4 Tips to Revolutionize Your IR Strategy — and Stick to It Throughout the Year

Written By Elizabeth Saunders, Partner

January 22, 2020

If you’ve found yourself wondering how to navigate your IR strategy into the new decade, you’re not alone. Many IROs are dragging their feet on bringing new, no longer radical solutions into their IR programs to address unchangeable trends. With limited sell side and less active investors, it’s tougher for companies to cut through the clutter and target investors. As well, ESG reporting — or at least on certain material topics — is coming. While not mandatory (yet), the SEC is going to require some type of human capital transparency, and that’s just the beginning of what investors are looking for.

Here are a few tips to help you respond to the trends you’ll be hearing about all year long.

Upgrade Your Investor Website with Video

You might be debating whether you should put your time and money into video. Do you have enough resources to create videos? Are enough people in your target audience interested? And in the end, will it be worth it? In short: yes.

The average analyst is in their 20s and grew up with video as a major part of their learning experience. And they’re watching more video content than ever before. Rest assured you don’t need Spielberg’s budget to get started. One of the main (and easiest) types of video content for many companies is the Corporate Profile video — a short video explaining a company strategy and investment proposition. Other popular types of content include vlogs (video blogs), video interviews, and clips or repurposed video from corporate presentations. Use it for Investor Days (Disney’s Investor Day 2019 Webcast), a quick corporate overview (TD Ameritrade’s Investment Thesis) and even a quick earnings update (MetLife Third Quarter 2019 Financial Update Video).

Dip a Toe in the “S” of ESG with Human Capital Disclosures

Investors increasingly expect IROs to be knowledgeable about Environmental, Social, and Governance criteria. So, it’s more important than ever to covey this kind of information to help them complement their views about your company and all the elements that drive success.

Start by ensuring you have an ESG page on your websiteCognizant – Corporate Governance.

Consider a statement from either the Chairman or CEO on the importance of initiatives within your own business and material in the industry.

Then address the “S” with information on human capitalL’Oreal – Diversity and Inclusion.

In recent years, there have been serious efforts to get Human Capital Management out of the reporting shadows. The underlying concept is that human capital initiatives make companies more profitable, whereas organizations with a disengaged workforce tend to lose money.

We have seen a swift evolution of issues in this area and expect the pace of change to continue. The SEC has provided proposed rulemaking on the topic of mandated ESG disclosures, with a surprising initial focus on human capital. These developments clearly signal a movement toward more corporate disclosure in this area, and you will need to stay proactive. Get ahead of the curve by gathering information and communicating in relevant areas, including: workplace diversity, culture initiatives, employee engagement/satisfaction, and workforce health, safety, and training. Partner with the appropriate areas across your company that handle the human capital side of the business, such as Human Resources, Talent Development, Communications, and Benefits.

Start an Off-Season Proxy Shareholder Engagement Program Without Leaving Your Office

Shareholder engagement includes efforts to connect with your shareholders on a wide range of topics that fall outside of the usual financial and strategic conversations, such as executive compensation, risk management, and corporate governance. ISS and Glass Lewis tell us that tone from the top is important in addressing these topics, and a message needs to be sent that your company has a culture where shareholder voices matter — and not just when there is a problem.

Best practice dictates that communication should take place year-round and in the proxy off-season. However, this standard often frustrates companies who line up management and Board members to travel to these off-season meetings, and very few institutional compliance teams attend unless the company is in the middle of a significant proxy or activism issue. Then they get a no vote from top investors or a vote no recommendation from ISS or Glass Lewis.

A far more efficient process is to do a webcast Cisco and Goldman Sachs to Host ESG Conference Call.

Open it up to investors and compliance officers. Add a member or two from the Board of Directors. Cover key topic areas of G and areas of E and S material to your industry. If you got a no vote, address the topic directly and how you have remediated the issue — or state why you aren’t changing the policy.

Focus on Quality — not Quantity — in Perception Studies

With the onslaught of stock surveillance firms adding monthly perception to their packages and the growth in perception-oriented IR firms, the Street is getting inundated with perception survey calls. A small cap manager at a recent NIRI seminar said he was getting 6 to 8 calls a day during heavy non-deal road show season – and not surprisingly, he was no longer taking any of them.

Stop doing these — particularly with non-holder targets who have only met with management once or twice. More effective options include:

  • Regular annual/biannual perception studies formally done, with a special request by the CEO/CFO to participate. Keep the conversations to 15 minutes. To get the most value, make sure the person conducting the interview is very steeped in the company and that the call comes across more as a conversation than a survey.
  • Topical calls with current investors or those that know the company. Ask one or two questions around a topic that matters (guidance, industry trends, etc.) and keep the call to 5 minutes. You will get high-quality information and not annoy the buysider.

Shake things up in your investor relations program in 2020 by using a few strategies that will become mainstream by 2021.

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