The Los Angeles Post

Template developed in response to calls from institutional investors for consistency in disclosures

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NEW YORK, April 23, 2019  – Building on a significant body of original research and ongoing feedback from institutional investors, CECP’s Strategic Investor Initiative (SII) has released a template for companies seeking to develop and communicate effective long-term strategic plans that help inform investment, voting, and engagement decisions. According to buy-side investors, the long-term should be described in terms of goals, metrics, and milestones, to enable a deeper understanding of the strategy and to track progress as it is implemented.

“Leading companies are strengthening their relationships with investors by sharing new types of information along extended time horizons,” stated Alex Gorsky, Chairman & CEO, Johnson & Johnson, SII Advisory Board Co-Chair. “This enhanced communication and transparency includes the development of long-term plans, supported by the Strategic Investor Initiative, inspiring positive shifts in the market and the way investors and companies operate, for the long-term.”

“For too long, companies have sacrificed long-term value creation to generate short-term results, which erodes the sustainability strategic investors seek,” said Bill McNabb, Former Chairman, Vanguard; SII Advisory Board Co-Chair. “It’s through the groundbreaking efforts of the Strategic Investor Initiative that companies and investors can change how businesses plan and act. CECP, with the 200 global CEOs in their coalition, is the right organization to lead this transformation.”

The template, available for download on CECP’s website, presents step-by-step guidance on essential elements of long-term plans. The fully-customizable template offers substantive counsel for IR and other corporate teams in a comprehensive format and includes details on presentation format, suggested slide content, and examples from past presentations. The template is not prescriptive, highlights key themes for companies to disclose on, and is intended to be used by companies across sectors in a variety of investor-facing settings. The template’s authors, Brian Tomlinson, Research Director, SII and Emily Parlapiano, Associate Manager, SII identified leading practices for decision-relevant disclosures in a Long-Term Plan:

  1. Additive: Builds on, but is additive to, existing disclosures, noting areas such as “corporate purpose”, not found in the default IR deck
  2. Context: Provides meaningful contextualized disclosures, expectations, and targets; more than marketing
  3. Materiality: Topics reflect those financially material for the relevant industry and business model
  4. Integrated: Environmental, social, and governance (ESG) issues and sustainability presented as part of an integrated discussion, providing details on meeting the needs of an extended list of stakeholders, including employees and society; not a silo or list of awards
  5. Forward-looking: Provides a five-year look-forward, based on the capital cycle, and is a strategic discussion related to sustainable value creation in response to megatrends; majority is forward-looking
  6. Performance: The long-term plan must provide a direct connection to financial prospects and operational performance over the long-term
  7. Risks/Opportunities: Sets out a balanced discussion of long-term risks and opportunities

“The world’s largest asset managers are unambiguous in their mandates for companies to demonstrate long-term value creation,” said Daryl Brewster, CEO, CECP. “But not all companies are clear on how to do that. With this template, SII has created a blueprint for companies seeking to bring their purpose and profits into alignment.”

“The most common request we’ve received from IR Teams, as they prepare their CEOs to present long-term plans at SII’s CEO Investor Forums, is for step-by-step guidance on content of a long-term plan,” said Brian Tomlinson. “This template was designed to be practical, functional, and inclusive of investor feedback. When paired with SII’s other resources, companies will have a complete toolbox to share the company’s plans for managing growth, strategy, and risk.”

As part of its suite of services, the Strategic Investor Initiative offers a five-step process for companies interested in developing and presenting their long-term plans to like-minded investors. The approach includes CEO engagement, an in-depth briefing for internal stakeholders, framework and template development, presentation at a CEO Investor Forum, and collecting feedback from investors for CEOs.

SII’s Investor Letter served as the basis of the long-term plan template. The letter, issued in 2018, was signed by nine leading investors from SII’s Advisory Board, including Bill McNabb.

The CEO Investor Forums are a new platform for senior business leaders from the world’s leading companies to present long-term plans to long-term oriented institutional investors. The sixth CEO Investor Forum took place on February 25th, 2019 and featured long-term plan presentations from Mark Schneider, CEO, Nestlé; Robin Hayes, CEO, JetBlue Airways; Kevin P. Clark, President & CEO, Aptiv; Peter Van Camp, Executive Chairman, Equinix; Steve Collis, Chairman, President & CEO, AmerisourceBergen.

CEO Investor Forum 7.0 is scheduled for May 8th, 2019 in Chicago with presentations from Nicholas K. Akins, Chairman, President and CEO, American Electric Power (AEP) and Ralph Izzo, Chairman, Present, and CEO, Public Service Enterprise Group, Incorporated (PSEG). CEO Investor Forum 8.0 is scheduled for February 24th, 2010 in New York City.

On May 8th in Chicago, directly following SII’s CEO Investor Forum 7.0, Brian Tomlinson will be leading a hands-on executive workshop focused on the who, what, where, when and why of developing and delivering market-moving long-term plan presentations. The two-hour workshop is designed to enhance collaboration between Corporate Social Responsibility and Investor Relations leaders.