Posts Tagged ‘executives’

Investor presentation benchmark

The executives of the major international firms try to convince the investor community during an investor presentation in February. Apart from the financial insights presented, investors can learn a lot from the slide decks presented. Comparing these decks provides insight into the Executive Vision, Executive Communication, and Professionalism of the Organization. Xstrata comes out on top of the presentation benchmark for 2010, followed by Rio Tinto. Vale’s presentation is the least convincing of the peer group.

Investor presentations are the primary communication channel from public companies to the investor community. The opinion about corporate performance of investors can be influenced during these presentations, especially in the yearly meeting in which the financial results are presented. As in any presentation setting, the content of the board’s words shape the perception of the audience only for a limited part. The hearing experience (intonation, rhythm, etc.) and the visual experience (posture, gestures, presentation material) carry at least as much weight as the content of spoken words.

The annual investor presentation slide deck is therefore arguably the most important deck produced by the company in the year. However, many companies put a lot of time in dragging together the material to be presented, but spend little funds and effort on the slide deck. This benchmark will analyze the investor presentation decks of the major mining houses to extract the implicitly communicated messages.


What can we learn from the quality of the investor deck? There are three key messages that investors will consciously or unconsciously derive from the deck. Each of these messages is translated into two benchmark criteria as depicted in the image below.

  • Firstly the deck will demonstrate the Executive Vision. The vision is communicated effectively through a logical and convincing storyline, in which priorities are clearly shown. Furthermore the contents of the deck will be balanced according to these priorities. In case the board is dominated by a single person of functional view, this will result in over-representation of this topic in the investor deck. The size of the deck should be limited, indicating the ability of the board to select the relevant messages.
  • Secondly the deck indicates the quality of Executive Communication. The objective of the presentation will be to leave the investors with a limited number of messages, so these messages should be presented clearly. Each slide should have a clear meaning, presented in an effective and sticky tagline. Furthermore, the messages will need to be adequately supported by relevant and insightful data. Data presented should be driven by the messages the board wants to communicate, not the other world around. Too often the board members add their favorite graphs to the investor deck, without extracting any relevant insight from the data.

Investor presentation benchmarking criteria

  • Finally, the deck displays to what extent the board has build a Professional Organization. In order to make the most important presentation of the year, the board members will need to surround themselves with professionals. The corporate communication department, business units and executive advisors (often strategy consultants) will need to be led in an effective manner. This professionalism is demonstrated by visual appeal and consistency in terms and referencing. Unclear graphs, misaligned text, distracting graphics, lack of references and discontinuity of layout from slide to slide are typical features indicating amateurism.

The decks are judged based on the criteria explained above. For each of the criteria a score is awarded on a 5-point scale, ranging from “very good” to “very poor”. The overall benchmark results are calculated as the average score over the six criteria.

Benchmark results
This study benchmarks the investor decks of BHP Billiton, Vale, Rio Tinto, Anglo American and Xstrata. Each of these companies presented the 2009 financial results in the period February 8 – 19 2010.

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Glencore IPO seen as route to Xstrata

May 5, 2010 Comments off

“The question hanging over the initial public offering of Glencore, the world’s biggest commodities trader, has moved from “if” to “how”.
Banks, seeing an IPO of at least $35bn (pound(s)23bn), have been pitching furiously to Glencore, which is understood to be considering many options. But there are difficulties in valuing this privately-owned powerhouse, which is a miner as well as a trader of everything from coal to soyabeans.
Observers suggest preparation for a flotation is the necessary precursor to a merger with Xstrata, in which Glencore has a 34 per cent stake, which could create a natural resources giant valued at more than $50bn. Speculation over a merger is something neither side has sought to damp.”

Source: Financial Times, May 3 2010


  • Glencore is reaching the limits of growth opportunities as a private company, as the possibilities to attract additional capital are limited without going public.
  • Glencore’s executives own a major stake of the company. Combined with the 30%+ stake of Xstrata Glencore holds, the executives will come close to owning a majority of the shares in the new company.
  • As it is more or less impossible to carry out an accurate valuation of Glencore, experts expect the company to go public and get a market valuation before merging with Xstrata.


  • Xstrata will be willing to cooperate, as the company might otherwise sooner or later become the victim of a hostile takeover by either BHP Billiton, Rio Tinto, Vale or Anglo American.
  • The companies will need to invent a reward system for Glencore’s executives that will not leverage the balance sheet too much when the executives retire and take their share of the equity.
  • The merger of the Mining & Metals firm and the Trading firm will introduce a new type of company to the competitive landscape. The combination will be a major player in a very large part of the commodities value chain
  • Key synergies will likely be found in consolidation of the trading departments (mainly reducing costs in Xstrata’s current operations) and in increased supplier power leading to renegotiation of trade terms.