Overused Words in 2015

The year is coming to a close quickly and reflecting on what we’ve learned in the last 12 monthsuni will hopefully set us up for success in 2016.

Much of our work at PondelWilkinson involves writing, and in the world of investor relations and financial communications, certain words are used more frequently than others in the span of a year.

Following is a top-10 list of the most overused words in 2015, along with (tongue-and-cheek) alternatives for the year ahead.

  1. Disruptive/transformeresque
  2. Unicorn/rhinoceros (two horns are better than one)
  3. Leading/simply the best
  4. Revolutionary/other worldly
  5. Activist/Laird Hamilton (one very active guy)
  6. Deep value/there’s treasure buried in them hills
  7. Emerging/turtle head
  8. Strategic alliance/friends with benefits
  9. Merger/friends with benefits (yes, a repeat)
  10. Consolidation/I crush your head

– Evan Pondel, epondel@pondel.com

For The Love of Polling

think it aboutMedia love polls. Data  helps identify trends that can be turned into stories or support or debunk a particular story narrative.

Polls have become instrumental in helping shape politics. Consider the GOP debates for the 2016 presidential election. Approval ratings are determining what candidate gets national camera time and who doesn’t.

Americans love polls too, unless they are asked, “Would you like to take a brief survey?” We get to find out what is the best-tasting ice cream or coffee, what is America’s favorite color (blue by the way), and that four out of five dentists recommend Trident to their patients who chew gum.

Polling in the U.S. pretty much started in the early 19th century during Andrew Jackson’s second presidential bid when supporters conducted polls at rallies. Much has changed since then, partly because in 1932, George Gallup through a new methodology accurately predicted that his mother-in-law would win a local Iowa election for secretary of state. The rest is history.

Today we have all kinds of polls, and not just political ones. There are straw polls, opinion polls, tracking polls, exit polls, and surveys of all kinds. But can polling really influence decisions? If the majority of Americans say they would vote for a particular candidate, would that sway someone’s decisions one way or another? Many political pundits say that President Clinton was notorious for using polls, but did that comprise a desire for popularity from doing what he believed was right? Whatever the reason, he certainly was one of America’s more popular presidents as the country experienced considerable economic growth and expansion during his tenure.

Polling helps keep the media business alive, and as many PR pros can attest, helps define business stories and trends that are so vital to reporters.

There is much debate on polling in America, some even calling for banning them. General consensus, however, believe otherwise, and say that polls serve a greater good. Another important question is how accurate are polls? Most experts agree that, when done right, they are accurate, which is corroborated by modern history, including Gallup’s 1932 prediction.

One organization that is surveying the attitudes and trends shaping America and the world is the Pew Research Center. Did you know that 51 percent of people across 40 countries including the U.S. believe they already are being harmed by climate change? That number drops to 41 percent among Americans. No doubt these numbers can impact policy making decisions whatever side the climate change debate you sit on.

So, it’s probably safe to say polls are good, unless the next poll shows that they aren’t.

- George Medici, gmedici@pondel.com

Peek-a-boo, I See You

Attention public companies: The Public Company Accounting Oversight Board, affectionately known as “peek-a-boo,” is watching you ever so closely…and wants to see even more of you.

That was the underlying message delivered by PCAOB Board member Greg Jonas as he addressed the recent second annual University of California-Irvine’s Audit Committee Summit, sponsored in part by PondelWilkinson.

“Regulators’ role is to be sure that investors hear the good, the bad and the ugly,” Jonas said. “Our challenge is to be useful and not just get in the way.”

Jonas spoke about the PCAOB’s “concept” issued in July, seeking public comment on 28 potential audit quality indicators to help identify insights into how high quality audits are achieved.

Jim Schnurr, Chief Accountant for the Securities and Exchange Commission, who is responsible for establishing and enforcing accounting and auditing policy and served as the event’s keynote speaker, interpreted the PCAOB’s project as a determining factor of whether additional public company disclosures should be made, particularly regarding greater oversight of management.

“The audit committee is in an excellent position to gain insight into management controls,” said Schnurr. “Avoidance of boilerplate reporting and minimizing the risk of litigation should be high on the directors’ agendas.”

Schnurr offered additional tips for audit committee members that should resonate with management:

  • Focus on effective disclosure
  • Increase the use of hyperlinks in communications
  • Periodically re-evaluate the relevance of disclosure items
  • Use solid judgment about what is not being disclosed
  • Be certain that audit committee members have the bandwidth to properly fill their roles

Two expert panel discussions followed Schnurr’s and Jonas’s addresses. Panelist Bala Iyer, audit committee chair at QLogic, offered a number of suggestions, focusing heavily on three: asking tough questions; trusting management; and taking the time to thoroughly understand the business.

The Sarbanes-Oxley Act of 2002, which created the PCAOB, requires that auditors of U.S. public companies be subject to external, independent oversight for the first time in history. The Board has no authority over public companies, but its work can have deep implications. Here’s looking atchya.

– Roger Pondel, rpondel@pondel.com

Yes, it’s Another Post about Activism

I’ve written about activism before, but a recent blog by Bloomberg Business caught my attention and spurred me to write again.

Though probably not a surprise to anyone, activism is on the rise, at least according to a survey conducted by law firm Gibson Dunn. Halfway through 2015, there were nearly as many activist campaigns afoot than for all of 2014. Further, the number of funds engaging in activist activities was higher for the first six month of 2015 than for the full year last year … 42 versus 35, respectively. According to the study, the most common reason for activist involvement so far this year has been board representation, followed by M&A, with return of capital a distant third. The New York Times recently noted that activist hedge funds now manage more than $129 billion in assets, compared with $29 billion just 10 years ago.

What does all of this activity mean? Is activism good for companies? Does it bring about positive change? A recent Wall Street Journal article asked the question: “Are Activist Investors Helping or Undermining American Companies?” After a comprehensive look at how activism has impacted large U.S. companies (greater than $5 billion in market cap), the resounding answer was maybe. According to the Journal, “Activism often improves a company’s operational results—and nearly as often doesn’t.” So, what’s the point?

As Wendell Willkie, II, visiting fellow at the American Enterprise Institute and of counsel at Steptoe, wrote for Fortune, activism has gone overboard, stating, “In their quest for quick returns, activists make the mistake of forgetting that it takes time and patience to position any company for success.”

A survey conducted by the National Association of Corporate Directors (NACD) reported in Accounting Today, showed that more than 20 percent of corporate board directors said their boards have been approached by activist investors during the past year. However, 46 percent of those polled do not have a plan in place for responding to activist challenges.

What should companies do when faced with activism? Or perhaps the better question is what should companies do before being faced with activism? Warren Buffet believes that “The best way to keep activists away is to perform reasonably well in your business and also to communicate well with your shareholders,” as noted during a speech at Fortune’s Most Powerful Women Summit in Washington.

Willkie says companies should plan for the emergence of an activist by taking proactive steps to increase shareholder value including share repurchases and cost reductions. But what if you can’t head them off at the pass? The Wall Street Journal recommends the growing popular belief that companies should not shun an activist or completely agree to all demands. The NACD survey pointed out that most frequently, boards have expanded compensation explanations in their proxy statements, revised executive compensation plans or implemented (or changed) their dividend and/or stock buyback policies in response to shareholder demands.

In my experience, when an activist comes knocking, most CEOs take it personally and dig their heels in to mount a defense. While that may be the proper response in certain cases, there is no one-size-fits-all solution. Know your shareholder base, treat each investor with respect (activist or not) and carefully evaluate any proposals that are sent to the board to ensure that whatever route you take will ultimately result in a win for the company’s shareholders.

– Laurie Berman, lberman@pondel.com

Join us in Orange County

Some big names in the world of public companies have agreed to share their insights at two fall conferences at which PondelWilkinson is among the sponsors: UCI’s Audit Committee 2015 Summit and the Orange County Public Company Forum.

UCI Audit Committee Summit 2015, October 23

James Schnurr, SEC Chief Accountant, will be flying in from Washington, D.C. to discuss the confluence of significant changes being contemplated or enacted by the SEC and other regulatory bodies that significantly impact audit committee responsibilities. Following Schnurr’s keynote address will be two interactive panel discussions.

The event will take place Friday, October 23, 8 a.m. to noon, at the Pacific Club in Newport Beach, 4110 MacArthur Boulevard. To register, visit merage.uci.edu/RegisterEvent/2015Audit.

Orange County Public Company Forum, November 18

David E. I. Pyott, former Chairman of the Board and Chief Executive Officer of Allergan, will provide his insight into the world of M&A, gained in part, from one of the highest profile M&A deals of the year, when Actavis acquired Allergan, and then changed its corporate name to Allergan. Pyott’s keynote address will be followed by an expert panel from all walks of the M&A spectrum.

The Forum will take place Wednesday, November 18, 7:30 a.m. to 9:45 a.m. at the Westin South Coast Plaza Hotel, 686 Anton Boulevard, in Costa Mesa. To register, please follow this link.

– Roger Pondel, rpondel@pondel.com

If David Letterman was an IR Guy

Perhaps even more unlikely than injuring yourself while playing Mahjong is the sliver of possibility that David Letterman will be leaving his new retirement life to become … wait for it … an investor relations professional. I can’t even imagine what the probability of something like that might look like as a percentage: .00000000000001%?

Source: Mass Communication Specialist 1st Class Chad J. McNeeley

Source: Mass Communication Specialist 1st Class Chad J. McNeeley/Released

What is possible, however, is coming up with one of Letterman’s famed top-10 lists to define key concepts of IR, especially for management teams that are new to life at the helm of a publicly traded company. Following is our initial list, and we encourage you to add to it on Twitter at #LettermanDoesIR.

1. Under promise and over deliver

2. Treat your shareholders with dignity, even if they’re seething with disdain

3. Love (or at least do not fear) thy activist

4. Show investors, don’t tell

5. Strategize, execute, perform, communicate
Strategize, communicate, execute, communicate, perform, communicate

6. Transparency wins

7. The numbers will tell

8. Perform, not promote

9. Do not bury the lead

10. The story is the business, not the stock price

– Evan Pondel, epondel@pondel.com

Turn Off Your Ringtone

Preparing clients for media interviews and press conferences are part of what we do every day. As always, one of the first things to remember is turn off your ringtone. It might sound simple enough, but there are countless examples of people forgetting to do so.

Following is a quick selection of my favorites:

Yesterday during a White House press briefing, Siri, Apple’s virtual personal assistant, responded to a reporter’s question on the Iran Nuclear Deal.

Seemed like a fitting answer.

Following is one of Bill Clinton with George Bush being interrupted at a scholarship announcement.

Now that was funny.

And finally, sometimes you just have to “Let it Go!”

Apparently, Sen. Pat Roberts is a fan of Disney’s “Frozen.”

So don’t forget the basics. Before you go on, remember to turn the ringtone off.

– Matt Sheldon, msheldon@pondel.com

Tales from Wall Street: Dealing with the Angry Investor

It’s been a very rough last few days on Wall Street. After nearly 20 years of doing investor relations, I’ve learned to weather the storm when it comes to crashes, corrections and the impact of what the Fed says (or doesn’t say) on any given day.

That said, investing is not just an intellectual exercise, but an emotional one, too. Whether it’s the Dow dropping 600 points, or less than stellar earnings results, chances are that if you are a public company CEO, CFO or investor relations professional, you’ve dealt with an upset investor.

Following are my dos and don’ts for dealing with an angry or upset investor:

Do actively listen. The best way to do this is to take good notes on what the investor is saying.

Do show empathy. Acknowledge what the investor is saying (and respectfully ask for clarification when needed). Treat every investor with genuine respect.

Do be calm, matter of fact and professional. Dealing with a professional or personal investor’s investments can be highly emotional. Be conscious of your body language and tone of voice. If an investor is profane or abusive, don’t respond in kind. Instead, remove yourself from the situation if you feel tempted to “fight back.”

Do correct misinformation and take the emotion out of the exchange. Avoid attacking the investor’s emotions or feelings about a stock when addressing any misinformation they’ve brought up. Your job is not to change their mind about how they feel about a stock – but to present them with factual information.

Don’t respond with sarcasm. While it may be OK in context among friends, it has the potential to be misinterpreted in a written conference call transcript or when an investor posts what you said on a message board.

Don’t get defensive or try to “solve” the issue right away. Wait for the cue or ask the investor for permission to ask questions or respond.

Don’t say “The stock is turning around or it’s going to go up soon.”

Don’t, under any circumstances, try to advise the investor on whether or not they should keep or sell a stock. If the investor asks you, “What would you do?” the appropriate response is “It would be inappropriate for me to advise you on whether you should buy or sell your stock.”

Do talk about your company’s “investor” story. Each company has its own unique investor thesis. Emphasize the fundamentals of your company’s story.

Do be proactive in your response, but don’t promise anything you can’t deliver. If you don’t know the answer, don’t make one up. There is nothing wrong with saying “When is a good time for me to get back to you on this issue?”

Do keep your answers short and to the point. It can be tempting to try to add additional assurances or information to your response, but when dealing with public company information issues – the best response is to stick with information already public.

- E.E. Wang, ewang@pondel.com

Everything is Awesome, Not

Awesome stampJust type the word awesome into a Google search and about 1,300,000,000 results will appear. The word is so ingrained into our popular culture, it’s hard not to watch anything on TV or go anywhere without someone using “awesome” to describe something cool or hip.

Countless articles and hundreds of thousands of pages on the Internet are dedicated to the overuse of the word. Several print and online magazines have put awesome on their list of banned words, including an article in the PR Industry’s trade magazine Ragan.com, saying, “let’s stop using it [awesome] as our default every time we are too lazy, busy, insecure, stupid or whatever to think of a more original or relevant word.”

Originated in the late 16th century from the words “awe” and “some,” awesome, according to Merriam-Webster’s dictionary, is an adjective that means causing feelings of fear and wonder or awe. Believe it or not there’s “awesomeness” as a noun and “awesomely” as an adverb. Oy vey.

As experts in the communications field, we try to avoid using jargon, slang or clichés to describe a product or service, or anything for that matter. Let’s not even get into words like disruptive, innovative or state-of-the-art. Those words can make any good writer cringe.

According to some writing experts, there are scores of other words that can replace awesome. Amazing?  Maybe, but probably number one on the list of the world’s most overused word. Brilliant? More of a British correlation. Dazzling? Let’s get real. Fabulous? Just doesn’t feel right. Spectacular? Boring.

The truth is there is no real word that can really mimic the same visceral reaction or meaning evoked by the word awesome. The problem is that awesome is used for pretty much everything, from describing a great-tasting doughnut to recounting MLB’s 2015 Home Run Derby. Finding new and exciting words will evolve over time, but until then, it’s hard to deny the awesomeness of awesome.

-George Medici, gmedici@pondel.com

Tales from Wall Street: Surviving Earnings Season

If a non-deal road show is a planned marathon made up of many, many sprints – earnings season is like a sprint that feels like a very long marathon.

At the risk of sounding a bit like a New Age-y Californian, here are the tips for how I survive earnings season:

  1. Stay Fueled. For you, it may be a Starbucks triple espresso, but for me, it’s my morning smoothie. My personal favorite recipe has 2 cups of kale or spinach, ½ a red grapefruit, ½ an orange, 3-4 strawberries, a few slices of Persian cucumber, a handful of raspberries, 1-2 tsps of raw maca powder (for extra pep in my step) and one tablespoon of chia seeds for protein.
  2. Find your Earnings Season touchstone to maintain your mojo. The most frustrating part of any earnings season is the “middle.” It could be the script’s not done, your team’s onto the XXth revision, you just found out that Yahoo’s printed the wrong analyst estimate, or you’re simply wondering how you will get everything done by Earnings Day.

Maintaining your mojo can be hard but incorporating fun little rituals and having a touchstone activity, can help refocus and reinvigorate your Earnings Season ninja skills. For me, it can be as simple as taking a moment to call or text my hubby* with a quick hello or performing freeway karaoke to my favorite IR songs to remind me that there is life outside of earnings season.

  1. Get Some Good Sleep. It can be hard getting a full night’s sleep when your mind is filled with anticipation for that upcoming earnings call. But as anyone will tell you, a good night’s sleep can do wonders for making sure you are feeling your best and on top of your game come Earnings Day. Research shows that it’s not about the hours you get, but the quality and depth.  Here’s my favorite sweet treat recipe for getting a good night’s sleep the evening before Earnings Day:

1 cup almond milk

1/2 a frozen banana

2/3 cup frozen bing cherries (pitted)

1/4 tsp nutmeg

1/2 tbsp. of raw cacao nibs

1 tbsp honey

Toss all ingredients in blender. Mix until smooth.

  1. Put Together a Fun Earnings Day Ritual. It might be having your team wear a certain color on earnings day or going out for a quick bite at a favorite local hangout, but I always find that sharing a simple ritual or tradition before the conference call is a fun way to make sure that your team gets some fresh energy before tackling that last stretch of your Earnings “sprint.”

You’ve researched, written, edited, rehearsed and planned for this day. Now your investors get to hear about your results for the first time. Good luck!

*(My hubby has been my rock through nearly 50 earnings seasons to date and despite his own busy work schedule, still has managed to send me a quick “good luck and I love you!” text just before each earnings call. Thanks hon! This one’s for you – and all of the understanding spouses and significant others who support the CEOs, CFOs and IR professionals during and outside of earnings season.)

- E.E. Wang, ewang@pondel.com