WE’VE just wrapped up our webinar with the TheCorporateCounsel.net on how to produce usable online annual reports and proxy statements for the e-proxy era.We had three of the world’s leading online annual report producers together for the event — Patrick Heick from VSA Partners in Chicago, Ryan Lejbak from Zu.com in Saskatoon, and Thomas Rosenmayr from GeBer in Vienna, Austria.
It was amazing to me how much all three agreed on the key issues. There really is no debate amongst the experts about what is good and bad when it comes to usable online reporting. Here are four key points made during the webinar:
1. You get one chance to make a good impression online.
This is an important point, and it may explain why there is such a low rate of participation by retail shareholders in the early notice-and-access style annual meetings — and why things will only get worse unless companies start offering better online annual reports and proxy statements.
Investors are so used to seeing and experiencing bad online documents that they’re simply not interested in going online when they receive the notice of Internet availability in the mail. Based on their past experience of companies providing horribly unusable documents, investors have a preconceived notion that it is not worth their while to go online to view the documents.
To overcome this, companies must start by first providing engaging, highly-usable online documents. Then they need to use their printed reports to drive investors to the online versions by selling the unique benefits of the online documents. Things like “you can search” or “print out the sections you want” are not going to cut it.
You have offer something more compelling. Things like “Watch a video,” “Manipulate these figures online,” “Download our financial statements in Excel” or “Discuss these proposals in our forum” are much more likely to drive people from the printed reports to the online versions.
If you haven’t been providing a good online version, then it’s risky to go straight into a notice-and-access style annual report and proxy. You have to transition to it by first proving to investors that the online versions are more useful.
Make a good impression and investors will happily go online to view your information. Do it wrong and you risk losing them for good.
2. Image-based and Flash paper documents are bad.
It was unanimous among the three panelists that all big vendors are doing their clients a disservice by selling image-based online annual reports. We tried to explain what image-based documents are — essentially photographs of your printed annual report’s pages. The issue came up that some vendors are misleading their clients by calling their image-based documents HTML, when they definitely are not HTML. Vendors also use terms like “Dynamic” or “Interactive” and often say that image-based documents are an improvement on PDF, but the panelists all agreed that these documents are actually worse than PDF. If you don’t know what we mean by image-based or Flash paper, then email me and I’ll send you links to current examples.
3. HTML is the best format.
I don’t think this needs much more explanation, other than to say that Thomas Rosenmayr from GeBer had a good idea. He said companies can easily and economically produce a usable HTML document by reusing their HTML filings from EDGAR and putting the table of contents in a left navigation menu. He said the process can be automated. Here’s an example of one such document. It’s important to note that Thomas said this type of document is very basic and not the best use of HTML, but it’s a better option than image-based documents. I think it’s a good choice for small companies as it costs about the same or less than those bad image-based documents. Note, too, that you cannot just link to your filings on EDGAR, you have to place the document on your own website or another website.
4. A lot more innovation coming.
If you think current HTML annual report practices are leading-edge, you’ve seen nothing yet. Some of the ideas and practices the three panelists mentioned are really intriguing, things like letting investors make electronic notes on annual reports, letting investors compile their own reports based on their interests, lots more video, and much more interactivity in the financial statements and footnotes. I thought it was oddly amusing that the things our panelists take for granted, such as footnotes linked to the financial statements, are still not being followed by the big vendors.
The three panelists are from companies we identified this summer as Great Online Annual Report Designers. I wholeheartedly recommend them to you and your investors.