46 pages! Wow! What were they thinking? 46 pages – that’s the length of JPMorgan Chase (NYSE: JPM) Chairman & CEO Jamie Dimon’s annual shareholder letter. Back in the day when I produced annual reports, if the CEO letter stretched 4 pages including charts and graphs and the full-color front section was half of this letter’s total length that would have been a lot.
Nowadays, traditional annual reports with their CEO letters seem anachronistic. But investors are hungry for more than a quarterly-earnings based discussion of strategy and results. Witness BlackRock CEO Larry Fink’s exhorting companies to focus on purpose, and the Strategic Investor Initiative urging for more long-term focused investor presentations. Investors today want different insights and Dimon’s letter is ahead of the curve in this regard in four key ways:
Articulates a long-term focus: While the letter reviews past year results along key metrics, it doesn’t give guidance or 2018 targets. Instead, Dimon articulates JPM’s philosophy of how it grows and manages the balance sheet. He also acknowledges the interdependencies of shareholders, customers, employees and communities in the value creation process.
Recognizes the importance of culture: By discussing the values and behaviors JPM wants to foster (diversity & inclusion, talent development, succession planning) or avoid (bureaucracy, complacency), Dimon essentially recognizes the importance of culture to long-term organizational success.
Addresses key business risks: Most companies limit discussion of risk factors to the 10K, but Dimon’s letter calls out several risks and reviews how JPM has, will, or may need to navigate through them. Now investors have a better perspective on JPM’s risk management framework and an understanding of likely decisions as these risks may evolve.
Provides perspective on public policy topics: By addressing relevant public policy topics, Dimon increases transparency around JPM’s perspectives. Consequently, JPM is better positioned to respond should it get caught in the crosshairs of debate. Interestingly, the results of a special 2017 Edelman Trust Barometer survey of institutional investors indicated three-quarters of investors believe companies should articulate their thoughts on political issues relevant to ensuring a healthy and robust business environment.
I don’t advocate addressing all these items in your annual CEO letters – in most cases that would be too much. However, there are many opportunities to broaden your business messages that you can consider. For example, articulating a long-term focus can appear in the 10K or investor presentations. Discussions of culture can be brought to life on a website. Or, perspectives on public policy can be included on a website or kept in a hip-pocket until needed.
Reflect on the topics investors today are most interested in and how you can get ahead of the curve.
Lead-IR Advisors, Inc.
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