crossbordergroup

We are not alone

Rest assured I'm not getting all Tom Cruise on you. I am not weird and I haven't been spending my evenings holed up in observatories scanning the skies for extra terrestrial life forms. Instead, I'm picking up on David Blackwell's comment piece on small caps in today's Financial Times.

The message: a bit of IR goes a long way.

Blackwell flags up software firm Datacash Group. It posted a blinding set of results this week, but when the analysts called up for a chat and some more meat on the bones there was no one on hand to answer the phone.

The result: misery. The company missed out on securing favorable press coverage and bumping up its share price. Deputy chairman David Bailey reportedly leapt to his company's defense. The board was too busy meeting institutions, he said, to answer to other investors on results day.

But how hard would it be to brief someone to do that for them? It seems like such a shame to spend all that time creating value if there's no one around to spread the good news.

So there you go, we’re not the only ones who think ongoing market communication is worthwhile.

Clare Harrison
Deputy international editor
IR magazine

Travel tip

Are plane tickets to Iceland cheap right now? I haven’t checked, but I should, because it’s one of the few places local currency is down against the US dollar. Of course it was always expensive there anyway, and the attitude will no doubt be melancholy given the drop in funds for 4X4 truck racing. And Iceland isn't Iceland without the hum of souped-up motor vehicles. Click, and you'll agree.

Despite the devastating effect on risky transport, the subprime mortgage crisis is making a positive impact on accounting rules. FASB announced that it intends to make it a little harder for banks to package and sell off loans. Meaning less chance of being stuck with a bag full of nothing, or in Icelandic terms, a truck without studded hubcaps.

Janine Armin
Associate editor
Corporate Secretary magazine

Bizarre CSR at Tesco

Once upon a time Tesco prided itself on its CSR. In 2004, the British supermarket won a prize for best communication to the financial media at IR magazine’s UK awards. Around 30 city editors and journalists sung Tesco’s praises for being involved in a lot of society and community events. ‘Its corporate social responsibility initiative to help farmers shows how the company can really relate to our local readers,’ remarked one journalist at the time.

Fast forward four years and Tesco’s proud claim to uphold basic human rights has taken a bashing. This week’s papers have reported stories of the company having taken exception to stories written by three Thai journalists. The not-so-super store opted to take them to court for damaging the company’s reputation. The fact one writer is now facing a two-year jail sentence, and the two others fines worth several million US dollars, has done way more harm that the original articles did to Tesco’s reputation and on an international scale.

Fay Sanders
International editor
IR magazine

A perfect proxy?

In its debut year as a public company, RiskMetrics Group, the owner of that hard-to-ignore governance advisory firm ISS, is just out with its first proxy statement. As you may expect, it ticks all the right boxes, outlining a long list of exemplary governance practices.

It’s even a little out there. In a highly unusual move, at least on these shores, RiskMetrics is letting investors know they can have proxy access if they hold at least 4 percent of its common stock for two years.

The company also has a new twist on say on pay, putting forward a proposal to give shareholders three ways to vote on its executive compensation policies. First, investors can say whether they agree with the approach overall. Then, they can give their view on whether the board executed on its principles correctly in 2007 compensation decisions. Third, investors can make a judgment on whether 2008 pay objectives look fine.

They aren’t giving critics much to protest. Indeed, there are no shareholder proposals. Will it last?

Anna Snider
North American editor
IR magazine

‘Same sandbox’

If you are launching an investor targeting effort, you may want to go after some of the big-name private equity houses. They’re taking a greater interest in plain vanilla investments -- shares in public companies.

Just today, it was announced that TPG bought $2 bn in newly issued Washington Mutual (WaMu) securities as the ‘anchor investor’ in a larger offering to shore up the position of the subprime-battered bank. The two sides already know each other: TPG founding partner David Bonderman is a former WaMu director, and now he’s back on the board.

Some observers have pointed out that taking a simple stake in a public company isn’t so unusual for PE firms, especially Bonderman’s which is interested in distressed investments.

But the WSJ’s Deal Journal blogger Dennis Berman writes: ‘This deal is thick with irony.’

And Dealbook’s Andrew Ross Sorkin says in the New York Times: ‘Yes, the buyout kings have been reduced to playing in the same sandbox as the rest of us.’

Anna Snider
North American editor
IR magazine

How to spend it

If ever there was a publication I love to hate it is the FT's 'How to spend it' supplement.

I loathe it from beginning to end. Every page from the smug cover shots of the sickeningly wealthy kitted out in designer golfing gear to the ads for ludicrously expensive gold watches and advice on where to buy the best yacht

But it's no reflection on the journalists that produce it, the very reason I hate it so is precisely because they are doing their job very well.

The fact that I'm so anti the magazine clearly stems from the fact that it is categorically not meant for me. The target audience evidently enjoy bank accounts that are overflowing with cash. So much cash, moreover, that its readers clearly need instruction on 'How to spend it'.

When something is not meant for you, it alienates you. The voice is not one you identify with, it does not resonate with you and it tends to make you switch off. It can patronize, it can confuse and it can come across as downright disingenuous.

And this has relevance for people in communications. If your message is not tailored to its audience, it is lost, rejected, disbelieved even. Too many annual reports turn their readers off because the writers forget their audience. They lose sight of the fact that while they find certain quirky facts and figures fascinating, their intended audience may find them irrelevant.

They try to say too much, if the average reader spends just three minutes reading an annual report it seems utterly fatuous including four hundred plus pages. Before you start writing your annual report, think about it.

Clare Harrison
Deputy international editor
IR magazine

Sorry, Bear Stearns

An apology from Neil Stewart for last night’s ill-considered remarks

Sorry, Bear Stearns, for being rude about you in my opening speech at the IR Magazine US Awards last night.

Sorry to the individual representing Bear Stearns at our event, to whom I also apologized face-to-face almost immediately. I hadn’t stopped to consider how you would be affected by what I said.

Sorry to everyone else whose celebration was marred. I wanted you to have nothing but a fantastic time honoring the best in IR and I deeply regret that you didn’t.

Neil Stewart
Executive editor
IR magazine

How soon is now?

Organizations are eager to amend corporations’ risk management strategies to ensure against another credit crisis. But when is it really safe to make assessments? Sitting on the brink of a recession – not that we’re calling it that – may not offer the best vantage point. Or is this the eye of the storm offering a well-rounded if blurry perspective? Either way, the residue of this burst real estate bubble is still clinging to Wall Street.

Experts think time will bring more perspective to what exactly made it possible for unknown risk to get passed along, profiting those who momentarily held it, ultimately penalizing many more.

A report entitled ‘Observations on Risk Management Practices during the Recent Market Turbulence’ issued by the Senior Financial Surpervisors, a collective of five countries, in response to the Financial Stability Forum, which promotes financial stability, summarizes a review of select firms’ risk management practices.

So while it may be too soon to make any blanket statements or resolutions, the time for discussion is always now.

Janine Armin
Associate editor
Corporate Secretary magazine

Wall Street's loving it

Former Merrill Lynch analyst Henry Blodget, perhaps the most famous casualty of Eliot Spitzer, has posted a link on his ‘Silicon Alley Insider’ blog to the explosive news coverage outlining the New York governor’s apparent connection to a prostitution ring.

But so far, he’s not adding any commentary. Henry, we are desperate for your observations.

In his 2002 crusade against conflicts in the investment banking industry, former AG Spitzer, a.k.a. ‘the sheriff of Wall Street,’ published private e-mails Blodget wrote disparaging certain stocks at the same time his firm promoted them. The discoveries led to Blodget being banned from the securities industry for life.

Meanwhile, Blodget’s readers are guessing at his thoughts in a stream of messages. ‘HA HA HA (times 50,000),’ writes ‘barnburner.’

Anna Snider
North American editor
IR magazine

If you can’t keep the receipt, it’s probably not a business expense

Abusing power is nothing new. Neither is trying to get what you want. And neither, for that matter, is greed. Kind of makes you understand why so many policy makers are pushing for stronger compliance.

Sure, it may be only a $400 ticket to a U2 concert, or one impromptu night on a jet plane, but the facts show that it’s just a hop, skip and a massive lapse in moral judgment for the tally to include female escorts and dwarf tossing. Yes, you heard me. But that was a bachelor’s party, and it was 2005 when everything was so very different. Right.

Get some comfort in the fact that progress is being attempted. The SEC is pressing hard to source misuse, just tying up an investigation into gifts given to mutual funds focused on Peter Lynch, vice chairman and director of FMR CO, Fidelity’s investment management arm. Lynch will remain employed by Fidelity, and the SEC has settled its case accusing him of requesting that traders get him tickets to hot events topping a value of $15,948.

He neither admits nor denies culpability, but will pay the fee with interest and also an $8 million penalty. Scalpers must charge a lot to justify that.

The SEC has also begun administrative proceedings against traders at Fidelity who allegedly received more than $1.5 million in gifts. The idea that mutual fund managers could be bribed to send trades to firms regardless of service is dangerous and it’s not too difficult to think how that might harm investors.

Lynch doesn’t want to be lumped in with the other characters who’ve abused the use of jets etc. And Fidelity will hire an independent consultant to re-examine its policies. Gift-givers too are getting fined.  One such company, Jefferies Group Inc, paid $10 million in 2006 to settle allegations with the SEC.

According to the SEC, Fidelity trader Thomas Bruderman, the ‘bachelor’ at the 2005 bachelor party was gifted ‘a bag filled with illegal drugs.’

He’s no longer with the company.

By Janine Armin
Associate editor
Corporate Secretary magazine