By Ted Allen, Faculty, Executive Master’s in Global Strategic Communications
The idea of balance sheets, earnings reports, and Regulation Fair Disclosure can be intimidating to many corporate communicators. However, for communications leaders to provide their full value to their C-suite or leadership teams, they need to understand how their company makes money and its prospects for the future. In addition, communicators need to understand the key stakeholders outside of their organization, which typically include shareholders, analysts, hedge funds, regulators, bondholders, governance activists, proxy advisors, customers, vendors, and local communities.
Below is a list of the top 10 topics that communicators should know about public companies:
- Know your investment story. You should be able to explain your company’s value proposition in a 30-second elevator pitch. Many companies prepare a one- or two-page summary of key business drivers and corporate messages that can be used in press releases and to prepare for media interviews.
- Know the different parts of a company’s income statement and balance sheet. You don’t need to be an accounting expert, but you should know whom to ask if you have questions.
- Know the key financial metrics that your company is evaluated on. For instance, same-store sales are an important metric for retailers, whereas oil companies are assessed based on their production totals and energy reserves.
- Know your owners. Is the company primarily owned by institutional investors? Is there a significant number of employees or company retirees who hold your shares? Has an activist hedge fund taken a position in your stock?
- Know the diverse concerns of your owners. Do your investors include public pension funds or labor funds that may voice concerns about executive pay or board accountability? Are there investors who want better disclosure on sustainability issues? If the company has bondholders, they often have different concerns than shareholders.
- Know what information is “material” for your investors and what information has already been disclosed. The Securities and Exchange Commission has provided guidance on what’s material, but some determinations will be company-specific. Consult with legal counsel on these matters.
- Know Regulation Fair Disclosure (Reg. FD) and the pitfalls to avoid. Companies may not selectively disclose material, non-public information to analysts or investors—even those shareholders who invested in the company before it went public. When an executive speaks privately with analysts, investors, or the news media, it is prudent to have another corporate representative there to make sure there isn’t an inadvertent disclosure. Even social media posts can violate Reg. FD.
- Know how your company delivers its quarterly earnings information. You should understand how your company gathers its earnings data and play an active role in developing corporate messages and delivering that information to stakeholders.
- Know the competitive landscape. Almost every company has competitors, even though few talk publicly about them. Monitor the news coverage and analyst reports on the companies in your sector. A competitor’s earnings call may give you a preview of the questions that your investors might ask.
- Know what you will do in a crisis. All companies will face a crisis at some point, whether it will be an earnings surprise, a product recall, or a negative presidential tweet. Your organization should prepare a crisis plan in advance and identify the key internal (and external) members of its crisis response team.
-- Ted Allen is the director of regulatory affairs and practice resources at the National Investor Relations Institute (NIRI). He also teaches Impacting Business Success for the executive master’s in Global Strategic Communications program at Georgetown University. You can follow him on Twitter at @tedallenJD.