the challenge of
maintaining ethical standards of practice is even greater. By applying the Golden
Rule of “do unto others as you would have done unto you,” the public relations
practitioner could set an example by exhibiting morally and ethically prudent
business behavior. The only way to shake a negative stigma is to practice positive
behavior, and if public relations practitioners set the trend, it is likely that other
professions would follow. It is important to note that the pendulum is now beginning
to swing the other way. Where business practices once involved a general disregard
for the common good when it interfered with private gain, that is not the rule
anymore. Corporations and individuals alike are discovering a need for social
consciousness and responsibility, and that need is well served by ethical and
honorable actions. Public relations could take a leading position in this movement,
thus serving the community and simultaneously disproving the notion of the “moral
morass.”
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Problem 5 - A
CAN AN ANNUAL REPORT PLEASE EVERYONE?
This question asks students to plan for an annual report, taking into account the divergent
interests of the CEO, the heads of operating division, and the systems analysts.
After the answers to these questions have been gathered, one thing to keep in mind while
preparing the report is to start early in planning.
The answers to this question will vary depending on what company is selected by the
student. Some considerations they should take into account:
Examine the approval process of the report. Are there any areas where there are
unnecessary or multiple approvals of the content of the report? Eliminate any of these
redundancies. Another effort that can reduce the cycle time of the report is to transmit
it electronically to the typesetter.
Problem 5 - B
HERE COMES THAT MAN NADER, AGAIN
This problem describes a delicate situation in investor relations. While you do not want to
brush off this woman’s concern about the policies of your corporation, you also do not
want to promise policy change that cannot be followed through. There are a few details to
take care of before writing a response to this disgruntled stockholder.
1. One initial task after receiving the letter is to check on the validity of her claim.
Make sure she is an investor in your organization. Large or small, any investor can
start a proxy fight, and stir up government officials or the media.
2. Identify the particular problems that she and the writers of the “Hall of Shame”
article have identified as unethical, illegal, and short-sighted actions.
3. Talk to the president. Discuss those problems and what can be done about them.
Find out what he has to say about them before writing your response.
4. Get a commitment from the president that some action will be taken to rectify those
issues that contribute to the negative image your company has been given.
5. Consider speaking publicly (or having the president speak publicly) about the article
and the negative publicity it has given you. Though you need not reference the
article itself, you can focus on the positive steps your organization is taking to
rectify these issues. This may head off any further letters from unhappy
stockholders.
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The actual letter written to the disgruntled stockholder should be to the point and accept
responsibility for the company’s actions. It should include a thank-you for her concern
and a response to her impressions of the company. Any action steps that the president has
committed to in rectifying the situation should be outlined in brief here.
Problem 5 - C
PLANNING THE ANNUAL MEETING WITH A TWIST
Planning the annual meeting is a large task to take on, but with the added information that
will need to be communicated, you realize that you have a huge job on your hands. This
merger will have a significant effect on many aspects of the corporation. First, it will be a
larger operation. As you are already a leader in the industry, this merger will put your
company at the top and possibly put it in the Fortune 500. Second, the company will
expand its services and products and will have to make changes internally to support the
new business that it will be taking on. Job descriptions will need to be changed, as well as
departments consolidated so that they may become more cohesive as to what their new
concentration will be. Third, many jobs will be eliminated from both companies to
complete the final merger. Some of the company’s shareholders are employees; they
might lose their jobs in this process.
Knowing all of this, how will you communicate this information to shareholders at the
annual meeting? Would you make a presentation to employees separate from
shareholders and allow them to voice their concerns? What media outlets would you use
to relay this information to the public outside of the company? In what sequence would
you release this information?
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Public relations practitioners often play the role of interpreter or mediator in situations
like these. What recommendations will you make to the CEO that might help her present
this news in a positive light?
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Another random document with
no related content on Scribd:
L’auteur, qui faisait ses visites aux loges, n’entra pas dans le 15,
où Mme de Juxanges, en larmes, disait à sa compagne de loge, la
miss institutrice du trois :
— Je n’ai eu… je n’ai eu… mon texte… qu’il y a sept jours…
Amateurs de théâtre
L’AUTEUR.
LE DIRECTEUR.
OMER, premier rôle.
SCÈNE PREMIÈRE
L’AUTEUR, LE DIRECTEUR
(Dans le cabinet du directeur)
SCÈNE DEUXIÈME
L’AUTEUR, OMER
(Sur le plateau)
L’Auteur. — Écoute, je n’aime pas beaucoup ce que le patron
t’a demandé de faire hier…
Omer. — Il faut le lui dire, mon vieux ! C’est à moi que tu dis ça ?
Tu as fait ta pièce. Tu as le droit de la faire jouer comme tu l’entends.
L’Auteur. — Il est tellement susceptible ! Si c’était plutôt toi qui
lui disais que tu ne sens pas la scène comme ça ?…
Omer. — Alors, c’est à moi qu’il en voudra. Je ne marche pas.
L’Auteur, résigné. — Il changera peut-être d’avis tout seul…
Omer. — Plus sûrement, en tout cas, que si on lui fait la moindre
observation.
SCÈNE TROISIÈME
OMER, LE DIRECTEUR
(A l’avant-scène, pendant que l’auteur est en conversation avec une petite
interprète, au fond du plateau.)
SCÈNE QUATRIÈME
L’AUTEUR, OMER, LE DIRECTEUR, PLUSIEURS AMIS
(Après la répétition générale. Des applaudissements assez copieux ont salué le
nom de l’auteur. Il est venu du monde sur le plateau en assez grand nombre, et
les compliments, assez abondants ont paru assez sincères. Sur la scène, on
croit assez au succès. L’auteur y croit peut-être un peu trop.)
ÉPILOGUE