Long-Term Plans: Company Presentation Guidelines CECPs Strategic - PDF document

Long-Term Plans: Company Presentation Guidelines CECP’s Strategic Investor Initiative (SII) provides the opportunity for leading CEOs to present their long-term business plans to long-term oriented institutional investors , representing over $15 trillion in assets under management. This document is intended for participants of CECP’s CEO Investor Forum and provides suggested guidance on how CEOs and their teams can structure their presentations to convey their companies’ plans for sustained value creation. Each CEO/Investor discussion lasts 40 minutes – 30 minutes CEO presentation, 10 minutes general Q&A. Thank your for your participation in the CEO Investor Forum. Presentation Requirements SII has three requirements for the presentation of your company’s long -term strategic plans: 1. They must be focused on a time frame of more than one year , preferably 3-5+ years; 2. The plans must integrate financially material ESG factors ; 3. Plans must be webcast live * Example Long-Term Plan Presentation Framework In structuring your long-term business plan presentations we suggest using the following framework: In structuring your long-term business plan presentations we suggest using the following framework: 1. What is the long-term strategic vision for your company? a. What is your time frame? b. How will your business model allow you to get there? c. What choices are you going to make, and what are the factors that drive them? i. What are the long-term material risks for environmental and social impacts? ii. What key initiatives is the company undertaking to address major risks or opportunity? iii. How is capital being allocated to support these initiatives? Is this process being led at the board level? 2. Who are your significant stakeholders and what are their long-term expectations of your company? 3. Present the metrics to be used in tracking long-term progress of organizational health, financial and operational performance, and for the mitigation of material ESG risks. 4. How are the company’s corporate governance structure and incentive systems aligned to support these long- term initiatives as well as manage short-term performance? * All presentations to be live webcast to ensure that material information is disclosed to all investors at the same time, in accordance with the rules under Regulation Fair Disclosure. Wall Street Webcasting will be providing this service at the CEO Investor Forum. Each company will be provided its own webcast link.  2017 CECP www.cecp.co/SII

Long-Term Plans: Company Presentation Guidelines, cont. The below core and supplemental information for potential inclusion in your long-term plan presentation can act as a useful checklist in ensuring you are communicating the factors of greatest importance to your long-term investors. Core Presentation Components • What is your long-term planning horizon? 
 • How do you view the eco-system in which you compete and how that might change? • How will your business model allow for innovation and productivity? • What are your long-term capital plans? • What are the short-term building blocks required for long-term success? • What are your free cash flow plans in support of your short-term building blocks? • Who are your key stakeholders? How are risks relating to long-term value creation affecting these groups? 
 • How does the company assess risks, such as technological disruption or geopolitical events, over the long term? • What are the most important social and/or environmental factors facing your company? • How do governance and board composition fit into your long-term plans? • Supplemental Information for Consideration What is your leadership succession process? 
 - - How is the company developing its talent (human capital)? How healthy is your corporate culture – and how is it assessed in delivering your long-term expectations? - What are the most appropriate financial metrics for your long-term success – e.g. cash flows, profits, cost of capital? - - How is long-term compensation linked to long term financial metrics, to long term ESG initiatives and to short term building blocks? - How are your long-term strategies being supported by your Board of Directors and what is the review process for 
 these plans? Additional Information In addition to working with Vanguard, BlackRock and State Street, the Strategic Investor Initiative has developed a CEO Presentation ‘ Toolkit ’ that will be shared with all presenters, containing further guidance on best practice and investor perspectives. The SII team is also surveying over 2,000 institutional, longer-term holders to better understand what they are looking for in long-term plans. We will share this information with presenters, alongside further presentation development support. Our objective is to refocus the traditional investor presentation from short-term events to those topics that support generating long-term value creation. For more information, please e-mail Mark Tulay mtulay@cecp.co.  2017 CECP www.cecp.co/SII 2

Sources Short-Term Ecosystem Financial Times, Definition of Short-Termism …………………………………………………………................. link o o The New York Times, Short-Term Thinking Graphic …………………………………………………………... ... link Harvard Business Review, Yes, Short-Termism Really Is A Problem ……………………………………….... .. link o “Big Three” Investor Letters o Laurence D. Fink, CEO, BlackRock, Annual Letter to CEOs , 2017………………………….…..……………... link F. William McNabb III, CEO, Vanguard, Open Letter to Company Directors, 2017 ………………. . ..………… link o o Ronald O’Hanley, CEO, State Street Global Advisors, Letter on ESG Guidance Framework, 2017 …… . …. . link Company Examples Dow 2015 Annual Report ……………………………………………………………………………………………. link o o SAP’s Sustainable Strategy………………..…………………………………………………………………… .. …. link Campbell’s Platform s for Growth over Next Decade……… . …..…………………………………………………. o link Stakeholders & Materiality o PwC, Investors, Corporates and ESG: Bridging the Gap ………………………………………………………… link Harvard Business School, Corporate Sustainability: First Evidence on Materiality …………………………… .link o The Conference Board, The Business Case for Corporate Investment in Sustainable Practices …………… link o The UN Global Compact & Accenture Strategy, 2016 CEO Study: Agenda 2030…………………………… .. o link Long-Term Performance Metrics McKinsey & Company, Measuring Long-Term Performance ……………………………………………………. link o Firms of Endearment, Raj Sisodia ………………………………………………………………………………….. link o CFA Institute, Environmental, Social and Governance (ESG) Survey, June 2015……………………………. link o o Bain & Company insights, Achieving Breakthrough Results in Sustainability. …………… . …………………... link Investor Perspective McKinsey & Company, Focusing Capital on the Long Term ………… . …………………………………………. link o o MIT Sloan Management & BCG, Investing For a Sustainable Future …………………………………………... link BlackRock & Ceres, 21st Century Engagemen t…………………………………………………………………… o link CEO Leadership / Succession / Remuneration Harvard Business Review, The Best Performing CEOs in the World …………………………………………… o link The Wall Street Journal, The Do’s and Don’t s of CEO Succession Planinng ………… . ……………. .............. link o o Brookings Institute, Curbing Short-Termism in Corporate America, Focus on Executive Compensation …... link Boards of Directors KPMG, Sharpening the Boards Focus on Long Term Performance ……………………………………………. link o o National Association of Corporate Directors (NACD), The Board and Long-Term Value Creation …………. link 3rd Party Initiatives FCLT (Focusing Capital on the Long Term) ……………………………………………………………………….. link o o Commonsense Corporate Governance Principles ………………………………………………………………… link  2017 CECP www.cecp.co/SII 3