Using Communications to Manage Risk in a Resetting Economy December 3, 2009
About Us <ul><li>Integrated, full-service firm </li></ul><ul><li>Twice named nation’s best mid-size firm </li></ul><ul><li...
Diverse Client Base
Dix & Eaton’s Investor Relations Practice <ul><li>Client services include: </li></ul><ul><li>Shareholder communications  <...
The Impact of Investor Relations <ul><li>Effective IR programs are believed to contribute a median premium of 10 percent o...
Investor Relations Trends to Watch in 2010 <ul><li>The economic recovery </li></ul><ul><ul><li>Will companies with increas...
Investor Relations Trends to Watch in 2010 <ul><li>The use of social media tools for IR purposes </li></ul><ul><ul><li>Dis...
Thoughts on Preparing for Proxy Season 2010 <ul><li>Recent changes have tipped the balance away from management to shareho...
The Trend in Activist Attacks <ul><li>Proposals intended to enhance shareholder value are increasingly about  accountabili...
Thoughts on Preparing for an Activist Attack <ul><li>Establish a team of relevant outside advisors: legal counsel, IR coun...
The Case for Crisis Communications <ul><li>“ During the next five years, 83 percent of  companies will face a crisis that ...
Our View of Crisis Communications <ul><li>Be at your best when times are their worst </li></ul><ul><li>Effective crisis ma...
Our Approach to Crisis Communications <ul><li>Why Communicate During a Crisis? </li></ul><ul><li>If you don’t, someone els...
Representative Assignments <ul><li>Colgan Air – Crash of Flight 3407 </li></ul><ul><li>Delek U.S. – Refinery explosion </l...
Crisis Trend to Watch in 2010 <ul><li>The impact of social media on crisis management </li></ul><ul><li>Yesterday, crises ...
Case Study: Domino’s Pizza  YOUTUBE THE WALL STREET JOURNAL
Speaker Information <ul><li>Rob Berick </li></ul><ul><ul><li>Managing Director and Investor Relations practice leader </li...
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Using Communications to Manage Risk in a Resetting Economy

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Using Communications to Manage Risk in a Resetting Economy

  1. 1. Using Communications to Manage Risk in a Resetting Economy December 3, 2009
  2. 2. About Us <ul><li>Integrated, full-service firm </li></ul><ul><li>Twice named nation’s best mid-size firm </li></ul><ul><li>Among largest employee-owned firms in U.S. </li></ul><ul><li>Two-thirds of professionals over 10 years of experience </li></ul><ul><li>Founded in 1952 </li></ul><ul><li>Specializing in IR & Crisis Communications </li></ul><ul><ul><li>Serve as outsourced IR department for many </li></ul></ul><ul><ul><li>Member of Chartis CrisisResponse ® network </li></ul></ul><ul><li>Long-term partners – still retained by two-thirds of existing 1990 clients </li></ul><ul><li>Senior-management orientation, high-stakes/ high-impact experience </li></ul>
  3. 3. Diverse Client Base
  4. 4. Dix & Eaton’s Investor Relations Practice <ul><li>Client services include: </li></ul><ul><li>Shareholder communications </li></ul><ul><li>Investor targeting </li></ul><ul><li>M&A/IPO communications </li></ul><ul><li>Proxy contests/shareholder activism </li></ul><ul><li>Bankruptcy communications </li></ul><ul><li>Investor perception studies </li></ul><ul><li>IR Web sites/digital strategies </li></ul><ul><li>Annual reports </li></ul><ul><li>IR training </li></ul><ul><li>IR function development and assessment </li></ul><ul><li>Employee education </li></ul>
  5. 5. The Impact of Investor Relations <ul><li>Effective IR programs are believed to contribute a median premium of 10 percent of valuation, while ineffective IR programs are thought to cost a median discount of 15 percent to valuation . </li></ul><ul><li>- Rivel Research, 2007 </li></ul>
  6. 6. Investor Relations Trends to Watch in 2010 <ul><li>The economic recovery </li></ul><ul><ul><li>Will companies with increasing revenues outnumber companies filing for Chapter 11 protection? </li></ul></ul><ul><ul><li>What is the proper role of the Board in corporate risk management going forward? </li></ul></ul><ul><li>The impact of the ongoing political and legislation focus on risk oversight </li></ul><ul><ul><li>What constitutes a “red flag” and what constitutes “conscious disregard” will come under greater scrutiny </li></ul></ul><ul><li>The way companies raise capital </li></ul><ul><ul><li>Private placements, IPOs, 144A’s, credit facilities </li></ul></ul>
  7. 7. Investor Relations Trends to Watch in 2010 <ul><li>The use of social media tools for IR purposes </li></ul><ul><ul><li>Disclosures v. dissemination </li></ul></ul><ul><li>The evolution of the proxy season </li></ul><ul><ul><li>From contests to campaigns </li></ul></ul><ul><ul><ul><li>Elimination of broker discretionary vote </li></ul></ul></ul><ul><ul><ul><li>Executive compensation and “Say on pay” </li></ul></ul></ul><ul><ul><ul><li>Proxy access </li></ul></ul></ul><ul><li>The rise in activism </li></ul><ul><ul><li>No longer just the work of activist hedge funds </li></ul></ul><ul><ul><li>No longer reserved for only large-cap companies </li></ul></ul><ul><ul><li>Issues will range from governance to environment </li></ul></ul>
  8. 8. Thoughts on Preparing for Proxy Season 2010 <ul><li>Recent changes have tipped the balance away from management to shareholders </li></ul><ul><ul><li>Undertake an annual governance audit of Board and corporate-wide policies/practices </li></ul></ul><ul><ul><li>Seek regular feedback from institutional investors on corporate governance policies/issues </li></ul></ul><ul><ul><li>Meet with institutional compliance officers early on to communicate management proposals/changes in policies and to address shareholder proposals </li></ul></ul><ul><ul><li>Pay attention to and address governance trends before they manifest into a shareholder proposal </li></ul></ul>
  9. 9. The Trend in Activist Attacks <ul><li>Proposals intended to enhance shareholder value are increasingly about accountability </li></ul><ul><ul><li>Board presence </li></ul></ul><ul><ul><li>Sale of company or assets </li></ul></ul><ul><ul><li>New management team </li></ul></ul><ul><ul><li>M&A bid </li></ul></ul><ul><ul><li>Elimination of defense mechanisms </li></ul></ul><ul><li>Use aggressive actions – including sophisticated communications strategies – until a settlement is reached with the company or the proposal is contested through a proxy solicitation </li></ul><ul><ul><li>Going public with letters to the Board, progressive SEC filings, rumor mongering, press releases/story placements, promoting churn in the stock </li></ul></ul>
  10. 10. Thoughts on Preparing for an Activist Attack <ul><li>Establish a team of relevant outside advisors: legal counsel, IR counsel, proxy firm, financial advisor </li></ul><ul><li>Develop a contingency communications plan </li></ul><ul><li>Identify and be aware of triggering events </li></ul><ul><li>Actively monitor shareholder base, accumulations, market intelligence </li></ul><ul><li>Know and understand current shareholder perceptions, motivations </li></ul><ul><li>Mobilize credible third-party testimonials </li></ul><ul><li>Leverage credibility with investors, media, regulators, communities, employees </li></ul><ul><li>Be willing to listen and negotiate prudently, when appropriate, to give the Board time to fully exercise its fiduciary responsibilities </li></ul>
  11. 11. The Case for Crisis Communications <ul><li>“ During the next five years, 83 percent of companies will face a crisis that will negatively impact share price between 20 and 30 percent.” - Oxford-Metrica </li></ul>
  12. 12. Our View of Crisis Communications <ul><li>Be at your best when times are their worst </li></ul><ul><li>Effective crisis management will: </li></ul><ul><ul><li>Preserve customers </li></ul></ul><ul><ul><li>Retain employees </li></ul></ul><ul><ul><li>Minimize sales losses </li></ul></ul><ul><ul><li>Reinforce stakeholder trust </li></ul></ul><ul><ul><li>Reassure the community </li></ul></ul><ul><ul><li>Positively influence media coverage </li></ul></ul><ul><ul><li>Create powerful allies </li></ul></ul><ul><ul><li>Shorten the duration of a crisis </li></ul></ul>
  13. 13. Our Approach to Crisis Communications <ul><li>Why Communicate During a Crisis? </li></ul><ul><li>If you don’t, someone else will </li></ul><ul><ul><li>Absent facts, rumor and speculation will fill the void </li></ul></ul><ul><li>Balance views of groups critical of the company or its activities </li></ul><ul><li>Demonstrate organization’s concern for employees and community </li></ul><ul><li>Key stakeholders receive information from the media </li></ul><ul><li>Demonstrate the successes of the company’s response </li></ul><ul><li>Building public support = less public pressure on regulatory agencies/elected officials to get tougher, demand more </li></ul><ul><li>Help defuse conflict and lower total project cost </li></ul><ul><li>Avoid the perception of a failed response </li></ul><ul><li>Help preserve your brand and reputation </li></ul>
  14. 14. Representative Assignments <ul><li>Colgan Air – Crash of Flight 3407 </li></ul><ul><li>Delek U.S. – Refinery explosion </li></ul><ul><li>Designer Shoe Warehouse – Credit card data theft </li></ul><ul><li>Lincoln Electric – Class-action defense </li></ul><ul><li>AkzoNobel/Glidden – Plant closure and lead paint litigation defense </li></ul><ul><li>Kelly Services – CEO transition and incident management </li></ul><ul><li>Energizer Battery – Toxic chemical spill </li></ul><ul><li>Pinnacle Airlines – Breach of contract </li></ul><ul><li>UnitedHealthcare – Hospital contract termination </li></ul><ul><li>International Coal Group – Sago Mine accident </li></ul><ul><li>Northwest Airlines – Mechanics strike and bankruptcy </li></ul>
  15. 15. Crisis Trend to Watch in 2010 <ul><li>The impact of social media on crisis management </li></ul><ul><li>Yesterday, crises were carried via traditional media, meaning breaking news reports had to be written and moved on a news wire by reputable journalists and camera trucks sent to the scene   </li></ul><ul><li>Today, social media can deliver news about a crisis by watching a live video feed uplinked from an employee or passerby's cell phone directly to CNN </li></ul><ul><li>So what can you do to get ready? Here are a few tips : </li></ul><ul><ul><li>Evaluate your online presence </li></ul></ul><ul><ul><li>Have a monitoring service on standby for an emergency </li></ul></ul><ul><ul><li>Have a social media policy in place </li></ul></ul><ul><ul><li>Make sure you can communicate swiftly </li></ul></ul><ul><li>Being prepared is no longer just about having a crisis manual on your shelf and trained spokespeople – it’s knowing how to react in real time </li></ul>
  16. 16. Case Study: Domino’s Pizza YOUTUBE THE WALL STREET JOURNAL
  17. 17. Speaker Information <ul><li>Rob Berick </li></ul><ul><ul><li>Managing Director and Investor Relations practice leader </li></ul></ul><ul><ul><li>216.241.4611 </li></ul></ul><ul><ul><li>[email_address] </li></ul></ul><ul><li>Matt Barkett </li></ul><ul><ul><li>Managing Director and Crisis Communications practice leader </li></ul></ul><ul><ul><li>216.241.3073 </li></ul></ul><ul><ul><li>[email_address] </li></ul></ul>

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