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Corporate Disclosure Corporate Disclosure Corporate Disclosure Corporate Disclosure Practices Survey 2001 Practices Survey 2001 Practices Survey 2001 Practices Survey 2001 M ARCH , 2001





A study conducted for: National Investor Relations Institute Among: Senior Investor Relations Executives at NIRI Companies

RIVEL RESEARCH GROUP RIVEL RESEARCH GROUP RIVEL RESEARCH GROUP RIVEL RESEARCH GROUP 830 POST ROAD EAST, WESTPORT, CT 06880 830 POST ROAD EAST, WESTPORT, CT 06880 830 POST ROAD EAST, WESTPORT, CT 06880 830 POST ROAD EAST, WESTPORT, CT 06880 TEL: 203.226.0800 FAX: 203.226.5644 TEL: 203.226.0800 FAX: 203.226.5644 TEL: 203.226.0800 FAX: 203.226.5644 TEL: 203.226.0800 FAX: 203.226.5644 WWW.RIVEL.COM WWW.RIVEL.COM WWW.RIVEL.COM WWW.RIVEL.COM TABLE OF CONTENTS Page I. Preface Background and Study Purpose .............................................................................................................................. 1
Methodology ........................................................................................................................................................... 1
Profile of Companies Included in Study ................................................................................................................. 2
Report Organization ................................................................................................................................................ 3 II. Research Highlights ........................................................................................................................ 5 III. Summary of Findings Assessing the Impact of Regulation Fair Disclosure on IR .................................................................................... 8
Focus on Earnings Guidance ................................................................................................................................. 12
Current Methods of Communicating .................................................................................................................... 14
Internal Company Policies .................................................................................................................................... 15
Suggestions for Changing Regulation Fair Disclosure ......................................................................................... 16 IV. Summary Tables ............................................................................................................................ 20 Table 1. Change in Level of Information Provided Since Reg FD Passed ................................................... 20 Table 2. Change in Level of One-on-ones Conducted Since Reg FD Passed ............................................... 20 Table 2.1 How Companies are Cutting Back on One-on-ones ........................................................................ 21 Table 3. Current Practices for One-on-ones .................................................................................................. 21 Table 4. Believe Employees Not Covered by Reg FD are Now Getting More Call
From Analysts/Investors .................................................................................................................. 22 Table 5. Perceived Impact of Reg FD on Analyst Coverage ......................................................................... 22 Table 6. Decline in Sell-side Coverage Believed to be a Result of Reg FD ................................................. 22 Table 7. Number of Sell-side Analysts Covering Firm ................................................................................. 23 Table 8. Believe Institutional Investor Sold Stock Due to a Change in
Disclosure Policy Since Reg FD ..................................................................................................... 23 Table 9. Perceived Impact of Reg FD on Analysts ........................................................................................ 24 Table 10. Pre-Reg FD: Reviewed Analysts’ Draft Earnings Models .............................................................. 24 Table 11. Post-Reg FD: Still Review Analysts’ Draft Earnings Models ......................................................... 25 Table 12: Pre-Reg FD: Reviewed Analysts’ Draft Reports ............................................................................. 25 Table 13. Post-Reg FD: Still Review Analysts’ Draft Reports ........................................................................ 25 Table 14. Post-Reg FD: How Earnings Models Are Reviewed ...................................................................... 26 Table 15 Post-Reg FD: How Analysts’ Draft Reports Are Reviewed ............................................................ 26 Table 16: Post-Reg FD: Type of Earnings Information Currently Disclosed .................................................. 26 Table 17. How Company Handles Questions as to Whether Previously Given Guidance is on Track ........... 27 Table 18. Company Has Made Public Commitment to Updating Earnings Guidance if it
Changes Materially .......................................................................................................................... 27 Table 18.1 How the Mid-Quarter Review of Guidance is Disseminated .......................................................... 27 Table 19. Company Has Quiet Period Prior to Earnings Releases .................................................................. 28 Table 20. Number of Days Quiet Period Begins Prior to Earnings Release ................................................... 28 Table 21. Post-Reg FD: Method Used to Notify Individual Investors and the Media
of Webcasts/Conference Calls ......................................................................................................... 28 Table 22. Post-Reg FD: Notification of Upcoming Meeting Includes Company’s Intent
to Discuss New Material Information ............................................................................................. 29 Table 23. Ways in Which Earnings Guidance is Currently Provided .............................................................. 29 Table 24. Company Has a Written Disclosure Policy ..................................................................................... 29 Table 24.1 Reason Company Doesn’t Have a Written Disclosure Policy ......................................................... 30 Table 25. Company Has Policy Against Employee Participation in Chat Rooms
or Unauthorized Discussions ........................................................................................................... 30 Table 26. One Thing Respondents Would Change About Reg FD ................................................................. 31 Table 27. Market Capitalization ...................................................................................................................... 32 Table 28. Stock Market Listings ...................................................................................................................... 32 Table 29. Title of Respondent ......................................................................................................................... 33 Table 30. Industry ............................................................................................................................................ 34 V. Industry Tables Table A: Banks, Chemicals and Consumer Products ............................................................................................ 36
Table B: Drugs, Electronics and Diversified Financial Services .......................................................................... 37
Table C: Healthcare Services, Insurance and Manufacturing ............................................................................... 38
Table D: Retail, Medical Devices and Real Estate ............................................................................................... 39
Table E: Technology, Telecom and Utilities & Power .......................................................................................... 40 VI. Questionnaire ............................................................................................................................... 42

I. I. I. I. Preface Preface Preface Preface



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I. I. I. I. Preface Preface Preface Preface



Background and Study Purpose This study represents the third survey conducted on behalf of the National Investor
Relations Institute by Rivel Research Group that focuses on key trends affecting
corporate disclosure. (The previous measurements were completed in 1998 and 1995.)
The overall purpose of this ongoing research effort is to develop a comprehensive
informational database that will assist members in dealing more effectively with the
constantly evolving dynamics of investor communications. The current study is the first completed since the implementation of Regulation Fair
Disclosure (Reg FD), and focuses on the impact this statute is having on corporate
investor relations practices. Given the far-reaching implications of Reg FD, the study
methodology has been enhanced to ensure that the data generated are both valuable and
actionable for the NIRI membership. These changes include inviting senior IR officers to
complete the survey online so that as comprehensive a database as possible is developed
on each of the questions explored. NIRI will continue to monitor change on Reg FD
through a follow-up tracking study and a second report on this subject at yearend. Methodology To ensure the most accurate representation of current disclosure policies, this study has
been conducted among senior investor relations practitioners at NIRI member
companies. While the sample group is similar to that targeted for the research
conducted in 1995 and 1998, the line of inquiry has been revised so that it focuses
exclusively on questions that can be used to measure the impact of Reg FD. In addition,
this year’s methodology utilized e-mail and an online questionnaire. The 1995 and 1998
surveys employed a combined telephone and mail procedure. At the outset of the interviewing on January 25, 2001, all NIRI corporate members (a
total of 2,736 firms) were e-mailed a NIRI Executive Alert which announced the survey,
requested the participation of the most senior IR practitioner in their firm and directed
them via hyperlink to the survey Web site. Once at the site, participants were able to
answer questions and submit their responses via an automatically generated e-mail to
the research team which was then imported into a data file. A second e-mail was
disseminated to NIRI corporate members on February 6 to remind those who had not
yet filled out the survey to please respond. Using this technique, 600 survey responses
were received by the cutoff date of February 16, which translates into a response rate of
21%. After data cleaning and removal of duplicate results (only one response was
allowed per company), a total of 577 records remained in the data pool from which -2- I. I. I. I. Preface Preface Preface Preface


the survey results were extracted and analyzed. The data collected are representative of
the NIRI corporate membership as a whole in terms of market capitalization and
spanned a wide variety of industry groups. Profile of Companies Included in Study Total Companies Interviewed (Base/Percentage) (577) 100 # % Market Capitalization: Large-cap ($1.5 billion or more) 224 39% Mid-cap ($500 million to $1.49 billion) 140 24% Small-cap (Under $500 million) 211 36% Not reported 2 .5% Title: CFO 37 6% Vice President, Investor Relations 187 32% Director/Executive Director of IR 198 34% Manager of Investor Relations 105 18% IR Associate/Specialist 29 5% Other 21 4% Stock Market: New York Stock Exchange 277 48% NASDAQ 267 46% American Stock Exchange 24 4% Other Market 9 2% Industry:* Technology (net) 148 26% Internet 53 9% Software 50 9% Hardware 45 8% Telecommunications 54 9% Diversified financial services 42 7% Drug & research, drug distribution 41 7% Medical devices and products 34 6% Utilities & power 33 6% Banks 31 5% Fuel – coal, oil and gas, petroleum 29 5% Consumer products 29 5% Electronic products 29 5% Manufacturing – capital goods 29 5% Insurance 22 4% Retailing 21 4% Real estate 21 4% Chemicals 20 3% Service industries 19 3% Health care services 19 3% Entertainment 17 3% Metals and mining 16 3% Food/beverage 15 3% Other industries 79 14% * Multiple responses. -3- I. I. I. I. Preface Preface Preface Preface



Report Organization The Research Highlights section of this report (which follows this Preface) gives an
overview of the key findings from this research. This is followed by the Summary of
Findings, which presents detailed results for the total group of senior NIRI practitioners
participating in this study. The findings are referenced to a set of summary tables
which provides more complete documentation of the issues covered. As a service to
NIRI members, a series of industry tables also has been prepared for sectors in which
sufficient numbers of interviews were completed to yield reliable results. The final
section includes a text version of the online questionnaire.
II. II. II. II. Research Highlights Research Highlights Research Highlights Research Highlights


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II. II. II. II. Research Highlights Research Highlights Research Highlights Research Highlights




? Investor relations officers in most NIRI companies report that they have not made major changes to key aspects of their IR programs as a result of Reg FD. • Three out of four IROs (75%) say their companies provide the same, or even more, information to analysts and investors as they did before Reg FD. • Nearly four out of five (79%) continue to hold one-on-one meetings with investment professionals to the same or greater extent than previously. • Four in five (79%) still offer some form of earnings guidance to the investment community (most often including factors driving earnings or a range of
estimated EPS).

? Regulation FD also is seen by IROs as having minimal impact on the composition of their company’s sell-side coverage or institutional shareholder base. • Of the 577 IROs surveyed, only one directly attributes a loss of sell-side coverage to Reg FD restrictions. • Similarly, only five IROs (still less than 1%) say that portfolio managers have sold stock in their company because of Reg FD.

? However, a distinct minority of IROs has cut back their investor communications since Reg FD went into effect. • One in four is disseminating less information about their firms. • One in ten has reduced the number of one-on-ones conducted. • And, of those providing earnings guidance, one-third do not update this insight during the quarter. -6-
II. II. II. II. Research Highlights Research Highlights Research Highlights Research Highlights



? IROs are making a concerted effort to avoid selective disclosure. • Fewer IROs review analysts’ earnings models and draft reports than was the case before Reg FD was implemented: - Since Reg FD went into effect, 43% report that they go over analysts’ earnings models (compared to 81% previously). - Just over half (57%) review draft reports (down from 79% pre-Reg FD). • Seven in ten IROs (70%) say they always accompany top corporate officers during one-on-one meetings with investment professionals. • And, just under two-thirds (63%) report that their firms currently have written disclosure policies, with an additional 25% saying they plan to establish one.
? At the same time, most NIRI companies have taken steps to facilitate access to corporate information through conference calls, webcasts and corporate Web sites. • Fully 89% of companies that provide earnings guidance do so by allowing full public access to their quarterly conference calls and webcasts.
• Two out of three of these firms (67%) include earnings guidance in their news releases.
• Over half of all companies (55%) are using e-mail push technology to notify investors of upcoming webcasts or telephone conference calls.
? While IROs appear to be adjusting to the post-Reg FD era, they would like to see some changes in the regulation. The most commonly expressed suggestions include:
• Greater clarity on the statute’s rules and definitions (especially in terms of what constitutes materiality).
• More flexibility in meeting the information needs of analysts and investors. One of the most frequently mentioned rules that IROs would like to change is the
stipulation which they believe requires companies to issue news releases simply
to confirm existing guidance.

III. III. III. III. Summary of Findin Summary of Findin Summary of Findin Summary of Findings gs gs gs





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III. III. III. III. Summary of Findings Summary of Findings Summary of Findings Summary of Findings




Assessing the Impact of Regulation Fair Disclosure on IR

? According to most investor relations officers, Reg FD has not reduced the amount of information they disseminate to analysts and investors.
Nearly half the senior IROs surveyed (48%) say they are providing the same quantity of data as they did before Reg FD went into effect.
In addition, better than one in four (27%) report sharing an even greater amount of information.
However, a similar number (24%) does indicate that they have cut back on the information they regularly send out to the investment community.
The following chart illustrates these findings and also presents results by the market
capitalization of the companies represented in the study. 1 [A LSO REFER TO S UMMARY T ABLE 1 AT THE END OF THIS REPORT ] Change in Level of Information Provided Since Reg FD Passed 24% 20% 25% 27% 48% 54% 42% 46% 27% 33% 26% 1% 1% 26% 0% 20% 40% 60% 80% 100% Total 2001 Large-cap Mid-cap Small-cap Providing more
information
Providing the same
amount of information
Providing less
information
No reply 1 Throughout this report, the following definitions are used: Large-cap – companies with a market capitalization of $1.5 billion or more; Mid-cap – $500 million to $1.49 billion; Small-cap – under $500 million. -9-
III. III. III. III. Summary of Findings Summary of Findings Summary of Findings Summary of Findings




? Correspondingly, the number of one-on-one meetings being held between senior corporate management and investment professionals has been little affected. [R EFER TO S UMMARY T ABLE 2] • Three out of four IROs (74%) say their companies are conducting the same number of one-on-one sessions as they did before Reg FD. Five percent actually
report an increase. • Relatively few firms (about one in ten) have cut back on the number of one-on- ones they hold. • As might be anticipated, one-on-ones are part of a large company’s IR program (83%) to a greater extent than that of a smaller company (63%). Change in Level of One-on-Ones Conducted Since Reg FD Passed 7% 11% 10% 12% 10% 74% 83% 76% 63% 2% 10% 22% 5% 5% 5% 5% 0% 20% 40% 60% 80% 100% Total 2001 Large-cap Mid-cap Small-cap Conducting more one-
on-ones than before
Conducting the same
number as before
Conducting fewer one-
on-ones than before
Uncertain/do not hold
one-on-ones

? IROs say they typically accompany senior corporate officers during one-on-one sessions with analysts and investors (reported by 94% of the IROs interviewed).
Seventy percent report they always go with senior executives. [R EFER TO S UMMARY T ABLE 3] • Investor relations officers also try to bring along another company executive when they themselves are the primary spokesperson at such meetings (62%). • Earnings topics are covered at about half the one-on-one meetings held between corporate executives and investment professionals (54%). -10-
III. III. III. III. Summary of Findings Summary of Findings Summary of Findings Summary of Findings




? Most investor relations executives (73%) do not think that investment professionals have turned to gathering insight from corporate employees not covered by Reg FD. • In fact, only 6% have detected such inquiries, while 20% are uncertain whether there have been any. [R EFER TO S UMMARY T ABLE 4]
? A loss in analyst coverage or institutional ownership is rarely attributed to the implementation of Reg FD. [R EFER TO S UMMARY T ABLES 5 AND 6] • Of the 577 IROs surveyed, only one (.2%) blames Reg FD specifically for a decline in sell-side coverage. - Nearly two in three (63%) say there has been no change, and 20% actually indicate an increase (although not necessarily due to Reg FD). - Average sell-side coverage reported in this study ranges from 16 analysts for large-cap companies to 7 for mid-caps and 3 for small-caps. [R EFER TO S UMMARY T ABLE 7] • Similarly, only five of the 577 respondents (1%) hold Reg FD directly responsible for a falloff in institutional holdings. [R EFER TO S UMMARY T ABLE 8]
? However, while very few IROs report an actual (or even threatened) decrease from these constituencies, several IR executives do say that they are receiving fewer requests
to review analysts’ earnings models or draft reports. [R EFER TO S UMMARY T ABLE 9] • Nearly half (47%, and 56% in large-cap companies) are being asked to review earnings models less frequently than was the case before Reg FD. • Better than one-third (36%) say they receive a smaller number of requests to look over draft reports. -11-
III. III. III. III. Summary of Findings Summary of Findings Summary of Findings Summary of Findings




? The reduced number of analysts’ requests also is reflected in the less extensive earnings guidance being supplied by IROs. [R EFER TO S UMMARY T ABLES 10 AND 11] • While 81% of the IROs surveyed say they reviewed analysts’ earnings models prior to the adoption of Reg FD, only 43% report that they continue this
practice today. • Similarly, 79% used to look over analysts’ draft reports, compared to 57% currently. [R EFER TO S UMMARY T ABLES 12 AND 13] Extent to which IROs Review Analysts’ Earnings Models/Draft Reports 81% 43% 79% 57% 0% 20% 40% 60% 80% 100% Pre-Reg FD Post-Reg FD Pre-Reg FD Post-Reg FD Review analysts'
earnings models Review analysts'
draft reports ? Most IR executives providing such reviews (over 90%) report that they do so in order to check the factual accuracy of historical information in the public domain. [R EFER TO S UMMARY T ABLES 14 AND 15] • Half (50%) also indicate that they are reviewing assumptions that they believe are non-material.


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III. III. III. III. Summary of Findings Summary of Findings Summary of Findings Summary of Findings



Focus on Earnings Guidance ? The large majority of NIRI companies (79% of total interviewed, and 88% of large- cap companies) continues to provide some form of earnings guidance. [R EFER TO S UMMARY T ABLE 16] • This usually takes the form of discussions of factors that drive earnings, but not a comprehensive review of all elements in these equations (51%). • Nearly as many IROs (47%) report sharing a range of estimated earnings per share. • Only one in ten (12%) provides a specific earnings target, with even fewer (6%) divulging an earnings model.
? As the following graph indicates, larger companies are the most likely to disclose various types of earnings guidance.
Types of Earnings Information Currently Disclosed 5% 9% 31% 42% 65% 7% 11% 54% 53% 85% 5% 17% 57% 57% 88% Provide an earnings model Provide estimated EPS Provide a range of estimated EPS Provide estimates of factors driving earnings Provide earnings guidance Large-cap companies ($1.5 B+) Mid-cap companies ($500 M - $1.49 B) Small-cap companies (Under $500 M) -13-
III. III. III. III. Summary of Findings Summary of Findings Summary of Findings Summary of Findings




? IROs in NIRI companies who currently give earnings guidance generally update this information during the fiscal quarter. [R EFER TO S UMMARY T ABLE 17] • Well over half either disseminate news releases to announce material events that will cause the guidance to change (56%), or plan to routinely issue a mid-quarter
review of guidance (6%). - In fact, one out of four (28%) says their companies have made a public commitment to updating earnings guidance if it changes materially. [R EFER TO S UMMARY T ABLE 18]
• A substantial minority (35%), however, reports that their firms do not update guidance during the quarter.
• Another 12% have not yet decided how to resolve this question. How Earnings Guidance Is Updated * 12% 6% 35% 56% Uncertain Plan to routinely issue a mid-quarter review of guidance Do NOT update guidance during the quarter Issue news release before discussing if circumstances cause guidance to change * Among companies that provide earnings guidance. Multiple responses. • Note: These percentages do not differ markedly by the size of a company’s market capitalization.
? Importantly, quiet periods are employed extensively by NIRI companies that discuss earnings with the Street (86%) – typically ranging from one to five weeks
prior to their quarterly earnings releases. [R EFER TO S UMMARY T ABLES 19 AND 20] • The average length of these quiet periods is 25 days. -14-
III. III. III. III. Summary of Findings Summary of Findings Summary of Findings Summary of Findings


Current Methods of Communicating ? Individual investors and the media are usually alerted to upcoming conference calls or webcasts through news releases and notices posted to a firm’s Web site. [R EFER TO S UMMARY T ABLE 21] • Each of these means of advance notification is employed by two out of three or more NIRI firms, regardless of company size. • Just over half are using push technology whereby interested investors who want an e-mail alert are notified directly.
? Announcements of upcoming conference calls and webcasts typically do not include insight as to whether new material information will be discussed. This kind of
advance notice is supplied by 38%. [R EFER TO S UMMARY T ABLE 22]
? The vast majority of quarterly conference calls in which earnings guidance is given is open to all interested parties and the media. [R EFER TO S UMMARY T ABLE 23] • Fully nine in ten IROs (89%) in these companies say they provide full public access to their quarterly conference calls. • Two out of three also disseminate guidance in the quarterly news release. • The restricted access call is rare, reported by only 1% of survey participants.
? As the following chart illustrates, these results do not differ significantly by company size. Methods by Which Earnings Guidance Is Currently Provided* 1% 28% 66% 83% 1% 24% 70% 92% 2% 27% 67% 90% Quarterly conference call not open to all parties SEC document (8K, 10K or 10Q) Quarterly news release Quarterly conference call open to all parties Large-cap companies ($1.5 B+) Mid-cap companies ($500 M - $1.49 B) Small-cap companies (Under $500 M) * Among companies that provide earnings guidance. Multiple responses. -15-
III. III. III. III. Summary of Findings Summary of Findings Summary of Findings Summary of Findings




Internal Company Policies

? Written disclosure policies are becoming the norm for NIRI companies. • Nearly two out of three IROs (63%) now say that these directives are in place (up from 50% and 40% in NIRI research completed in 1995 and 1998, respectively). [R EFER TO S UMMARY T ABLE 24] Company Has a Written Disclosure Policy 50% 60% 38% 43% 40% 49% 39% 29% 63% 68% 63% 59% 0% 20% 40% 60% 80% 100% Total Large-cap companies ($1.5 B+) Mid-cap companies ($500 M - $1.49 B) Small-cap companies (under $500 M) 1995 1998 2001 • In addition, 25% in the current study indicate that their firms have plans to formalize their disclosure policy in writing.

? Three-quarters of NIRI companies (73%) also have policies to prevent employees from participating in chat rooms or unauthorized discussions about the firm. [R EFER TO S UMMARY T ABLE 25] -16-
III. III. III. III. Summary of Findings Summary of Findings Summary of Findings Summary of Findings




Suggestions for Changing Regulation Fair Disclosure

? When asked to specify aspects of Reg FD they would like to change, IROs most often call for the following: • Greater clarity on Reg FD’s rules and definitions (cited by 16%) – particularly, a better definition of material information, as well as insight from the SEC on how
best to comply with the statute’s mandates. • More latitude in meeting the information needs of analysts, investors and the media (15%). These respondents would like more freedom to respond to
questions or to confirm existing guidance without having to issue news releases. • In addition to these two leading issues, some IROs (6%) would like to see a broader application of Reg FD so that it also applies to some of the questions
asked by such key interest groups as analysts, investors and, particularly, the
media. • Others (5%) want a more liberal interpretation as to how information can be disseminated, frequently suggesting that a company’s Web site should suffice as
the source for public disclosure, obviating the need for myriad news releases.
The following verbatim comments lend further insight into the views expressed: [R EFER ALSO TO S UMMARY T ABLE 26] “They should clarify exactly what we can or should say about future earnings expectations.
No one wants to be the first test case, so we won’t say anything about future expectations.
That result certainly seems contrary to the intent of the rule.”

“I would change the restriction throughout the quarter that we cannot say that we remain
comfortable with earnings consensus without having to announce it via a press release.”

“The definition of materiality needs to be changed. At present, everything is ‘material’
however small or truly insignificant it is. Not every bit of information needs full
disclosure.”
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III. III. III. III. Summary of Finding Summary of Finding Summary of Finding Summary of Findings s s s



“It should directly involve other players, such as sell-side firms and buy-side analysts, in
the process of improving disclosure. Today, the onus and policing lies solely with the
issuer, and better cooperation by investors, rather than trying to keep one foot in the ‘old
days,’ would be helpful. Overall, we do not have problems with the purpose of Reg FD, and
the process is getting institutionalized fairly quickly.”

“Having accurate information available for the investing public, including reasonable
earnings estimates, is a valuable contribution provided by the analysts’ community. It
would be helpful if there were a means in the regulation, a safe harbor, that would allow
management to review analysts’ earnings models, and minimize the variations in earnings
estimates that will otherwise likely occur.”

“We need a solid definition about what exactly constitutes materiality in today’s world.
The ‘average’ investor rule is not good enough.”

“While the intent of Regulation FD is noble and has resulted in a more level playing field
with respect to investors’ access to company conference calls (which is a positive), the
‘noise’ created by the significantly increased number of corporate press releases
announcing earnings dates and conference call access information is cluttering up the
newswires. I would advocate that corporate Web sites should publish that information,
then provide for push technology which can alert investors and the media – the ones who
have requested and want the information – to the news. Automatic issuance of press
releases to announce every corporate earnings release date and every investor conference
appearance is overkill. The very noise this activity creates may ultimately dampen the
spirit of the Regulation by jading everyone with so much news traffic that they eventually
tune it out.”

“If I gave guidance for the future in an earnings release, I would like to be able to refer to
that release throughout the quarter assuming the guidance was still true. I don’t think it
should be necessary to issue a new release when guidance has not changed.”

“It should include sell-side analysts. They can report rumors and write anything they
want without SEC oversight. Companies have little power to respond or correct
information without the burden of putting out more press releases or holding more
conference calls.”
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III. III. III. III. Summary of Findings Summary of Findings Summary of Findings Summary of Findings



“They should define webcasting of conference calls and financial conferences over the
Internet which are available from company Web sites as adequate disclosure for Reg FD
purposes. Allow push technology, where interested persons register an e-mail address to
receive adequate notification and allow the corporate Web site to be a satisfactory source of
dissemination of material information for Reg FD purposes.”

“Revise FD so that the media is not given special exemption. We do not give any material,
non-public information to the media, but several media folks believe that they have a right
to receive it and we can not, as a company, invoke Reg FD in not providing them the data
they are seeking.”

“Remove the subjectivity whereby the SEC can, after the fact, accuse the company of
making a material non-public disclosure. Our evaluation as to whether an item is material
is done in advance. The SEC can, looking back, argue that an item was material simply
based on movement in the company’s stock price that day.”

“I would make it standard policy that if the company does not issue an update to the
guidance issued in an earlier release then the public must assume there has been no
material change to the guidance. It seems silly to me to issue an update mid-quarter that
says nothing has changed.”

“Regarding materiality – at what specific point does the company have an obligation to
disclose, for example, new products, mergers and management changes? This appears to be
a very gray area.”

“It is extremely difficult for young, growing companies with evolving corporate models to
not give more guidance to the analyst initiating coverage of the company.”

“They need to be more cognizant of the perception created by the rule, rather than the rule
itself. Companies can still talk about many things – history, industry, trends, factors
driving the industry – but many companies now seem petrified to discuss anything because
of a fear of Regulation FD.”

“We need clearer definitions of what is considered material and clearer guidance on what
can and cannot be disclosed. And, we need more guidance on one-on-ones. The SEC
should conduct training in major cities and be able to explain their own policies.”

IV. IV. IV. IV. Summary Tables Summary Tables Summary Tables Summary Tables




IV IV IV IV.... Summary Tables Summary Tables Summary Tables Summary Tables -20-
Table 1. Change in Level of Information Provided Since Reg FD Passed Market Capitalization Total $1.5B or more $500M - $1.49B Under $500M (Base) (577) (224) (140) (211) % % % % Providing more information 27 26 33 26 Providing the same amount of information 48 54 42 46 Providing less information 24 20 25 27 No reply 1 - - 1
Table 2. Change in Level of One-on-ones Conducted Since Reg FD Passed Market Capitalization Total $1.5B or more $500M - $1.49B Under $500M (Base) (577) (224) (140) (211) % % % % Conducting a greater number of one-on-ones than before 5 5 5 5 Conducting the same number of one-on-ones as before 74 83 76 63 Cutting back on the number of one-on-ones conducted 11 10 12 10 Have not been holding one-on-ones and do not
plan to begin 4 1 1 11 Uncertain 6 1 6 11

IV IV IV IV.... Summary Tables Summary Tables Summary Tables Summary Tables -21- Table 2.1. How Companies are Cutting Back on One-on-ones Market Capitalization Total $1.5B or more $500M - $1.49B Under $500M (Base) (577) (224) (140) (211) % % % % Sell-side Conducting fewer one-on-ones with sell-side analysts 9 9 11 8 Eliminating one-on-ones with sell-side analysts 1 - 1 2 Not cutting back sell-side one-on-ones 89 90 88 90 No reply 1 1 - - Buy-side Conducting fewer one-on-ones with the buy-side 9 9 11 7 Eliminating one-on-ones with the buy-side 1 - 1 2 Not cutting back buy-side one-on-ones 89 90 88 90 No reply 1 1 - 1
Table 3. Current Practices for One-on-ones Market Capitalization Total $1.5B or more $500M - $1.49B Under $500M (Base: among companies that hold such meetings) (552) (222) (139) (189) % % % % IR accompanies top corporate officers during one-on-ones Yes (net) 94 98 94 91
Yes, always 70 86 67 53 Yes, sometimes 24 12 27 38 No 5 2 6 8 No reply 1 - - 1 Senior IR officer brings other person during one-on-ones Yes (net) 62 60 56 69
Yes, always 17 14 13 22 Yes, sometimes 45 46 43 47 No 34 37 38 26 No reply 4 3 6 5 Earnings topics are covered in one-on-ones Yes 54 56 57 50 No 44 43 42 45 No reply 2 1 1 5

IV IV IV IV.... Summary Tables Summary Tables Summary Tables Summary Tables -22- Table 4. Believe Employees Not Covered by Reg FD are Now Getting More Calls From Analysts/Investors Market Capitalization Total $1.5B or more $500M - $1.49B Under $500M (Base) (577) (224) (140) (211) % % % % Yes 6 5 7 5 No 73 72 76 73 Uncertain 20 23 16 21 No reply 1 - 1 1
Table 5. Perceived Impact of Reg FD on Analyst Coverage Market Capitalization Total $1.5B or more $500M - $1.49B Under $500M (Base) (577) (224) (140) (211) % % % % Sell-side coverage increased
since passage of Reg FD 20 29 21 9 Sell-side coverage stayed the same 63 62 63 63 Sell-side coverage decreased 12 7 12 18 Uncertain

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