Investor Relations Officer obtains 10% budget increase and a promotion
The Investor Relations Officer of a USD 40 billion market cap group in the consumer sector was desperate. He had failed to convince management that he needed help to manage 25 sell-side analysts covering the company, a global shareholder base spread over five continents with two stock exchange listings and more than 350 investor meetings per year, on top of quarterly results announcements. The company´s reputation on the international capital markets was at stake.
Being former Investor Relations ourselves, we were only too familiar with the challenges our client was facing: how to articulate the value of Investor Relations?
We quickly came to realize that the Chief Financial Officer, beyond participating in a few roadshows and signing off on the financial press releases, had little to no idea of the amount of work required in Investor Relations. We knew that producing hard facts would be our only chance get his attention, and hopefully, his buy-in.
What we did:
Management had never before insisted on regular reports from the Investor Relations Officer, beyond the usual share price charts and analysts´reports. We therefore created a comprehensive management report with a robust executive summary. The report highlighted the achievements of the one-man Investor Relations department in the key areas that matter to most CFOs:
- share price in all its components, in absolute and relative terms, including transaction volumes
- share ownership structure
- earnings consensus and investment recommendations
- market sentiment, focusing on the top 5 areas of investors and analysts´ interests and concerns and how well these reflect the key messages that the company was trying to convey
- quantified inbound and outbound IR activities, such as the number of meetings held, information requests handled
- key takeaways from the most recent analysts´ reports
- next steps in terms of calendar, new initiatives for the IR strategy.
Also, the data was benchmarked against the company´s peer group, whenever applicable. Last but not least, in the first of what was to become a quarterly report, we were able to supply comparative information on how the IR departments of listed companies of a similar size had teams of between 4… and 15 staff.
What was the measurable outcome for our client?
The report was so informative and well received by the CFO that he decided to share it with the Board. Both recognized the value of the unique insights it provided and agreed that the Investor Relations Officer needed more resources in order to continue and adequately support the company in its growth journey.
A 10% budget increase was approved to hire a full-time Investor Relations Manager and invest in additional resources such as dedicated IR management software and a business school trainee. Two years on, the Investor Relations Officer was promoted to Group head of investor relations and corporate communications.
You should not wait until you are asked to create your own Investor reporting framework. Go ahead and proactively develop one, test it with the CFO or the CEO if you can, and fine-tune it based on their feedback. Think of the Board and the executive teams as clients you want to attract, engage and retain. An in-depth Investor Relations report can prove to be very effective to:
- raise the level of awareness about the strategic role of investor relations within your company. With shareholder activism intensifying, it can be critical to keep your Board regularly updated about who your shareholders are and what they think.
- boost your profile internally as you aspire to new, greater responsibilities. Here are a few examples:
- if your objective is to become a finance director one day, you should enrich your report with valuation metrics, compare your performance to that of your competitors, analyse their reporting format and the key performance indicators they emphasize in their disclosure.
- If evolving into a corporate communications role is your goal, then your report should highlight your ability to manage your company´s reputation with a demanding audience.
- Looking to move to operations? A report focusing on your company´s competitors and what analysts are writing about them will help you build and strengthen the strong network your will need internally.
Hard facts are most compelling when presented in a concise and user friendly format.
Get your Board and leadership team understand the value of Investor Relations