Once upon a time, the annual report was the most important communications tool that a company had to reach its shareholders.
It was a chance to present not only necessary financial information, but also to give investors a solid idea about what the company's plans were for the future. For IR pros, the annual report was the year's biggest branding exercise.
But now, things are changing. The Internet's wealth of instantly available data about all public companies has made annual reports less appealing. As companies move forward into the digital age, they are seeking to both adapt annual reports to the needs of modern investors and ensure that the branding benefits they once provided are not lost.
"Now, you're soaking in [information]," says Roger Sametz, president of Sametz Blackstone Associates and longtime consultant on annual reports. "The need to get information out on an annual basis... is not compelling."
Sametz points out that annual reports began after the Great Depression as a mandate that companies share their financial statistics with investors; slowly, companies took advantage of that need to expand the reports into larger, more polished productions.
Now, that evolution is simply continuing in the other direction. This means that companies are losing some of their power to control the message, but alternate tactics like e-newsletters are helping to ease the transition.
Linda Kelleher, interim CEO of the National Investor Relations Institute, notes that many companies are shifting to "10-K wraps," slimmer versions of annual reports. Others are using Web-based information models, focusing resources on their Web sites while allowing investors to request optional hard copies.
"In a way, the annual report as it was traditionally looked at is a bit of an anachronism," she says. "What's taking its place are a lot of different ways of dealing with the information that hopefully will suit the personality of the company."
Companies must beef up their Web sites' financial information as investors turn to the Internet more
Consider a 10-K wrap or a Web-based report model
The decline of annual reports means less branding control for companies