03-05-2009, 05:19 AM
How to Do Corporate Research Online
By Philip Mattera
Director of the Corporate Research Project
Director of the Corporate Research Project
Table of Contents
IntroductionI. GETTING STARTED: THE KEY SOURCES OF COMPANY INFORMATION
A. Sources for basic corporate profiles
B. Company websites
C. State corporation filings and property records
D. Securities and Exchange Commission filings
E. Dun & Bradstreet
F. Media coverage
G. Internet chat rooms and internal documents
II. EXPLORING A COMPANY’S ESSENTIAL RELATIONSHIPS
A. Parent company/subsidiaries
B. Outside directors
C. Institutional shareholders
D. Wall Street analysts
E. Creditors
F. Customers and suppliers
III. ANALYZING A COMPANY’S SOCIAL RESPONSIBILITY RECORD
A. Social responsibility profiles and ratings; dissident websites
B. Court proceedings
C. Federal regulatory matters
D. Labor relations and employment practices
E. Workplace safety and health
F. Environmental compliance
G. Campaign contributions and lobbying
H. Public relations, corporate philanthropy and sponsored research
I. Executive compensation
J. Government subsidies
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INTRODUCTION
The corporate crime wave that came to light beginning in late 2001 makes it increasingly important for progressive activists to know how to gather information on the way business operates. These days, all of us also need to be watchdogs against the excesses of corporate power.
This Guide is designed to help researchers and activists gather essential information on any type of U.S.-based company, whether small or large, privately held or publicly traded. Given space limitations, the Guide does not contain sources that relate to specific industries or geographic areas. Also, aside from a few brief references to Canadian sources, there is no detailed discussion of information sources outside the United States. Actually, there wouldn’t be that much to say, since corporate disclosure in most of the world is much more limited than what we have in this country.
Given that most business research these days is done via computer, most of the sources listed are found online. Wherever possible, the recommended resources are free sites on the web, but the Guide also points out where certain valuable information can be found only on pay websites and subscription services such as Lexis-Nexis or Westlaw. Keep in mind that it is easy to run up large bills on some of these services, so you may want to get help from an experienced user. Also keep in mind that not everything is available online. There are times when you still have to go to the library or a government agency. This Guide tells you when that is necessary.
The resources listed here are all, in one way or another, part of the public record. If you want to know about business espionage or private investigative techniques, you will have to look elsewhere. The Guide, nonetheless, will introduce you to many lesser known public sources that contain information that may feel as if it is secret.
The Guide is divided into three parts. The first covers leading sources of basic information on companies of all kinds. The second part focuses on information sources relating to the key relationships every company must have in order to function. The final part shows you how to gather information about a company’s social responsibility record. Together, these sections will help you find all the basic information needed to support efforts to get companies to do the right thing. Happy hunting!
I. GETTING STARTED: THE KEY SOURCES OF COMPANY INFORMATION
The biggest challenge in most corporate research projects is not a shortage of information, but rather too much of it. The key to efficient research is figuring out how to sort through the barrage of data and zero in on what is important. An essential part of this is knowing where to begin. This section provides a list of the besting starting points for getting a basic understanding of a company, including its finances, its operations, its executives and its history.
A. SOURCES FOR BASIC CORPORATE PROFILES
Hoover’s Online
Hoover’s is one of the most useful places to begin when trying to get a basic picture of a company. Its free website offers capsule descriptions of thousands of companies based in the United States and abroad. Most of the firms are publicly traded, but it also covers larger privately held companies as well as major non-profit institutions. The capsules include the following information:
- name, address, phone number and website
- ticker symbol and stock price chart
- data on revenues, profits and number of employees
- brief overview of history, operations and reputation
- links to recent news stories and company press releases
- names of top executives
- top competitors
Yahoo Finance
Yahoo operates one of the most popular of the multitude of investor information sites on the web. You begin by entering the ticker symbol (which it can help you look up) and are then shown a screen with the most recent stock price and a list of news headlines. You can think click on various links within categories such as News & Info, Company and Financials.
Mergent Manuals
Several years ago Mergent Inc. took over the publication of Moody’s Manuals, which in the pre-Internet age were one of the prime sources for basic descriptive, historical and financial information about publicly traded companies, including a useful summary of major acquisitions and a list of subsidiaries. These hefty annual volumes are still used widely by researchers who don’t like computers and those who need an easy way to track a company’s evolution. The books are published in various series, including the following:
- Mergent Industrial Manual (published since 1920)
- Mergent OTC Industrial Manual (since 1970)
- Mergent Bank and Finance Manual (since 1928)
- Mergent Transportation Manual (since 1909)
- Mergent Public Utility Manual (since 1914)
- Mergent International Manual (since 1981)
International Directory of Company Histories
For more than a decade, St. James Press has been publishing collections of narrative profiles of thousands of major companies. Known as the International Directory of Company Histories, this series now comprises more than 50 volumes. It can be found in larger reference libraries. While it is not possible to access this reference work directly on line, the Gale Group draws from its content in a web-based product called the Business & Company Resource Center (see below).
Business & Company Resource Center
The Business & Company Resource Center is an amalgamation of information from a variety of printed and online reference works. This resource is produced by Gale Group and is marketed mainly to larger public and academic libraries, which often provide remote as well as on-site access for authorized users. A version can also be found on Westlaw in the Company Profiles database. The features include:
- basic data (address, line of business, top officers, etc.)
- company history
- financial data
- rankings
- product names
- links to news articles about the company
- links to Wall Street analyst reports about the company
- links to relevant trade associations
Advice for Investors
This site contains brief company descriptions, basic financials and links to press releases and disclosure documents for publicly traded companies in Canada.
B. COMPANY WEBSITES
Much of the material on corporate websites amounts to little more than company propaganda, but there is also a fair amount of useful information, especially on the sites of larger firms. Here are some of the main items to look for
- General description and company history. Most companies include at least a basic profile of themselves (often under the heading About Us). Sometimes there will also be a history of the firm.
- Annual Report. Company websites are the only place where you can download copies of the firm’s glossy annual report, which contains information about operations, financial results, officers and directors, etc. [For old reports, see the ProQuest Historical Annual Reports database, which is available as part of the electronic resources of some university libraries.]
- Press Releases. These documents contain a high quotient of hype, but they are useful as sources of information that may never make it into the media. They serve as a primary source for official company positions and claims. In a controversy over a company’s failure to live up to a commitment (such as the creation of new jobs at a plant that received a government subsidy), it is quite effective to be able to quote from an old company press release in which the promise was made.
- Executive biographies. Many large companies post bios of upper level managers. These can often provide useful information about executives who might be your adversaries.
- Facility lists. Companies often put lists of their factories and other facilities on the website, including their location. Larger retail chains include store locators. Such information can be quite handy in planning campaign activities.
C. STATE CORPORATION FILINGS AND PROPERTY RECORDS
Every corporation – whether publicly traded, privately held or non-profit – must register at the state level to receive a charter to do business. The agency that handles this process is usually the state Secretary of State’s office, which will also provide public access to at least some of the information that corporations must provide in their filings.
There are several ways to obtain this information. The best is to go to the Secretary of State’s office directly, make a request and obtain hard-copy printouts of all the documents available on your target company. Along with the articles of incorporation, the materials should at least contain the exact name and mailing address of the company plus the name of its registered agent (a person or entity that is served papers when the company is sued but may not otherwise be involved in operations). In many states companies must also provide information such as the name (and sometimes home address) of each officer and director and his/her ownership of the company’s stock. These facts are especially valuable when researching small, privately-held companies that may otherwise not be required to disclose much information.
If you cannot go to the Secretary of State’s office in person, check if there is a telephone request service. In addition, more and more states are putting their corporate filings on the Internet. For a guide to which states have created free sites for this or other kinds of public records, see the BRB Publications site at or that of Search Systems.
If you don’t know what state the company is located in, there are several ways of doing nationwide searches. The website KnowX allows you to search records from most states for free; there is a charge for viewing the details. If you have access to a subscription service such as Lexis-Nexis or Westlaw, you can search nearly all states at once – either by the name of the company or the name of an officer or director (though the entries from some states do not include such names); Delaware can also be searched through a separate service. On Lexis-Nexis or Westlaw you can also search Fictitious Names (DBA) files for the same states.
Property Records
The real estate holdings of corporations, like those of individuals, are a matter of public record, usually at the county level. You will want to check the records of the Tax Assessor to see what properties are held in the company’s name, how much property tax is supposed to be paid on those properties and whether the payments have been made. You will also want to search at the office of the Recorder of Deeds to get copies of documents such as deeds, mortgages and tax liens. Note that the names of these offices will vary in different places. To do a search beyond a single county, use services such as KnowX, the Assets Library of Lexis-Nexis or the Asset Locator on Westlaw. Note that these services can also search for ownership of boats and aircraft; Lexis-Nexis and Westlaw have some motor vehicle information as well.
D. SECURITIES AND EXCHANGE COMMISSION FILINGS
Since the federal government instituted an extensive system of securities oversight in the 1930s, publicly traded companies have been required to file a variety of reports with the Securities and Exchange Commission (SEC), which in turn releases most of these filings to the public. The reports, which cover financial and some operational matters, are designed to assist investors, but they also widely consulted by trade unionists and other progressive activists.
Gaining access to these reports became much easier in the mid-1990s, when the SEC initiated a system called EDGAR (Electronic Data Gathering Analysis and Retrieval) under which most of the public filings are posted on the Internet. EDGAR documents are available from the SEC website itself or from several commercial sites.
For online access to SEC documents that predate the EDGAR system, try the Company Library on Lexis-Nexis or SEC-ONLINE on Westlaw, which have documents going back to around 1987. Older filings can also be found on microfiche at the SEC public reading room in Washington, DC or at larger reference libraries. The Access Disclosure file on Lexis-Nexis and the Company Index on Westlaw have lists of all SEC filings back to the late 1960s.
There are dozens of different types of SEC filings. Here are descriptions of the key ones to check when profiling a corporation:
10-K
The 10-K is an annual report that companies file with the SEC, but it is quite different from the glossy annual report that firms use for public relations purposes. The 10-K may lack photographs and fancy graphics, but it includes a wealth of information about the company. Along with a full set of financial statements, the document includes:
- a detailed description of the company’s operations
- a summary of the firm’s competitive and regulatory climate
- a description of the company’s facilities
- basic data on the company’s workforce, which often includes information on the extent to which the workers are unionized and which unions represent them
- an overview of the main legal proceedings in which the company is involved
- an account of environmental issues relating to the company’s operations
- a list of the company’s subsidiaries
10-Q and 8-K
The 10-Q is a quarterly filing that updates the information in the 10-K. The 8-K is a filing made by the company when an extraordinary event has taken place. This would include things such as a change in top management, a takeover bid or merger plan, and the initiation of a major legal action against the company.
Proxy Statement (Form DEF 14A)
Another disclosure goldmine is the proxy statement (or simply proxy), which the SEC designates as Form DEF 14A. The primary function of the proxy is to notify shareholders when and where the company’s annual meeting will take place. It is called a proxy because the version sent to shareholders includes a card that those who do not plan to attend the meeting can send in to give management the right to vote their shares in the election of directors and any ballot measures.
Information about the annual meeting is also useful to trade unionists and other activists who may be trying to influence corporate policy. The annual meeting may be the only opportunity for you to address top management and the board of directors face to face. If you are engaged in an intensive campaign, you may want to formulate a shareholder resolution and try to get it on the ballot for the meeting. This is a complicated process that you should not undertake without consulting groups that specialize in shareholder activism (see below). If you succeed, the text of your resolution would appear in the proxy statement.
The value of the proxy statement as an information source goes beyond matters relating to the annual meeting. Here are some of the other gems it contains:
- Stock Ownership Data. The proxy will list any individual or institution that controls 5 percent or more of the company’s shares. It will also list the number of shares controlled by each director and each member of top management. This will allow you to determine, for example, how much a chief executive stands to gain personally by pursuing policies aimed at jacking up the stock price.
- Executive Compensation. Everyone talks about corporate greed. The proxy statement will show you exactly how greedy the top officers of the company are—in terms of the exorbitant compensation packages they have pressured the board to award them. The document states down to the dollar how much the five highest paid executives receive in salary, bonus, incentive pay, perks, etc. It also shows you the quantity of stock options those executives have received and how much profit they have realized by exercising the options. A reminder: a stock option is the right to purchase a certain number of a company’s shares at a specified price. When the market price rises well above the option price, the executive can make a killing by purchasing shares at what amounts to a steep discount.
- Director Compensation. Outside directors (i.e. those who are not members of management) used to receive nominal payment for what is typically a not very demanding part-time job. These days, large companies often reward their outside directors handsomely with cash and stock options. The proxy discloses the details.
- Director Biographies. One of the things that shareholders do at annual meetings is to elect or re-elect directors (who usually run unopposed). The proxy statement is where the candidates are listed and where their professional background is presented. These biographies include the names of any other companies where the individual serves as a director. Situations in which two companies share directors (also known as interlocks) can signify an important relationship between the firms. It is also a key fact that can be used in corporate campaigns to put pressure on parties other than the direct employer.
- Procedures for Shareholder Resolutions. The proxy will contain information on the deadline for the submission of a shareholder resolution for the following year’s annual meeting.
Prospectus and S-1 Registration Statement
These are documents issued in connection with an initial public offering (IPO) of stock or the issuance of new stock by a company that is already public. The disclosure process begins with a preliminary prospectus (known informally as a “red herring”). This contains:
- a description of the securities to be registered
- planned use of the proceeds from the sale of the securities
- risk factors that need to be considered by potential investors
- names of the parties selling shares to the public
- company advisers and their financial interest in the deal
Forms 3 and 4
These filings are the means by which company insiders (officers and directors) report sales or purchases of the firm’s stock.. The SEC requires these reports so that investors are aware of personal transactions that may reflect the insiders’ assessment of the company’s prospects. Form 3 is an initial filing and Form 4 reflects changes in the holding.
Canadian companies
Canada is one of the only other countries with a corporate disclosure system comparable to that of the United States. It has a program called SEDAR (System for Electronic Data Analysis and Retrieval). The Canadian filings have different names from those in EDGAR (see the website for a guide), but the content is similar.
E. DUN & BRADSTREET
Dun & Bradstreet (D&B) is one of the leading credit-rating companies; i.e., it collects information on how promptly firms pay their bills and sells this information to other companies that want to determine how risky it is to extend credit to a commercial customer. In the course of assembling this payment data, D&B also collects a great deal of descriptive information on millions of U.S. and foreign companies, including ones that are privately held and ones that are tiny in size. D&B is thus an invaluable source of information on companies that do not file with the SEC. Keep in mind, however, that there is no legal penalty for lying to D&B (as there is with the SEC), so the data in its databases cannot be regarded as authoritative. It is, however, often the only source of descriptive information (beyond what is in state corporate filings) for small, private firms.
Many unions and other organizations subscribe to D&B’s services. If you do not have such access, you can purchase individual reports on the Internet (using a credit card) at this site. Among the various reports, the most useful for general corporate research is the Business Background Report. It does not contain payment data, but it usually has the following:
- line of business and scope of operations
- estimate of annual revenues
- number of employees
- brief history of the company
- names and brief biographies of officers and directors
- names of subsidiaries or parent company
F. MEDIA COVERAGE
Newspaper and magazine articles may be secondary sources, but they often contain company information found nowhere else. This is especially so with specialized trade journals and newspapers in cities where a company has its headquarters or a major facility.
Searching for news articles used to a cumbersome process of paging through hefty printed indexes and then retrieving the actual texts from bound volumes or microfilm. Thanks to the creation of digital archives, it is now possible to search for articles via your computer. Some publications have set up websites with an archive of back issues. To locate the website of a print publication, try NewsLink, which is arranged by subject and by geography.
For a more thorough search, use one of the databases that collect the full text of articles from many publications. The best of these is Nexis, which brings together articles – in some cases going back 20 years – from several thousand newspapers, magazines, trade journals, wire services and press release services. Nexis can be expensive, but it is possible to arrange for reasonably priced flat-rate subscriptions for small organizations. It may also be possible to gain access through a public or academic library.
The other leading source of full-text articles is Factiva (formerly Dow Jones Interactive), which is somewhat more affordable than Nexis. It is the only source for the full online archive of the Wall Street Journal.
If you are on a tight budget, there are a few websites that allow full-text searching of articles for free, though the material available is far less extensive than on Nexis or Factiva. See, for example, Find Articles or MagPortal.
Also keep in mind that many public and academic libraries provide free online access to commercial databases to authorized users.
G. INTERNET CHAT ROOMS AND INTERNAL DOCUMENTS
One of the results of the spread of the internet is that it enables people around the country who share specialized interests – including the fact that they have investments in the same company – to communicate with one another. The web has numerous sites where investors (and sometimes company insiders) can share information (or rumors) with one another, or simply mouth off about the company. These postings cannot be regarded as authoritative, but sometimes they contain valuable leads that you can then research using more reliable sources. Yahoo Finance, for example, has a set of message boards on individuals stocks that you reach by plugging in the stock symbol and then clicking on Message Board.
A website called Internal Memos posts company documents that have been leaked by employees. Some of the documents can be viewed for free; full access requires a subscription.
II. EXPLORING A COMPANY’S ESSENTIAL RELATIONSHIPS
Companies are like people: they need relationships to survive. These include, for example, relationships with those who buy the firm’s products, those who invest in the company and those who lend it money. When you are researching a company, it is essential to understand these relationships. When you are involved in a corporate campaign against a company, chances are that you will end up intervening in these relationships in some way, since this is often the most effective way to get a corporation’s attention and persuade it to abandon socially irresponsible policies.
A. PARENT COMPANY/SUBSIDIARIES
If you are researching a large company, there is a good chance that it has subsidiaries or is itself a subsidiary of a larger corporation. This is vital information for any campaign.
[FONT=Verdana][size=12]An indication of where a particular company fits into a corporate hierarchy may be obtained from sources such as Hoover’s or Dun & Bradstreet (see above for both); public companies must provide a list of subsidiaries in their 10-K. These lists are included in the Mergent Manuals (see above). Keep in mind that the fact that a company is publicly traded does not mean that it is an ultimate parent company. It is not uncommon for large companies to make a public offering of stock in a subsidiary while retaining...
"The philosophers have only interpreted the world, in various ways. The point, however, is to change it." Karl Marx
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"He would, wouldn't he?" Mandy Rice-Davies. When asked in court whether she knew that Lord Astor had denied having sex with her.
“I think it would be a good idea” Ghandi, when asked about Western Civilisation.