NIRI White Paper: The Annual Report


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National Investor Relations Institute White Paper on annual reports (09/2013).

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NIRI White Paper: The Annual Report

  1. 1. © 2013 National Investor Relations Institute 225 Reinekers Lane, Suite 560 Alexandria, VA 22314 (703) 562-7700 The Annual Report By Ariel Finno, Director-Research ( Matt Brusch, Vice President-Communications and Practice Information A NIRI White Paper
  2. 2. NIRI White Paper: The Annual Report © 2013 National Investor Relations Institute Overview Annual reports (AR) are in-depth, specific and complete products about a public company’s activities throughout the past year. Typically, they are created with the intention of giving stakeholders, potential investors, the media and the general public information about company activities. In the last decade they have increased as one of many marketing tools a company utilizes to highlight their keenest assets. Although for some company’s creating an annual report is optional, many choose to do so regardless, for the reasons noted above. Any information, be it financial or otherwise, that may be of interest to shareholders or the public might be included in a company’s annual report. While not alternatives to the annual report, Form 10-K’s (which are more detailed than a traditional AR) are filed with the Securities and Exchange Commission (SEC), while an annual report is distributed to shareholders. In recent years a shorter version of the more traditional AR, called a 10-K Wrap (“Wrap”, or “Wrap report”) have been distributed by some companies in lieu of a longer, more detailed report. As technology transforms the investor communications process, the production, dissemination and costs associated with the traditional annual report have received increasing scrutiny. Responding to this trend, in 1995 the National Investor Relations Institute (NIRI) developed a comprehensive survey research program designed to measure change in how corporations develop and distribute the Annual Report to their investment community constituencies. Annual reports are a significant investment for many companies and a key communications vehicle for investor relations officers. NIRI tracks trends in annual report practices in order to help organizations benchmark against their peers. NIRI’s objective with the Annual Report effort is to articulate trends impacting this important investor relations tool. Trend analysis can reveal how these different aspects of the annual report have evolved over time.1 NIRI Research NIRI has conducted an Annual Report Survey on a biennial basis for the past 17 years. With recent and projected regulatory changes and rapid technological advances, the goal of the NIRI Annual Report Survey is to present a history of past practices, a snapshot of current trends and perhaps a small window into the future of the annual report. 1 Previous NIRI work in this area includes the 2008 Annual Report Survey.
  3. 3. © 2013 National Investor Relations Institute NIRI Annual Report Surveys typically detail particular annual report practices including:  Design and types of materials included in AR  Development and key leaders in production across company departments  Annual report production  Distribution  Overall and specific budget items costs  Assessment of AR by type of format  Roles and responsibilities  Company and individual demographics In 2010, the National Investor Relations Institute (NIRI) surveyed corporate members on key annual report subjects2 . 2010 Key Findings  Respondents’ average annual report (AR) print budget was approximately $103,000, down from $156,000 in 2008.  The average cost per printed annual report copy was $7.69 versus $6.62 in 2008.  The median budget was $60,000, down from $97,500 in 2008.  The median per copy cost was $4.82 versus $4.32 in 2008.  The average online annual report budget was roughly $11,800, down from $17,000 in 2008.  49% of those producing an online annual report indicated no incremental production costs for this version, compared with 28% in 2008.  57% of respondents work with the same firm for their print and online annual report.  10-K wraps remain the most popular annual report format. Among respondents printing an annual report, 66% printed a 10-K wrap, 31% produced a traditional AR, and 10% produced a summary AR. In 2008, these figures were 53%, 35% and 12%, respectively. NIRI again studied this subject in 2012 in order to assess the current utilization of annual reports, and to extend trend data on industry practices. In January 2013, NIRI released a report announcing the results of its survey of corporate investor relations practitioner members.3 2 NIRI’s Annual Report Survey Shows Further Budget Pressures. 3 NIRI Annual Report Survey-2012.
  4. 4. © 2013 National Investor Relations Institute 2012 Highlights  The percentage of respondents tracking the effectiveness of their printed AR continues to increase. The percentage of those who reported assessing and monitoring printed AR effectiveness rose to 44% from 39% in 2010, and 25% in 2008.  In lieu of a traditional annual report, respondents continue to utilize alternative annual report formats such as the Summary Annual Report and the 10-K Wrap.  In 2012, 43% of all annual reports printed were 101 pages or longer, whereas in 2004, it was 19%.  The median budget for preparation and printing of annual reports was $65,000. In 2012 print budgets saw a small increase of 2%, after four years of decline and adjusting for inflation.
  5. 5. © 2013 National Investor Relations Institute More Information For complete survey results, please visit, or contact Ariel Finno, Director of Research, (703) 562-7678, About the National Investor Relations Institute Founded in 1969, the National Investor Relations Institute (NIRI) is the professional association of corporate officers and investor relations consultants responsible for communication among corporate management, shareholders, securities analysts and other financial community constituents. The largest professional investor relations association in the world, NIRI’s more than 3,300 members representing over 1,600 publicly held companies and $9 trillion in stock market capitalization.