Engaging the Skeptical Investor

1. Engaging the Skeptical Investor Gene Stevenson President and Chief Executive Officer Macropath, Inc. To Georgetown University Leadership in Communications Gene Stevenson, Macropath, Inc.

2. Our Agenda • Speaking with One Voice • Speaking to Management Credibility • Speaking to Stakeholder Values • Leadership communications perspective • Investor relations context Gene Stevenson, Macropath, Inc.

3. Question What is investor relations? Gene Stevenson, Macropath, Inc.

4. What is IR ?Answer 1 National Investor Relations Institute (NIRI) –Investor relations is a strategic management responsibility that integrates finance, communication, marketing and securities law compliance to enable the most effective two-way communication between a company, the financial community, and other constituencies, which ultimately contributes to a company’s securities achieving fair valuation. Gene Stevenson, Macropath, Inc.

5. What is IR Answer 2 Investor Relations Society (U.K.) -- Investor Relations is the communication of information and insight between a company and the investment community. This process enables a full appreciation of the company’s business activities, strategy and prospects and allows the market to make an informed judgement about the fair value and appropriate ownership of a company. Gene Stevenson, Macropath, Inc.

6. What is IR? Answer 3 Gene Stevenson – Investor Relations is the communication of a company’s strategy, and progress on that strategy, to the financial community and other key stakeholders. Gene Stevenson, Macropath, Inc.

7. Why? • Businesses need capital to operate and grow. • Public companies’ securities trade globally. • Capital markets are omnivorous re data. • Companies manage information flow or are managed by it. • Fair valuation is the goal. Gene Stevenson, Macropath, Inc.

8. Speaking with One Voice Gene Stevenson, Macropath, Inc.

9. One Voice - Challenges • Challenge 1: Traditional corporate reporting structure not ideal for communications coordination at the top. • Challenge 2: Relationships and processes used more frequently than structure and organization to coordinate communications. • Challenge 3: Social media + blogosphere = increased sources, more inputs, less reliability. Gene Stevenson, Macropath, Inc.

10. One Voice – IRO Views • A lot of people think communications as being just media and investors and there’s a much broader set of constituencies out there to reach. • It’s a constant objective of ours to speak with one voice and it takes a lot of work with PR and the subject matter experts, but it comes down to relationships. You need to trust the people you work with and their info sources. Gene Stevenson, Macropath, Inc.

11. One Voice – Operating Environment Gene Stevenson, Macropath, Inc.

12. One Voice - Processes Informal (predominant) • Intuitive rather than structured • Requires high authority levels in comms pros • Most effective when comms pros have good relationship, are experienced • Employs philosophy that IR and corpcomms can “walk down the hall, figure it out” Formal (structured) • Regular external relations team meeting • High frequency, tactical • Low frequency, strategic • More frequent meetings of principals • Goal: info timely shared • Goal: IR aware of any new info going into the market Gene Stevenson, Macropath, Inc.

13. One Voice – Taking the Lead How to take the lead in your organization • Set themes, develop messages • Set the “voice” • Coordinate the other communications functions; process makes this stronger • Immerse, educate, police • Build relationships, get & stay connected Gene Stevenson, Macropath, Inc.

14. One Voice – IRO Quotes • I write an IR communication strategy document: what I think the key messaging should be, how we should deliver. I get it reviewed by the CFO, then division presidents, then the CEO. Once they give me their feedback, we finalize it. Then I share… • We have one rule: Make sure you run it by IR before it goes out. Gene Stevenson, Macropath, Inc.

15. One Voice - Framework Establishing the “Voice” • Can be short- or long-term oriented • Long-term • Easier to integrate • Everyone gets it • Short-term • Quarterly earnings • Flavor of the month: current environment Gene Stevenson, Macropath, Inc.

16. One Voice – Ideas to Consider Gene Stevenson, Macropath, Inc.

17. One Voice – Major Findings • Coordinated corporate comms directly related to the value of reputation, brand • Easier to create, control outbound comms than react to external inquiries, opinions • Long-term general corporate themes, message platforms strengthen One Voice strategy • Promote global communications platform Gene Stevenson, Macropath, Inc.

18. One Voice - Measurement • Quantifying results notoriously difficult • IROs have not cracked the measurement code • Management interested in evaluation, but recognize limitations. • Most efforts highly anecdotal • Follow-up calls with analysts • Perception studies • Roadshow feedback Gene Stevenson, Macropath, Inc.

19. Management credibility Gene Stevenson, Macropath, Inc.

20. Management Credibility – Investors Gene Stevenson, Macropath, Inc.

21. Management Credibility - Aspects • Management credibility intangible • But integral to valuation • Difficult to quantify • Measured in qualitative context • Hard to build, easy to lose • Always will be some investors who doubt management credibility Gene Stevenson, Macropath, Inc.

22. Management Credibility – Value Gene Stevenson, Macropath, Inc.

23. Management Credibility - Analysts The biggest issue surrounding (company) is management credibility. (Company’s) statement on […] just shows me that management is losing credibility. Headline: (Company) cut at Goldman Sachs on management credibility. Gene Stevenson, Macropath, Inc.

24. Management Credibility - Analysts Analysts perspective on keys to credibility: • Management knows their subject matter • Management willing to meet with investors • Management is not going to mislead • Management provides reasonable opportunities to interact • Management presentation skills important Gene Stevenson, Macropath, Inc.

25. Management Credibility - Terms Gene Stevenson, Macropath, Inc.

26. Management Credibility - Proxies Gene Stevenson, Macropath, Inc.

27. Management Credibility – IRO Quote On building a credibility bank account: Over time, you build up a reputation such that, in good times or bad times, they know you’re going to give them the straight story. They can trust what you say. Even when things don’t happen the way you’ve described, that trust provides you with a lot of chips that you can hold. People will stay with you. Gene Stevenson, Macropath, Inc.

28. Management Credibility - Strategies Gene Stevenson, Macropath, Inc.

29. Management Credibility - Assessment Gene Stevenson, Macropath, Inc.

30. Management Credibility – Red Flags Gene Stevenson, Macropath, Inc.

31. Stakeholder Values Gene Stevenson, Macropath, Inc.

32. Stakeholder Values – Need to Know • CEOs drive CSR communications. • Environment is the focus of ESG issues. • Best Practice: Coordinated IR, CSR comms. • More companies targeting SRIs. • Non-financial KPIs tend to get buried in company reports. • Governance Qs are warning sign of shift in investor risk assessment. Gene Stevenson, Macropath, Inc.

33. Stakeholder Values – The Path Gene Stevenson, Macropath, Inc.

34. Stakeholder Values - Risks E 100% Environment Climate Change Investment Cost Sustainable Development Sustainability Innovation Product Impact S 32% Health & Safety Employee Levels Supplier Labor Labor Contracts Emp. Savings Plan Investments Downsizing Principal Compliance G 24% Accountability Ethics Executive Pay BOD Independence Gene Stevenson, Macropath, Inc.

35. Stakeholder Values -- Leadership • If CEOS drive company commitment… • The thought-leader Head of Investor Relations turns the responsibility into action • Our CEO is a big supporter of CSR especially how we use it as a business driver. • Our regular IR reporting includes competitive analysis on ESG issues. Our CEO wants the info and one of our CFO’s KPIs is how we compare. Gene Stevenson, Macropath, Inc.

36. Stakeholder Values – IR & CSR • 62.5% of IROs report structure interaction with CSR colleagues. • CSR prepares 85% of CSR questionnaires. • IR prepares 15% • CSR prepares with IR review 70% Gene Stevenson, Macropath, Inc.

37. Stakeholder Values – A View Gene Stevenson, Macropath, Inc.

38. Stakeholder Values – Company A Gene Stevenson, Macropath, Inc.

39. Stakeholder Values – Company B Gene Stevenson, Macropath, Inc.

40. Stakeholder Values – Value Pyramid Gene Stevenson, Macropath, Inc.

41. Stakeholder Values – Investors Want • Core strategies, business model, relation of CSR issues to company’s investment case • Communication leading with what’s important to business, financially focused • Relationship where companies seek, understand investor needs, priorities • Presentation of concepts know and accepted by mainstream analysts • Prioritization of CSR risks, opportunities, rationale used for priorities Gene Stevenson, Macropath, Inc.

42. Stakeholder Values – Investors Want • Investor-oriented communications, not generic comms for all stakeholders • Quantification, exposure context, actions on CSR; sense of scale, impact probabilities • Sector discussion of high-impact events, regardless of probability • Improved internal comms between CSR, IR • Integrate CSR case in all IR communications Gene Stevenson, Macropath, Inc.

43. Stakeholder Values -- Challenges Gene Stevenson, Macropath, Inc.

44. Stakeholder Values – IR Checklist Gene Stevenson, Macropath, Inc.

45. Stakeholder Values – IR Checklist Gene Stevenson, Macropath, Inc.

46. Engaging the Skeptical Investor Gene Stevenson President and Chief Executive Officer Macropath, Inc. 8307 Chastain Dr NE Atlanta, Georgia 30342 USA +1.404.250.9050 gstevenson@macropath-inc.com Gene Stevenson, Macropath, Inc.