In 1934, the landmark Security Exchange Commission Act required all public companies to make full financial disclosures annually. These disclosures became known as annual reports to the shareholders or the annual report.

In the 1960’s, some very forward-thinking companies (IBM for instance) seized this “disclosure” process as an opportunity to fully explain the health, progress, and strategic direction of their companies. These companies realized they had an annual opportunity to speak directly to their employees, customers, investors, and portfolio managers. According to the Wall Street Journal, “Annuals are the most important report a company produces.” Shelly Taylor, publisher of Full Disclosure Study of Corporate Disclosure Practices, believes annual reports, when tied with 10-K reports, are the second-most important source of company-generated information. So why did these companies put so much effort and time into their annual reports and why do they continue to do so? ... in a word, credibility. Credibility builds trust, trust builds commitment, and companies with committed investors and employees succeed.

In contrast, some companies view the annual report process as a burden. It seems the gap between the companies willing to take advantage of this opportunity and those simply willing to produce the bare minimum 10-K is growing. According to Investor Relations Business, “A well-crafted annual report acts as a sales tool. It is the best opportunity companies have to tell their story to both investors and portfolio managers.” Companies that have had a down year or need to tell discouraging news, sometimes produce only the bare minimum, thinking this will show fiscal responsibility. On the contrary, this shows a disregard for investors and demonstrates an unwillingness to fully share the company’s story and plan for growth. These companies, most of all, need this opportunity to tell the entire story. Even disturbing news, when executed well, calms nerves and helps to form lasting, trusting, unfettered bonds with the audience.

An annual report is possibly the best way a company has to build credibility. It is stronger than public relations — numbers don’t lie. It’s certainly more believable than advertising, tradeshow graphics, or packaging. An annual report should be the cornerstone of all corporate communications. It should tell the whole truth about the company’s past year and how it plans to operate in the coming year.

To produce a powerfully crafted annual report, most companies hire a design firm with annual report experience. To follow are some guides to help facilitate the annual report design process.

1. Let the message rule the day. The Securities and Exchange Commission (SEC) recently issued recommendations to clarify language — using “plain English” as opposed to technical and/or financial jargon in financial disclosure documents. Clarity of message fosters trust with an investment audience. Hire an experienced annual report copywriter. They will interview all stakeholders and make sure your message is clear and concise. Don’t make excuses or dwell on trouble. Tell the facts and strengths of your company in concise and straightforward language.


2. Be conservative … not cheap. Even during an exceptional year, an annual report should reflect fiscal responsibility yet stand out from the crowd. It should be well designed, with an excellent message, and flawlessly produced. Conversely, producing a “cheap” annual report or simply the bare minimum implies an unsuccessful year—even if you didn’t have one. It also shows a disregard for investors, analysts, and employees.


3. Keep alternative media in mind as a possibilty. On-line annuals are an excellent way to save costs on distribution and reduce print runs. Be sure your on-line annual is searchable so your audience can find the information that is salient to them.


4. Start early … according to the SEC, you have a hard deadline. Give yourself, your writers, designers, financial partners, proofers, printers, and distributors adequate time to perform their tasks. If you are not confident in your abilities to manage a team of this size, plus your company’s CEO, CFO, Investor Relations department and various other entities, get an experienced design firm or project manager involved in the project ASAP.

“It should tell the whole truth about the company’s past year and how it plans to operate in the coming year.”