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Investor Relations impact on Corporate

Governance

Michael Campbell September 2010

Agenda•Case Study

•Investor Relations

•Reputational

Management

•Compliance

Programmes

Case Study

Shareholders vs Executives

Conflict and non-alignment, enter ‘corporate governance’

Charl Kocks: “doing the right thing at the right time”

Remedies or approaches to achieve corporate governance:

Traditional: exit or voice/influence (1970’s)

Corporate raiders: bid for underperforming shares (1980’s)

Activist shareholders: Bob Monks – Lens (1990-2000)

Contentious issues:

Pay vs performance (UK)

Value creation/destruction (US)

Stock option plans (UK and US) 2

Case Study: Activist shareholder – Bob Monks

Take active positions in company:

underperforming in light of strong underlying values, and

susceptible to increased value through shareholder involvement

Managers to function as legally charged vs activist to monitor and even remove hard-of-hearing managers

Ran for directorship of Sears Roebuck in 1991

Eastman Kodak, Westinghouse, American Express

Now activism extended from US to UK and Asia3

Influence of Institutional Shareholders

Special Responsibility to Corporate Governance:

Hirschman (1970) – exit or voice

Cadbury Committee (1972) – influence

Greenburg Report (1995) – power and influence

Hempel Report (1998) – role of shareholders

Combined Code (2003) – dialogue with companies: Enter a dialogue

Evaluation of governance disclosures

Shareholder voting

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Influence of Institutional Shareholders - 2

UK: Hermes principles (2002): 

Company’s board should seek an honest, open and ongoing dialogue with shareholders 

Board is responsible for facilitating a satisfactory dialogue with shareholders

US: ‘investor capitalism’ (1996):

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“concentration of shares enables institutional investors to directly challenge management on

issues of concern.” (Useem)

Investor Relations’ goal is ...

To position the company as the world’s premier corporate, across all measures, amongst key stakeholders

Taking cognisance of investment markets

Regulatory environment, and

Global best practice

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Purpose statement - 1

Strive for “best-in-class” communications

Promote excellent relationships with investment communities

Build and maintain positive stakeholder sentiment

Ensure sufficient liquidity in company shares

Retain and expand company’s investor universe

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Purpose statement - 2

Manage analyst and investor expectations

Increase analyst research coverage

Positively differentiate from other investments

Communicate through various channels

Messaging has to be managed in a regulated environment

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Communication tools

Annual Report and Interim Report Presentations of full year and half year results Roadshows 1:1 meetings Electronic media – SENS, website Print media – news releases, brochures, corporate

surveys, research reports Investor Day / site visits Investor breakfasts / lunches Conference speaking

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Who is our Investor market?

Institutions / fund managers

Analysts (buy- and sell- side)

Private investors (retail market)

Financial media

Employees

Other influential contacts

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Year planner for 2010

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Jan

Close period

Mar

Apr

May

Jun

Jul

AugSep

OctNov

Feb

Dec

• World Moneyshow Orlando

• Close Period• Half year results• Local and

international roadshow

• Interim report

BAML 1:1Sun City

Marketing roadshow

• JSE Showcase Jo’burg

• Investor Day Jo’burg• Las Vegas

Moneyshow• BAML EM Conference

USA• Financial year End

Close period

Close period

• Close period• Full year results• Local and Int’l

roadshow

• UBS South Africa Conference London

• Marketing roadshow

• Annual Report published

• BAML 1:1 Montecasino conference

• Investec SA CEO’s conference London

• Annual General Meeting

• Half year end

Close period

Statutory

Marketing to retail investors

Marketing to institutions

Reputation risks

Size

Health and safety issues

Emotive industry / government

Ambivalent base / management

Soft target, and

Company defensive

12Reputation is the only competitive advantage

Six drivers of reputation - 1

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Productand

Service

Productand

Service

Emotional appealEmotional appeal

Visionand

Leadership

Visionand

Leadership

1. Good feeling

Admiration & respect

Trust

2. Product/service warranty

High quality product/service

Innovative product/service

Good value product/service

3. Good leadership

Clear strategy

Good employees

Six drivers of reputation - 2

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Financial performance

Financial performance

Workplace environmentWorkplace

environment

HSECHSEC

4. Good employer

Good employees

Well managed

5. Profitable record

Good investment

Growth projects

6. Safety performance

Employees treated well

Environmentally responsible

Supports community

Upholding Reputation requires compliance programmes

Continuous disclosure compliance programme

Reinforces commitment to complying with continuous disclosure obligations of listing

Sets out systematic processes ensuring compliance

Provides employees with a statement of disclosure obligations, as well as practical guidance for dissemination of information

Includes disclosure rules, investor & media protocols and corporate governance codes

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Components of compliance programmes

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Group Protocols for Investor and Media Relations

Group Protocols for Investor and Media Relations

Market Disclosure and

CommunicationsPolicy

Market Disclosure and

CommunicationsPolicy

Blue Label – Continuous Disclosure

Obligations and Communications

Blue Label – Continuous Disclosure

Obligations and Communications

Disclosure Committee

Protocol

Disclosure Committee

Protocol

• Management of Blue Label’s Investor & Media Relations, Group-wide

• Management of Blue Label’s Investor & Media Relations, Group-wide

• Blue Label’s commitment to complying with continuous disclosure obligations

• Blue Label’s commitment to complying with continuous disclosure obligations

• Continuous disclosure obligations of countries where Blue Label lists its securities

• Practical guide

• Continuous disclosure obligations of countries where Blue Label lists its securities

• Practical guide

Sets out:• Functions of the

Disclosure Committee• Reporting processes• Controls for the

release of information• Processes for

managing obligations

Sets out:• Functions of the

Disclosure Committee• Reporting processes• Controls for the

release of information• Processes for

managing obligations

• Responsibilities of Disclosure Officers and reporting processes, and is a practical guide for Disclosure Officers

• Responsibilities of Disclosure Officers and reporting processes, and is a practical guide for Disclosure Officers

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• Internal• Intranet

• Internal• Intranet

• External• Internet

• External• Internet

• Internal• Intranet

• Internal• Intranet

• Internal• Intranet

• Internal• Intranet • Limited internal• Limited internal

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Disclosure Officer Guidelines

Disclosure Officer Guidelines

Principles or why do we have Rules of Disclosure?

Legal requirement to disclose ‘material information’ to the market in accordance with listing rules

Determining ‘materiality’ is not always straightforward and may require judgement – consult widely

Information is released to stock exchange, investors and media and is posted on website

Investor Relations and Disclosure Committee/Company Secretary responsible

17not selective but simultaneous disclosure

In conclusion…

In general:

We say too much… too soon… to too many people

We are unique, technology, passionate

Golden rules

no surprises,no disappointments

don’t over-promise,don’t under-deliver

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Questions and Answers

Michael CampbellSeptember 2010