I apparently triggered a hot-button topic – yes, website bios – for small-cap CEOs and investor relations professionals in one of my recent webinars (If You Knew How Institutional Investors Actually Assess Websites, Yours Would Look… A Lot Different). Given the number and range of the questions I received, I thought it would be constructive to summarize some of the principal takeaways about that topic.
How investors read and assess corporate website bios
First, it’s important to note that small-cap institutional investors and seasoned retail investors predominantly bet on jockeys, not horses. And one of the most common ways prospective investors assess jockeys – i.e., officers and directors – is by analyzing their website bios.
As it turns out, you can learn an awful lot about what’s said – and what’s not said – when you have extensive experience reviewing professional bios. Here are some things experienced investors have learned to focus on, and why.
Formal company names and precise titles. There’s not any particularly nice way to say this, but small-cap investors have learned the hard way that bios that don’t contain formal company names and precise job titles (at least for the immediately precedent 10-15 year period) typically don’t for a reason, and it’s unlikely to be positive. Put a bit differently, when CEOs limit their work history disclosure to “Mr. Johnson has held senior management roles with several large technology companies,” seasoned investors know it’s more likely that they weren’t senior roles, they weren’t large technology companies, they or the companies performed poorly, or… all of the above.
Dueling bios. In order to get an accurate sense of a CEO’s background, investors not only review the bios on company websites, but they also review bios in the company’s SEC filings, bios from prior jobs, bios from other board memberships (and associated SEC filings, if any), and LinkedIn. Accordingly, CEOs (and other officers and directors) need to make sure that their current website bios don’t materially differ from other available bios. Every veteran small-cap investor has discovered CEOs who, for example, are currently CEOs of other undisclosed companies, or CEOs who have omitted numerous unflattering career iterations. As one of my former buy-side colleagues likes to say, “The Internet giveth… and the Internet taketh away.”
Education bona fides. While reasonable people may differ about whether education references should matter or not, they definitely matter to investors. The admonishment in this regard is three-fold: (1) every officer and director bio needs to include accurate, post-high school education references; (2) executive program degrees are not the same thing as undergraduate and graduate degrees, so bios shouldn’t treat them as such; and (3) when it comes to education references, there is no such thing as a “white lie.”
Hobbies, family, charity, religion. Some of you might have heard me, or my former colleagues say that: “In our experience, the quality of a small-cap company is almost always inversely proportional to the length of its investor presentation.” This is also true for officer and director bios that contain any references to personal hobbies, family life, favored charities, or religious beliefs – this information is irrelevant to expert investors. In fact, the more personal information contained in a website bio, the lower the perception will likely be of that officer or director.
Stick to the facts. Just like well-drafted public company press releases, officer and director website bios are for facts – not modifiers. In other words, let investors determine whether a CEO is “renowned” or a “visionary” or whether their leadership track record is “peerless.” Most investors will tell you that great officers and directors don’t need to resort to adjectives… the facts speak for themselves.
Uniform format. Whether it’s a VP of Sales, the Chairperson, or the CFO, the format/composition of the bio should be identical.
Photos. I don’t know of any investors who have strong preferences one way or the other regarding the use of photos accompanying website bios. That said, if your company chooses to use them: (1) all of the photos should be the same size and should be an accurate rendering of what the executive currently looks like; (2) they should all be high resolution, and should all be in color or all be in black and white (i.e., pick one, and stick with it); (3) they should have uniform backdrops (easy to accomplish with basic photo editing); and (4) the dress codes should be consistent.
Subsequent to the webinar, one CEO asked: “Adam, this is all really helpful to know, but in addition to telling us what investors don’t want to see, can you also direct us to an example of what investors would like to see?”
When in doubt, officer and director bios should look like this.
A version of this post was previously published in LinkedIn Pulse.