From Investor Relations to Shareholder Management

Presented at: Strategíu dagurinn Hver má hvað? Hlutverk hluthafa, stjórna og framkvæmdastjóra 10 September 2015 From Investor Relations to Shareholder Management Reykjavík Presented by: Danielle Neben Member of the Board of Directors Landsbankinn

Overview HSBC: Evolution in communication Investor Relations: A key component Approach as a member of the Board

HSBC: Evolution in communication The two words 'information' and 'communication' are often used interchangeably, but they signify quite different things. Information is giving out; communication is getting through. Sydney J. Harris

USD From Investor Relations to Shareholder Management HSBC a dividend stock Financial performance over 15 years 1,50 1,00 0,50 0,00 Argentine 1,18 Asian crisis 0,99 crisis 0,80 0,76 0,69 0,61 0,66 0,63 0,60 0,66 0,49 0,54 0,53 0,41 0,44 0,48 0,35 0,28 0,31 0,34 0,22 0,12 0,14 0,16 1,36 1,40 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Earnings per share Dividends per share Sub-prime crisis 0,73 0,81 1,65 Financial crisis 0,90 1,36 0,47

30/06/06 30/07/06 30/08/06 30/09/06 30/10/06 30/11/06 30/12/06 30/01/07 28/02/07 30/03/07 30/04/07 30/05/07 30/06/07 30/07/07 30/08/07 30/09/07 30/10/07 30/11/07 30/12/07 30/01/08 29/02/08 30/03/08 30/04/08 30/05/08 30/06/08 30/07/08 30/08/08 30/09/08 30/10/08 From Investor Relations to Shareholder Management HSBC s share price (Sep06 to Oct08) A tipping point in communications 10.5000 10.0000 2006 1H06 results $10m provision $2bn subprime provision announcement 2007 2008 Liquidity crisis sets in Financial crisis sets in Global economy is slowing + Downgrades of HSBC 9.5000 9.0000 8.5000 Group trading update 1H08 results 8.0000 7.5000 7.0000 Annual results 1H07 results 2007 results Major government interventions 6.5000 6.0000 Knight Vinke launches activist campaign

Information > Communication How did Investor Relations adapt its programme?

Investor Relations: A key component I do not agree with what you have to say, but I'll defend to the death your right to say it. Voltaire

Investor Relations: Vision Communicate a company s strategy and results in a transparent and consistent manner to the equity market: investors and analysts Provide the equity perspective to the board and executives to help improve strategy execution and internal decision quality

Investor Relations role Compliance PR Strateg y CEO, CFO, Company Secretary Internal groups Management Chairman and the Board Investor Relations Investors Sell side Traditional Hedge funds Analysts Brokers

The Investor Relations programme Communications Results presentations IR events Financial conference attendance Broker meetings Roadshows and 1x1 meetings Shareholder and analyst queries Website management

Elements of implementation Annual IR plan: who, what and where KYS: shareholder identification and targeting The broker relationship (reactive versus proactive) Administration: CRM system Presentations and 1x1 meetings: disclosure and recording of meetings Feedback loops

30/06/06 30/07/06 30/08/06 30/09/06 30/10/06 30/11/06 30/12/06 30/01/07 28/02/07 30/03/07 30/04/07 30/05/07 30/06/07 30/07/07 30/08/07 30/09/07 30/10/07 30/11/07 30/12/07 30/01/08 29/02/08 30/03/08 30/04/08 30/05/08 30/06/08 30/07/08 30/08/08 30/09/08 30/10/08 From Investor Relations to Shareholder Management HSBC s share price (Sep06 to Oct08) A tipping point in communications 10.5000 10.0000 2006 1H06 results $10m provision $2bn subprime provision announcement 2007 2008 Liquidity crisis sets in Financial crisis sets in Global economy is slowing + Downgrades of HSBC 9.5000 9.0000 8.5000 Group trading update IR day: Asia IR day: Strategy 1H08 results IR day: IT 8.0000 7.5000 7.0000 IR day: IT IR day: LATAM Annual results 1H07 results IR day: Premier and Commercial Banking IR day: Basel II 2007 results Major government interventions 6.5000 6.0000 Knight Vinke launches activist campaign Asia analyst roadshow

Shareholder activism Main drivers A company is underperforming Sitting on cash M&A Change in capital structure Board has a duty to act in the long-term best interest of the company and all shareholders Communication of the equity story Oversight on engagement with shareholders Good lines of communication between management, IR and the Board Evaluate feedback openly to review strategy and execution Source: Fidelio Partners

HSBC USD17.7bn rights issue in 1Q09 The biggest single rights issue in the UK at that time Announced in March 2009 at the 2008 Annual Results Presentation to Investors and Analysts Global roadshow completed in 3 weeks 99% shareholder approval 97% shareholder uptake, remaining shares sold immediately

Investor Relations Communication and feedback loops External Communication Internal Communication

Approach as a member of the Board Leadership and learning are indispensible to each other. John F. Kennedy

Learning to be a member of the Board Chamber of Commerce: Corporate Governance Guidelines HR: Ábyrgð og árangur stjórnarmanna Rules of Procedure Company strategy, previous results, risk report Meet with senior management to understand the business FME exam: laws & regulations, accounting and corporate governance

Focus and adaptation Strategy Board involvement to approve strategy and risk appetite Change in committees Annual priorities, agenda Review of rules of procedure: The role of the Board, Committees and CEO Legal and regulatory updates Independence (Board, Committees, Internal Audit) Setting the annual agenda in line with the rules of procedure

Focus and adaptation Organisation: SharePoint: meeting documents, follow up items Computer access

Three areas of personal focus KPIs

Three areas of personal focus KPIs Continuous learning and preparation

Three areas of personal focus KPIs Continuous learning and preparation The dance

Information versus communication Proactive shareholder management and feedback loops Leadership and continuous learning