© 2013 National Investor Relations Institute

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Social Media Use for Investor Relations

By Ariel Finno, Director-Research Ted Allen, Director-Practice Resources

Matt Brusch, Vice President-Communications and Practice Information

A NIRI White Paper

NIRI White Paper: Social Media Use in Investor Relations

© 2013 National Investor Relations Institute

NIRI Social Media Use in Investor Relations Survey Results Presented here are key findings from NIRI’s 2010, and 2013 NIRI Social Media Use in Investor Relations research projects. In 2010, NIRI released Social Media Mainstream for IR Professionals – Not Yet for Profession, which announced the results of its member data on the subject. 2010 Key Findings

IR professional survey respondents are using social media more for personal networking rather than for professional IR communications, though non-survey anecdotal evidence indicates growing IR use.

Respondents are not using social media for IR largely due to their core constituencies' (the investment community and financial media) lack of interest in social media interactions or engagement with their IR departments as an additional or replacement medium beyond their current interactions.

SEC Permits Social Media Use for Corporate Disclosure On April 2, 2013, the U.S. Securities and Exchange Commission (SEC) issued a press release stating that companies may use corporate social media outlets such as Facebook and Twitter “to announce key information in compliance with Regulation Fair Disclosure (Regulation FD) so long as investors have been alerted about which social media will be used to disseminate such information.” In 2008, the SEC issued an interpretive release (SEC Release No. 34-58288) which acknowledged the use of a company website to satisfy Regulation FD disclosure requirements if the company had ensured that it met certain criteria including:

1. The website is a recognized channel of distribution of information to the market; 2. The website is a source of broad dissemination to the market; and 3. There has been a reasonable waiting period for investors and the market to react to the posted information.

As a result, whether the use of a company website satisfies Regulation FD disclosure requirements is dependent on company-specific facts and circumstances, an analysis that is the responsibility of each company and not the SEC. The new social media guidance is similar in that the SEC leaves it for each company to decide if the use of social media for material disclosure is appropriate after a careful Regulation FD analysis. The guidance emphasizes the importance of issuers examining “rigorously the factors indicating whether a particular channel is a ‘recognized channel of distribution’ for communicating with their investors.” Among other important points:

“First, issuer communications through social media channels require careful Regulation FD analysis comparable to communications through more traditional channels. Second, the principles outlined in the 2008 Guidance — and specifically the concept that the investing public should be alerted to the channels of distribution a company will use to disseminate material information — apply with equal force to corporate disclosures made through social media channels.”

© 2013 National Investor Relations Institute

The SEC also made clear that the personal social media accounts of corporate executives “would not ordinarily be assumed to be channels through which the company would disclose material corporate information.” Given the SEC April press release, NIRI again studied this subject in 2013 in order to assess the current state of social media for professional use among IROs. The survey inquired about recent SEC announcements concerning social media, IR-related social media use, which is activity focused on a company's IR program (i.e., where the investment community is the primary audience), broad corporate policy concerning social media use by employees for work purposes, and organizational staff changes as a result of social media. In this context, social media was defined very broadly as the myriad tools and technologies on the Internet that enable the creation and dissemination of interactive, often user-generated content such as: LinkedIn, Google+, RSS or other web feeds, Twitter/TweetDeck, StockTwits, private social networks, message boards and forums (any online groups that are established for specific interests, memberships or private groups), YouTube, Slideshare, IR-oriented corporate blogs, other blogs, video blogs and podcasts, wikis, Facebook, social bookmarking (e.g., Delicious, Digg, StumbleUpon, etc.), chat/IM functions, text messaging, QR codes, feedback functions, and other tools. In June 2013, NIRI released NIRI Social Media Use in Investor Relations – 2013 Survey Results and presents input from NIRI corporate and counselor practitioners. 2013 Key Findings

The majority of survey respondent investor relations (IR) professionals (72%) do not use social media for their work.

Although differences can be seen in social media use by practitioner type (corporate or counselor) and market cap size, respondents within all spheres are not using social media for their work.

Consistent with the results of NIRI’s last (2010) study, respondents report not using social media for IR primarily due to lack of interest in the medium by the investment community.

Almost half (49%) of respondents who do not currently use social media for IR plan to reassess the issue within the next 12 months. The recent SEC guidance on the topic is a driving factor in determining reassessment.

Those already using social media for IR state the recent SEC social media and Bloomberg Twitter announcements will not affect the way they utilize the medium.

Over half of IROs using social media for IR state that social media postings are held to a lower degree of review than applied to press releases or SEC filings.

The top five social media tools among IR practitioners using social media are: Twitter (72%), webcasts (50%), LinkedIn (38%), Facebook (33%), and StockTwits (25%).

The companies within the majority (66%) of social media IR users have formal social media policies outlining expected employee behavior while using the medium.

IR counselors are more likely to have a social media manager on staff than corporate IR practitioners. IR counselors also report an increase in staff directly related to social media investment, and plan to increase their social media use within the next 12 months.

More Resources:

SEC Press Release: www.sec.gov/news/press/2013/2013-51.htm

SEC Report of Investigation: www.sec.gov/litigation/investreport/34-69279.pdf

SEC Interpretive Release on the Use of Websites: www.sec.gov/rules/interp/2008/34-58288.pdf

NIRI Standards of Practice: www.niri.org/standardsofpractice

NIRI, Social Media Use in Investor Relations – 2013 Survey Results: http://tinyurl.com/m8hojo6 Please visit www.niri.org for more information.

© 2013 National Investor Relations Institute

About the National Investor Relations Institute

Founded in 1969, the National Investor Relations Institute (NIRI) is the professional association of corporate officers and investor relations consultants responsible for communication among corporate management, shareholders, securities analysts and other financial community constituents. The largest professional investor relations association in the world, NIRI’s more than 3,300 members representing over 1,600 publicly held companies and $9 trillion in stock market capitalization.