where one million stakeholders tuned-in to the webcast. The webcast discussed several topics about GE, its 2007 Annual Report, the market and the outlook for the company. GE conducts over 350 investors meetings per year many of which are through webcasts (Snider, 2008c). Imagine what kind of logistics will be required to host one million delegates for a meeting!!
e. E-Proxy
We are living the e-era. The letter “e” is added to many familiar words denoting the use of the internet as a means of delivery. For example, e-Commerce refers to carrying commerce using the internet whereas e-Government refers to the delivery of government services using the internet such as visa issuance and utilities bills payment.
In the arena of IR, the letter “e” has been added to the word Proxy to form the term “e-Proxy.” Companies use e-Proxies to deliver Annual General Meetings materials to their shareholders instead of physical documents sent by surface mail. In most cases, the e-Proxy is made available through companies’ websites.
The e-Proxy provides companies with several benefits including cost savings on printing and shipping costs of materials. For example, United Technologies Corporation estimates that it saved around USD One Million on such costs (DeMars, 2007). Microsoft, Sara Lee and Pharmos, all US-Based companies, have all reported six figures savings of American Dollars using E-Proxies (IR Magazine, April 2008). In addition, companies are likely to see an increase in voting speed and more participation by shareholders. The US SEC reported that 10.7 million shareholders agreed to receive e-Proxy materials electronically and 88% of votes made in 2006 were made through e-Proxies (DeMars, 2007). These relatively high figures in USA are likely to been seen in other parts of the world in the near future.
It should be noted that the US Securities & Exchange Commission has already made it mandatory to make the proxy materials available on the internet with effect of July 1, 2007. (Securities & Exchange Commission, 2007).
1.7 Conclusion
Investor Relations (IR) refers to how companies reach out to the financial community in general and to companies’ respective shareholders in particular. IR emerged in the 1960’s in USA due to the great pressure exerted by Institutional Shareholders on listed companies to provide them with timely and strategic information. Then, it emerged in the UK and Europe.
According to different surveys, the IR Function importance has increased over the years; that is why now many companies have a dedicated IR Department to handle their IR activities. There are several reasons that affect the organization of IR Department including the size of the company, overseas listings, regulatory requirements and the continuing increase in sophistication of the world’s capital markets.
In one study, IR Function was viewed as a strategic function within companies. This is confirmed by the fact that IR Professionals communicate with CEO’s, CFO’s and Board Members frequently which clearly indicates the importance companies attach to IR.
IR Professionals are involved in different activities including organizing and attending meetings with investment analysts, credit rating agencies and investors. In addition, they report IR Activities to the Executive Committees and the Board of Directors. Effective IR Practices have a direct positive effect on companies’ market capitalization and shares fair valuation. One company increased its capitalization from USD 300 Million to USD 3.3 Billion over a period of six years using effective IR Practices.
Finally, the internet has a great impact on the development of new IR tools that help companies reach a greater number of shareholders in a timely manner and save costs simultaneously. Companies’ websites play an important role in reaching to current and potential investors. Websites are dynamic and can be changed instantly unlike printed materials.
Companies started publishing their Annual Reports online through their websites and some companies use Video Annual Reports to communicate to the financial community. Other companies added the usage of blogging and webcasting to reach out to more stakeholders. In USA and UK, companies are distributing proxy materials using their website to increase the participation of shareholders in Annual Shareholders Meetings.
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