PondelWilkinson in Los Angeles Business Journal

PondelWilkinson was recently featured in a Los Angeles Business Journal article on public companies engaging in social media and the implications for disclosure.  Click here to read the article in its entirety.  Following are takeaways:

  • Consider setting up a social media policy that permits official corporate communication to be conveyed through specified social media accounts, not personal accounts;
  • Ensure that social media communications are consistent with other public statements;
  • Determine whether disclaimers are necessary, such as forward-looking statements;
  • Identify someone who will monitor social media communications;
  • When you implement a social media policy, stick with it.

PW Participates in IR Certification Exam

First it was the CPA certification for accountants, instituted in 1917.

 

Then in 1963 came the CFA credential, administered by the CFA Institute, for finance and investment professionals, particularly in the fields of investment management and financial analysis of stocks, bonds and their derivative assets.

 

One year later, in 1964, the Public Relations Society of America, www.prsa.org, launched the APR designation as a way to recognize PR practitioners who have mastered the knowledge, skills and abilities needed to develop and deliver strategic communications.

 

Soon, investor relations professionals, courtesy of the National Investor Relations Institute (NIRI), www.niri.org, will have a test of their own. The designation has yet to be named, but development of the Body of Knowledge (BOK) is now underway, and the inaugural exam is scheduled for mid-2015.

 

The BOK is the basis for most certification exams, including the CFA. It forms the base of teachings, skills, and research in a given function, along with details on the essential competencies required of a practitioner based on a set number of years of experience.

 

It is with great honor that I am serving as an advisor to the NIRI committee preparing the first BOK for the investor relations profession.  I will be working directly with editor Ted Allen and a distinguished group of 25 investor relations professionals from throughout the nation who will write the definitive book—one that will represent every element of the requisite knowledge that will be tested in the IR certification exam.

 

It’s a big project and a tall order, especially for a profession whose practitioners require a wide range of knowledge, spanning disciplines that include finance, accounting, capital markets, news media, disclosure regulations, public relations practices and virtually all aspects of communications.

 

Canada and the UK currently have IR certification programs, and two U.S. universities—Fordham and the University of San Francisco—offer graduate degrees in investor relations.

 

While validation of competency through an exam or graduate degree may not guarantee practical success, we at PondelWilkinson are proud to have been asked to participate in this milestone endeavor for our industry.  I’ll keep you posted as the program develops, but please do not ask me for any answers to the exam—none of the BOK committee members will have access to it!

 

Roger Pondel, rpondel@pondel.com

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Does it Pay to Go Public?

IPORecently, a client pointed me in the direction of a very interesting Inc. article about the case for staying private. The author is the CEO of a privately held, family-controlled tech business, one that has name cache. He notes that being a public company is expensive and time consuming. He also believes that “the most critical benefit of staying private is the facilitation of a true focus on long-term goals.”

It’s not hard to argue that Wall Street is increasingly focused on short-term results, but does that mean that management teams need to adopt the same mindset? Maybe it’s a naïve belief, but some would say that if the stock market is working as it should, a company’s share price will reflect the company’s true value over the long-term.

The New York Stock Exchange predicts a busy year for IPOs in 2014, with about 150 to 200 new issues expected. Reuters points to first quarter IPO activity of $47.2 billion, a nearly doubling from this time last year and “the strongest annual start for global IPOs since 2010.”

Clearly, there are CEOs who still believe in taking their companies public, many in the technology sector. Perhaps they are in it for a large personal pay day, but perhaps they realize that it could be easier and less expensive to raise capital to realize their growth plans. Or perhaps, their Fortune 500 client base requires audited financials as a condition for doing business together.

The decision to go public is not an easy one, and it’s a decision that every company must weigh very carefully. If you’re contemplating an IPO to become like Hooli, the fictional tech company featured in the new HBO series “Silicon Valley,” it may not be the right move. But if you’re doing it to build something that can have a lasting impact, it might just be. Just make sure you surround yourself with good advisors to ensure a smooth process.

— Laurie Berman, lberman@pondel.com

Director Tenure Tops List of Expected 2014 Boardroom Topics

We recently debuted our “heard around the water cooler”  series.  Following is the first installment:IR photo
 
Director tenure topped the list of topics that board members of publicly traded companies are expected to discuss in 2014, according to the Boardroom Water Cooler survey conducted in January by PondelWilkinson Inc., a corporate public relations and investor relations consultancy.
 
Institutional investors are beginning to advocate the concept of “board refreshment,” as a groundswell of concerns surface related to directors who have been in place for significant periods of time.
 
“The conversation clearly has shifted from age-related bias to tenure,” said Laurie Berman, managing director of PondelWilkinson. “Age notwithstanding, there is growing belief that the longer a director has served, the less independent he or she becomes from management, which is contradictory to fundamental governance mandates.
 
“Perhaps for some of the same reasons that term limits exist for political leaders, we soon may see an enactment of board member term limits as part of the increasing democratization of publicly owned companies,” Berman said.
 
The second most popular topic around the boardroom water cooler is the Securities and Exchange Commission’s mixed vote in September 2013 in favor of requiring companies to disclose the pay gap between employees and the CEO.
 
Originally mandated four years ago by the Dodd-Frank Act, if the rule passes, public companies would have to disclose the median of the annual total compensation of all of its employees, excluding the CEO, against the annual total compensation of its CEO, and the ratio of the two amounts.
 
“This proposal follows closely on the heels of the ‘say-on-pay’ advisory votes already in place,” said Evan Pondel, president of PondelWilkinson. “However, since the SEC was not unanimous in its vote, the proposal will likely be subject to strong challenges. Its underlying theme closely tracks the momentum that is building in Washington and elsewhere around income inequality,” Pondel added.
 
Survey results also point to heightened 2014 boardroom discussions about:

 

  • Cybersecurity and wrestling with increasing threats to intellectual property and information systems, such as the Target retail chain recently experienced;
  • Big data and taking full advantage of emerging technology to drive profitable growth;
  • Effective use of social media to enhance brand awareness, along with customer and shareholder loyalty;
  • Interest rates and how management should take advantage soon of what may be historically low rates before it is too late, regardless of current financing needs;
  • How best to comply with the newly required Form SD requiring disclosure beginning in May 2014 of the level of due diligence a company exercised to determine whether its products and products in its supply chain contain conflict minerals;
  • Maintaining valuation after a robust 2013;
  • How to deal with what may be a period of increased shareholder activism and a mindset that activists should be listened to, rather than avoided, and could actually bring good ideas; and
  • The importance of listening to small individual investors as well.

 
The anecdotal survey was compiled by the firm’s staff, who queried public company directors, CEOs and CFOs, sell-side analysts and institutional and individual investors.

Conversation: Potential Perils of Crowdfunding

Mary Jo WhiteThe Securities and Exchange Commission, through December 23, 2013, is seeking public comments on a proposal under Title III of the JOBS Act that would permit crowdfunding in connection with the purchase of securities. Nothing is perfect, and if adopted, investors and issuers alike will need to exercise caution.
 
Following is a tongue-in-cheek dialog between SEC Chair Mary Jo White, with comments taken verbatim from a press release issued by the SEC October 23, and a completely fictitious investor, expressing concerns:
 
Mary Jo:  I’m pleased that we’re in a position to seek public comment on a proposal to permit crowdfunding.
 
Investor:  What is crowdfunding?
 
Mary Jo:  Crowdfunding describes an evolving method of raising capital that has been used outside the securities arena to raise funds through the Internet for a variety of projects ranging from innovative product ideas to artistic endeavors.
 
Investor: Umm…I’m not sure I understand.  What does that have to do with securities?
 
Mary Jo:  Title III of the JOBS Act created an exemption under securities laws so that this type of funding method can be easily used to offer and sell securities as well. Securities purchased in a crowdfunding transaction could not be resold for a period of one year.
 
Investor:  Oh, I get it now.   You mean I soon will be able to take my hard-earned money and buy stocks in small, risky companies I never heard of?  Companies that may be run by rip-off artists.  Companies that have not been vetted by an investment bank. Stocks that will not necessarily trade in the public markets—not even on the OTC Bulletin Board?  And stocks that I may not even be able to easily sell?
 
Mary Jo: The Securities and Exchange Commission voted unanimously to propose rules under the JOBS Act to permit companies to offer and sell securities through crowdfunding.
 
Investor: Huh?  Maybe I don’t get it after all. What are the commissioners thinking?
 
Mary Jo:  The intent of the JOBS Act is to make it easier for startups and small businesses to raise capital from a wide range of potential investors and provide additional investment opportunities for investors.
 
Investor: Opportunities you say?  Aren’t there enough investment opportunities out there already? Do we really need more?  I’m scared. I want my mommy.
 
Mary Jo: We want this market to thrive in a safe manner for investors.
 
Investor:  O.K. I understand that’s what you want.  But President Obama wanted the Affordable Care Act website to work.  Besides, wasn’t the SEC supposed to be watching folks like that Madoff fellow?  He should have been easy to monitor, compared with the thousands of small entrepreneurs who will want to sell securities to unsuspecting investors?
 
Mary Jo:  There is a great deal of excitement in the marketplace about the crowdfunding exemption.
 
Investor:  Did I say I am scared?
 
Roger Pondel, rpondel@pondel.com
 
 

Crisis Case Study: Baiting the Media in the Court of Public Opinion

Last Sunday’s overtime win against the San Diego Chargers gave the Washington Redskins a reason to celebrate, at least temporarily, as the storied franchise continues to make headlines both on and off the field.
 
The team’s losing season is only part of the problem.  A new report by the Pew Research Center revealed that 76 news outlets have publicly announced their opposition to the name “Redskins” or have banned or restricted its use in editorial coverage. 2013-09-11-WashingtonRedskinsLogo
 
Washington, D.C. Mayor Vincent Gray and anti-defamation groups reignited the decades-old issue earlier this year calling for the removal of the name, saying it is a racial slur and offensive toward Native Americans.
 
Owner Dan Snyder for years has been adamant about not changing the team’s name.  He made headlines last month after sending a letter to fans defending his reasons against a name change.  He’s not alone either.  A Washington Post poll found that a majority of D.C. residents (66 percent) are against a name change.  Other published polls also show support for the name, even among Native Americans.
 
While the 76 news outlets that came out in opposition to the name are only a small portion of the media landscape, they certainly pack a punch.  Several high profile journalists have created national news themselves by opining their reasons for the Redskins name to go.
 
Whether a reporter “becoming” the story is bad for an outlet’s credibility will continue to be debated.  Most journalists try not to get involved in their own stories, although that is becoming increasingly difficult in today’s highly fragmented, 24-hour media landscape.  Either way, it makes for good television and sells newspapers.
 
The fact is the Washington Redskins are in crisis, a battle with the courts of both legal and public opinions.  And there aren’t any signs of it tapering off, although published reports indicate that the NFL has been meeting with Snyder and the Oneida Indian Nation to address the controversy.
 
Even though the owner, team and fans like the name the way it is, the current reality is creating too much controversy around the brand, which equates to lost dollars and can impact future revenues.  That’s a recipe that can’t work in today’s NFL as pro football teams look to sell products, licenses, and TV and radio rights outside their respective locales.
 
All this makes for an interesting public relations case study for today’s business organizations.  First off, executives always must be mindful of sending correspondence, whether it’s targeting consumers, customers or even shareholders.  Most times these communications will be leaked to media or appear across social media platforms, as in the case of Dan Snyder’s recent letter to fans.
 
This case is unusual because many of the fans and ethnic groups that may be affected don’t mind the Redskins name.  However, the issue has created a broader movement among media and anti-defamation groups, which appear to have their own agenda under the guise of eradicating racism.
 
The reality is Snyder is in a difficult situation: succumb to public pressure or stick to his proverbial guns.  This instance may be reminiscent of a business executive passionate about a company function or an unrelated personal issue.  There is no easy solution in these circumstances, especially if the executive has a legitimate position.  It’s also extremely difficult to win in the court of public opinion, let alone going toe-to-toe with national media.
 
CEOs and business executives can learn from the Redskins’ current communications crunch.  For Snyder, the strategy now is to manage the PR crisis, probably taking a reactive approach, rather than a proactive one, which may only continue to fan the flames — a strategy worth remembering when dealing with the next corporate communications crisis.
 
— George Medici, gmedici@pondel.com

The Tango of Business, Politics and Journalism

It came to no surprise among media pundits that Time Magazine’s Managing Editor Richard Stengel will be taking a job as a spokesperson for the U.S. State Department.  His new title, under secretary of state for public diplomacy and public affairs, will have Stengel leading communications outreach for the department across many issues, ranging from cultural programs to terrorism.

Time Magazine is no stranger to the Obama Administration.  Former Washington, D.C. Bureau Chief Jay Carney joined the president’s staff as White House press secretary in January 2011 after serving as Vice President Joe Biden’s communications director.

English: Jay Carney giving a press briefing.

English: Jay Carney giving a press briefing. (Photo credit: Wikipedia)

Journalists historically have transitioned from hack to flack, probably more so in recent times as traditional news outlets struggle to survive in today’s Internet-based media landscape. It’s happening in the corporate world as well, and has for decades, with financial reporters taking jobs at public relations firms, including ours, as well as within internal corporate communications departments to focus on media and investor relations.
On one hand, it’s hard to deny these moves don’t affect the credibility of journalism or at least each reporter’s former news outlet.  Reporters accepting positions at organizations they once covered can create an allure of collusion within an industry that prides itself as being vigorously independent, unbiased and objective.

The pendulum swings both ways, however.  Scores of business executives and political officials   have transitioned to various media gigs, including talk show hosts and media contributors.

Business, politics and journalism always have had incestuous relationships. Some good, others not so good.  With New York City’s primary elections over, and Anthony Weiner and Eliot Spitzer losing their bids for mayor and comptroller, respectively, all eyes will be on which politician may be the next media pundit.  Perhaps both.

— George Medici, gmedici@pondel.com

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The Rise of Mobile Payment

Mobile Payment Replaces Cash

iPhone Mobile Payment, 100 Euros, (Photo Credit: Flickr, Monty Metzger)

Hey, cash, it was nice knowing you, but I’m moving on.
 
According to a story this week in the New York Times, Square, the San Francisco start-up that is out to kill cash with its mobile payment gizmo, has formed an alliance with Starbucks.
 
To alert consumers and investors, Starbucks CEO Howard Schultz and Square co-founder Jack Dorsey have been doing the press rounds, being interviewed by major news outlets and appearing on national business television networks.
 
No doubt this is pretty big news.  In the coming months, Square is poised to take over the processing duties of credit and debit card transactions at all U.S. Starbucks stores.  The Times also reported that in the not too distant future, I will be able to pay simply by giving the barista my name.  What’s next, a retinal scan as I walk in the door that simultaneously orders my usual and charges my card?  I can definitely see that happening, but what if I want a Grande instead of a Tall?
 
There’s no doubt mobile payments are here to stay. They’re cool and convenient, unless you drop your phone into the bathtub — yes, that really happened.  But don’t make the funeral arrangements for cash just yet. As Fortune technology writer Miguel Helft points out, “changing the way Americans pay for stuff is going to be really hard work.”
 
It’s hard to imagine a world without cash.  Things do change however.  Just the other night, I was telling my children about nearly extinct products like typewriters, 8-tracks, VCRs and rotary phones, which were indispensable when I was their age. At the time, you’d never imagine these items ending up on the scrap heap. This leads me to believe that in the mobile payment revolution, once the kinks are worked out and buyer and seller are in sync, cash will just be another item on the “when we were kids” agenda.
 
The trick right now for mobile payment providers is communicating that proposition to consumers and merchants, no small feat. Looks like Schultz and Dorsey have more media to do.

 

Ron Neal, rneal@pondel.com
 
 

Sunday Mornings May Never Be the Same

My favorite part of Sunday morning is relaxing over a cup of coffee while leisurely reading both the New York Times and Los Angeles Times–every section–without that harried feeling of having to skip and skim stories like I do the rest of the week, or use the speed reading techniques I learned from my 11th grade English teacher, Mr. Coughlin.

The Times-Picayne (Photo Source: wikipedia.com)

 
I even savor the smell of the newsprint, which combined with the coffee aroma, exudes a state of calm. But I am worried that the Sunday papers may not be around too much longer. And while the thought of sipping coffee with an iPad doesn’t exactly thrill me, I am reluctantly bracing for the future. Of course, it’s all about technology, which is changing our lives–granted, mostly for the better–and changing the media landscape at breakneck speed.
 
Within the last couple of weeks alone, The Times-Picayune in New Orleans told the world it will be cutting back its print editions to three days a week.  That same day, three other newspapers followed suit.  Like a tsunami, a few days later, a Canadian newspaper chain, Postmedia, announced that its three newspapers will be eliminating their Sunday editions.
 
These were not the first such actions, of course, but the pace of such change seems to be picking up speed.  The shift to online news certainly makes sense from an economic point of view. It’s just that it makes me sad and I would think that there are others like me that feel the same way.
 
But it’s not just about relaxing with the paper on Sunday mornings. It’s quality of content, as well as
quantity, with lost columns and generally fewer investigative pieces and features.  And add to that, perhaps saddest of all, is lost jobs.  When the change takes place at The Times-Picayune, expectations are that about a third of the journalists will be cut.
 
I’d like to think that in the biggest U.S. cities we’ll always have our Sunday papers.  But I guess
there’s a good chance that we will not. So as my psychotherapist wife repeatedly tells me, enjoy the moment. Sunday mornings may never be the same.

 

Roger Pondel, rpondel@pondel.com
 
 

Sleeping with the Enemy

Be honest.  How often do you check work email right before you go to sleep and then again soon after you wake up?

Android Email

Email apps are increasingly easy to check and use (Photo Source: rackspace.com)

 
Does the paragraph above describe someone you know? Could that someone be you?  According to a recent Inc.com story, it’s more common than you might think.  In fact, 72 percent of managers and professionals surveyed who work more than 50 hours per week check their smartphones every morning within an hour of waking up, while 62 percent check their devices before going to bed.
 
Such activity is not healthy for employees or employers, says Harvard Business School Professor Leslie Perlow. A few years ago, she conducted an experiment at Boston Consulting Group to help rid a small group of employees of the “always on” mentality. Each person took one night off from work by not responding to emails or answering calls from clients after leaving the office, instead letting other team members take care of any issues that came up.  After five weeks, the employees were happier and the quality of the team’s work went up, while the number of hours they put in at the office went down.
 
Steve Tobak, on the other hand, believes that a common sense approach to work-life balance is more realistic, and that one size does not fit all.  In other words, we must all make the decisions that work best for us.
 
I admit that I am a slave to my smartphone, but also believe it helps me do my job better.  I’d rather know at 5:30 a.m. that there is a problem awaiting my attention, so that when I arrive in the office I’m armed with information and have a leg up that will hopefully help make my day less stressful.  Just the same, knowing clients are happy before I got to bed helps me sleep better.
 
For me, and for the time being, that means sleeping with the enemy … my iPhone.

 

— Laurie Berman, lberman@pondel.com