Insights into Investor Relations

“Dear New Shareholders: It is my privilege to welcome you to the fast-growing ranks of Citicorp investors . . . between you and me and the ATM, we probably wouldn’t have made it without your help.”
 
Thus writes the tongue-in-cheek Antony Currie in Breakingviews.com, who observes that, within a few short weeks, 148 million U.S. taxpayers will each gain a solid ownership stake in the sprawling and deeply troubled giant. Curry notes (as we did back in April) that this new, huge investor audience might be advised to pack their own breakfast when shareholders meet in about nine months. Last year, to shave costs, Citicorp eliminated the customary bagels and coffee. More troubling, however, it also severely restricted the scope of its annual report, so that all you got was a 10K wrap. (You want a little context? Get it yourself.)

As I wrote then, squeezing the annual, and investor communications in general, saves little money while eliminating an absolutely vital channel for building engagement. I cited studies that show that investors are swayed by narrative as well as numbers, that they want management to communicate more, not less, about their companies and industries.

“ ...corporations demand that they remain at their accustomed comfort and luxury levels of the feeding frenzies ... They refuse to budge an inch ... It will be their extinction ... Their insatiable greed and lust for money will essentially pull down the whole global economy, and all of us ... Everyone loses ... You’ll see ...” —one voice among millions, http://www.stopthehousingbailout.com

With four-million-plus Google results for the key words “bail out” — whether you’re for or against it — the one thing that is clear is that the hundreds of financial-services and insurance companies have a major turn-around in front of them.

It’s one thing to have to take on the financial TARP transfusion and be able to recirculate those funds back into the economic pipeline. Make no mistake, that feat alone will be a difficult one to achieve. It’s another thing to have your existing customers feel enough assurance to stick with you and to convince new ones that you’re worthy of their trust.

You have to admit, it must be tough to be in Vikram Pandit’s shoes. Imagine facing investors as the CEO of Citigroup, poster child for the financial collapse, defending the indefensible. Nevertheless, the show must go on, and this means a show of frugality at the annual shareholders meeting — no coffee, no donuts, no logo-shaped cookies, no lapel pin giveaways and especially no glossy annual report.