This proxy season has shown that proxy contest websites can be effective weapons for activist investors who know how to use them. Proxy contest websites may become even more relevant next season if the SEC’s May 20th, 2009 proposed rule amendments to facilitate the rights of shareholders to nominate directors on corporate boards goes into effect. When another SEC rule, Notice and Access, went into full effect in January 2009 electronic distribution of proxy material officially replaced traditional paper mailings as the default method of distribution. As investors and corporations adjust to the change and realize the effectiveness of communicating with shareholders online the quality of online investor materials, including the rapidly evolving proxy contest website, is improving. Whether published by shareholders fighting for improvements at a company or company management defending itself from a shareholder looking for changes, the more effective the proxy contest website the more influence it will have on shareholder votes.

If you’re an investor preparing to wage a proxy battle how can you stay ahead of the curve and make your proxy contest website work for you?

Here are a few tips to get you started.

Know the Rules It would not look good for a shareholder company to be investigated by the SEC while trying to fight for company change. Before launching a proxy contest website it’s important to make sure the website is in compliance with the SEC and FINRA’s rules. For example, according to the SEC the proxy material website may not track the identity of persons accessing that Website to view the proxy material. In addition, the Website cannot require the installation of any “cookies” or other software that might collect information about the accessing person. All content on the website should be thoroughly reviewed by your legal and/or compliance team prior to launch. Plan on budgeting time for this critical, and often lengthy, pre-launch step.

What’s in a Name A carefully crafted domain name will make your site easier for people to access, either through a Google search or by typing the name in from memory. The domain name is the address of the site minus the www, i.e. “shareholder-proxy-contest.com”. Incorporate relevant keywords into the domain name. Words like “proxy”, “shareholder”, “change”, “vote” and the name or ticker symbol of the company are all good words to include in the domain name. Don’t make the domain name too long — it should be easy to remember.

Shareholders for CTO Home Page

Organization is Key The purpose of the site is to inform shareholders about your position. Page titles and text hierarchy should help clarify and define the page information. To keep site visitors from missing important content the site’s navigation should tell them, at a glance, where they are and where they’ve been so they can easily navigate to where they still want to go.

Form and Function Page layout and design can make or break a site’s effectiveness. Legible text size, line length and line height will also make proxy contest websites easier for shareholders to use. If your proxy site is excessively wide or the paragraphs run into each other, or the text is barely big enough to read, you’re giving site visitors too many reasons to reject or not bother learning about your position or message.

The bottom line, there’s no need to complicate your site with fancy bells and whistles or crazy colors and animations. Make your proxy contest site simple and easy to use so you can focus your effort on crafting a compelling and persuasive argument that wins shareholder votes.

Resources:

SEC, INTERNET AVAILABILITY OF PROXY MATERIALS 

SEC Votes to Propose Rule Amendments to Facilitate Rights of Shareholders to Nominate Directors

THE OFFICIAL ACTIVIST INVESTING BLOG (TM)

3 Senseless Steps in a Proxy Contest – Carl Icahn

Revisiting the Proxy Contest – NY Times

A Surprise at the Ballot This Proxy Season? – NY Times

Okapi Partners

RiskMetrics Group

Georgeson Inc.

Glass, Lewis & Co.

Egan-Jones Rating Co.

Here are ten tips to help you build an effective online strategy. Incorporate two or three items into your plan each quarter and you’ll end the year with an online strategy that puts your firm and fund websites to work for you.

1. Increase Traffic Turn a volatile market into your advantage: Nervous clients are thirsty for more frequent updates and that presents the perfect opportunity to drive traffic to your site. Let people know that you will be posting more frequent updates to your websites with a simple note, mailed with your quarterly and interim letters or with an email that links directly to your sites’ new content. Also consider adding RSS feeds to your sites.
2. Keep Content Relevant and Current Post brief, weekly market overviews. Ask questions. Be candid. Take responsibility for your performance and judgment and always let clients know what you’re doing to help them achieve their financial goals. Be direct with clients about poor performance, but don’t dwell on the downside. Instead focus on strategy and what you’re doing to turn things around. Keep offering documents such as fund prospectuses up to date – it’s not just a regulatory requirement, it also shows that the firm is ‘on its toes’.
3. Build A Website Content Strategy Invest in a content management system (CMS) and develop a content strategy. Designate a content management editor/writer to update content regularly and keep it relevant to your branding and service message. Add time and date to your firm home page or NAV to your funds’ to remind visitors that the sites are not static and encourage them to return often.Of course, make sure any time-sensitive information is updated promptly.
4. Post Webcasts & Videos Give your firm’s experts a voice: do a webcast once a month in which your partners, fund managers or analysts talk straight to investors about what’s going on in the market. Post a market overview video on your home page and provide podcasts and transcripts.
5. Be Accessible Put a personal face on your firm by using quotes, high quality photograhy and video of the partners to illustrate their philosophies, strengths, achievements and service offerings. Tell real stories if possible.
   
6. Differentiate Your Firm Highlight the firm’s investment philosophy, process and expertise; use engaging visuals, graphics, animations and content to differentiate your performance and investment approach from others. Post Lipper and Morningstar ratings on your homepage.
7. Add PR to the Mix Good PR in the financial media often leads to increased sales. Talk to the news media and add press and video to your site. Write white papers and post them. Develop good relationships with journalists: this is key to gaining presence in the financial media and visibility with your existing and potential client base.
8. Don’t Forget Compliance Is your exciting new content permissible? Your compliance team will let you know if the content can be published on your site or not. You want to leave enough room in your schedule for your in-house compliance officer or external compliance firm to review content.
9. Optimize Your Website SEO is short for Search Engine Optimization and many fund managers think it’s irrelevant to their online strategy. Your clients won’t be searching for an investment firm online but they (or their representatives) may Google you if your firm or fund has been recommended to them or if they are considering meeting with you. Your firm’s Google search results are a real-time snapshot of your firm’s online reputation. Google searches should lead to your own published content first, not something appearing on someone else’s website. Optimize your site for search engines.
10. Build Brand Equity Lastly, your company’s image and brand matter. Make sure your value proposition shines through every detail of your firm and fund websites, from your logo, tagline, imagery and color scheme to the description of your firm’s investment approach and process.

The investment you make in your website communication strategies today will help calm nervous clients and increase your firm’s visibility. When investors start getting back into the market you want them to think of your firm first.