Investor Relations

IMPLEMENTING BEST PRACTICES IN INVESTOR RELATIONS 107with Generally Accepted Accounting Principles (GAAP) and reconcile tothe reported numbers.3.5.2.6 StrategyCompanies should develop specific presentations for the senior managementto talk about their longer-term strategy, and not simply make it a partof their results announcements. The goal is to attract maximum attentionand not be distracted by short-term achievements.When discussing their strategy, companies should also provide performanceindicatorsthat enable the market to evaluate how successfully a strategy is beingimplemented,for which management is accountable.The following principles should apply:Align internal and external key performance indicators (“KPIs”),1 strategic objective → 1 key performance indicator,No key performance indicator available? No message.In other words, management should exert extreme caution before it communicatesa given strategic objective but has no metric to be held accountablefor. It is wise to stay away from mainstream, generic messages thatcan apply to virtually every company (“profitable growth”, “value creation”are good proxies of this) and become meaningless if not properlysubstantiated.Strategic messages are particularly important when the goal is to preparethe market for changes resulting, for instance, from an acquisition ora move into a new geographic area. Such news will be readily understood,and maybe even endorsed by the market as soon as it is announced if it isconsistent with the strategy the company has presented over time. Investorsdo not like surprises. This is another reason why communications too mustbe long-term oriented. The share may trend higher or lower in the two daysthat follow a strategic announcement, but the important thing is where itstands two years later.A clear explanation of the strategy goes hand in hand with a clearexplanation of the risks attached to it.