By Howard Berkenblit, Partner, Sullivan & Worcester LLP
By Maureen Wolff, President and Partner, Sharon Merrill Associates
As you may have heard, the SEC has stated that public companies may announce material, non-public news on social media outlets like Facebook and Twitter, provided that companies take appropriate steps to alert investors which outlets they will use. Depending on your perspective, that may sound either intriguing or daunting.
But if that’s as far as it goes for your company – a quick reaction followed by little else – then all of the recent discussion spawned by the SEC’s ruling will have been little more than a wasted opportunity.
Sharon Merrill and the law firm Sullivan & Worcester recently co-hosted an educational seminar with investor relations and corporate communications officers on using social media for public companies. We presented an overview of the legal issues related to using social media for disclosure purposes, and we also provided six building blocks for developing an investor relations social media strategy.
It’s important to remember that the use of social media as a disclosure method compliant with Regulation Fair Disclosure has evolved during the past several years. When the SEC issued its 2008 guidance, it allowed posting to corporate websites, but subject to conditions. With its 2013 statement, the SEC included social media as a Reg. FD-compliant disclosure method, subject to those same conditions. We advise that companies make social media one of their disclosure channels – not the only channel – thereby ensuring the widest possible dissemination of material news.
Sullivan & Worcester: The use of Social Media in Investor Relations
As a general best practice, we recommend updating your company’s corporate disclosure policy to include social media. You should designate, and limit, the individuals who are authorized to post on behalf of the company, just as you would with press releases and media interviews, for example. In other words, you’ll want to follow the same disclosure protocols for social media that you already use for other platforms.
As your company works through the legal implications of the SEC’s statement, it may be tempting to pause indefinitely. That’s why we presented the building blocks. These six steps can be used to determine whether social media are right for your company and get you started on developing a strategy.
This leads us to the first and most critical step:
Sharon Merrill: Socialize IR - The Use of Social Media in Investor Relations
1) Do Your Research!
How are people talking about your company? Who is doing the talking? Are there misperceptions? Are employees sharing inside information online? What are our peers saying? Who follows them?
That’s a bit of a laundry list, but it’s important to remember a comprehensive social media strategy should be, well, comprehensive. This means setting up alerts that track online mentions of your company, brands, executive names and peer companies. You’ll quickly learn what is being said about your company online, and soon enough, you’ll find the answers to the rest of those questions too.
You also will want to secure your company’s brand names on social media platforms. If you aren’t already overwhelmed by the number of social platforms, you probably will be at some point during this step.
2) Develop a Social Media Strategy
Once you understand how social media apply to your company, you can develop a strategy to achieve your program goals. Remember, the conversation online will go on either with or without your participation. Even if your strategy is to simply continue monitoring, you should have a policy in place. Social media usage guidelines will vary depending on the goals of your social media program.
3) Engage
If you decide to have a proactive social media program, you will need to determine what level of engagement is appropriate. Social media can be a great channel for keeping investors updated between quarterly earnings announcements with news that might be interesting, but not necessarily worthy of a press release or SEC filing. You could use your social media channels to share news release headlines, key messages from an earnings call, participation at investor conferences, clarify misconceptions, white papers publications, training seminars and thought leadership pieces featuring the company’s management.
4) Integrate With Your Website
The IR website should serve as the hub to your social media strategy. Envision your company’s IR site as a true investor resource that is full of helpful, informative, real-time content. By providing regular content on the IR site, you will give investors a reason to come to the site more frequently. The more they visit, the more they will think of the site as the first source of company information – even before they call you. Also, inform investors who visit the website which social media platforms your company is actively using.
5) Go Mobile
Having an IR app for smartphones and tablets may not be for every company. But it can be a great way to target a loyal audience. Apps are unique in that the user must download and agree to receive notifications to the device, meaning they truly have an interest in receiving news about your company. In an era when people are looking for more and easier access, and using mobile devices virtually nonstop, making your company’s story as easy to follow as possible is the name of the game.
6) Measure Your Progress
Chances are, you don’t have the time or budget to plunge head-first into social media without something to show for your efforts. The true value of a social media IR program may be difficult to quantify. However, social media offer a number of metrics that can help you gauge your program’s progress. Many sites provide corporate users with analytics packages, which can help your company establish an audience baseline and follow user trends over time.
Go get social
Many companies are exploring how they can incorporate social media into their IR programs while still maintaining appropriate SEC compliance – and they must. Any excellent corporate strategy requires considerable thought and planning, and a social media IR strategy is no different. With these six building blocks as your foundation, you can embark on a prudent, well-rounded social media strategy that helps you advance your overall IR program and start driving your company’s online message.
Howard E. Berkenblit is a partner and leader of the Securities & Corporate Governance Group at Sullivan & Worcester. He specializes in counseling both public and private companies involved in equity and debt financings and ongoing corporate governance and disclosure matters, stock exchange listing standards and Sarbanes-Oxley Act and Dodd-Frank Act compliance. He also advises Israeli and other international companies that seek to have their securities traded in the United States, as well as real estate investment trusts that engage in securities offerings and governance initiatives.
Maureen Wolff is president and partner at Sharon Merrill. Maureen leads the implementation of the firm’s strategic vision and provides high-level strategic counsel to clients. She is a past chairman and board member of the National Investor Relations Institute (NIRI) and a current member of NIRI’s Senior IR Roundtable. She is a trusted advisor to CEOs, CFOs and boards of directors on critical communications issues including corporate governance, shareholder activism and proxy contests, CEO succession planning and disclosure issues.
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