Those with experience of organized riots or bar brawls will already be familiar with the ‘strength in numbers’ phenomenon. Others should observe how the eponymous hero of Gulliver’s Travels finds himself outdone by a vast gaggle of miniature people – plucky little scrappers who, in a one-on-one fight, would have been battered to a messy pulp. As the proverb says, many hands make light work.
But numbers aren’t everything; structure and solid organization are crucial too – consider how Boadicea’s cocky British resistance was soundly whupped by a smaller but highly organized Roman force during Caesar’s invasion. As the proverb nearly says, too many disorganized cooks fail to make the broth at all.
IR practitioners have been quick to realize this and, despite the relative youth of the practice, several bodies have sprung up to represent IR and to fight the fight against oppressive new legislation, outmoded old regulations and a lack of awareness of IR itself. Be it an association, institute or society, most IR bodies have at some stage fought for policy change or campaigned to make themselves heard.
Rather predictably, the US, Canada and the UK lead the way. In fact campaigning is an especially hot topic in the US at the moment. With regulation FD being championed by the SEC as a way to alleviate the problem of selective disclosure, Niri is pulling out all the stops in its campaign to keep regulatory interference to a reasonable level.
‘Aspects of the proposed regulation are going beyond what we consider to be acceptable or beneficial to IR,’ remarks Niri’s Lou Thompson. ‘We’ve held meetings with the SEC so they can understand the Niri point of view. They were supposedly going to incorporate our ideas into their rule-making.’
It’s no push-over for Niri, mind you. Thompson and the board have had to campaign long and hard. ‘We had a meeting of the Niri board after which I wrote a twelve-page letter to the SEC,’ explains Thompson. ‘On top of that we’ve met with four of the five SEC commissioners. I’ve also met with the chairman and the chief counsel and had two meetings with the SEC general counsel, one of which was just prior to the Niri board meeting.’
The Canadian Investor Relations Institute (Ciri) also has its hands full. ‘There have been a number of issues put forth by participants in the Canadian capital market that could affect the regulatory environment,’ says Ciri’s David Mills. ‘The Canadian Securities Administration suggested introducing beneficial shareholder communication, so we lobbied to have Ciri involved and we sat on the working committee itself. On another occasion, the Toronto Stock Exchange wanted to change disclosure rules to introduce a limited statutory liability regime. We commented on every draft and made formal presentations on the issue.’
The UK’s Investor Relations Society (IRS) is no slouch either. It is currently looking at the problems faced by its corporate members as they deal with the dissemination of information via the regulatory news service (RNS).
Big brother
While these groups enjoy a fairly high profile, they are by no means the only ones standing up for the poor IR professional. The International Investor Relations Federation (IIRF) opens its arms to any formal IR society from any country with an active securities industry. Those groups currently number 17.
According to its mission statement, the IIRF’s goal is ‘to establish and maintain the highest standards for the global practice of investor relations by encouraging the exchange of information and experiences among investor relations professionals around the world.’ The IIRF also ‘represents member views on international investor relations issues to governments and regulatory and professional bodies’.
Admittedly, most societies initiate a call to arms on an ad hoc basis, usually when change is either urgently needed or being imminently threatened. In Austria, for example, IROs rallied around their organization Cira (the Circle for Investor Relations Austria) when it was felt that the structure of the stock exchange was inhibiting companies.
‘Until summer 1999, the exchange was 50-50 owned by the banks and by the republic of Vienna,’ explains Randolf Fochler, president of Cira. ‘We wanted it to be privatized and held by the listed companies and the banks.’
Cira moved into action, lobbying the government and arranging several meetings to bring together everyone involved. They wrote letters and invited people from investment banks to meet, with a task force set up especially for the purpose. A couple of months later the government asked the OIAG [the state holding company], which had a good relationship with the companies, to find 31 listed companies that would be prepared to own the exchange. The board of Cira helped because it had contact with the companies.
Since then, Cira has continued to do its bit to improve the lot of Austrian IR, tackling issues one at a time. ‘The last thing we campaigned for was the switch from the Vienna bourse’s trading system to the Deutsche Borse’s Xetra,’ says Fochler. ‘That will be of even greater benefit if the Frankfurt and London exchanges merge.’
But Cira is not on a constantly-campaigning crusade. Having achieved so much over the last few years – ‘We have reached the standards of Western Europe now,’ says Fochler – the organization is taking a breather from war-waging against the powers that be. ‘We are not going to be lobbying for a while,’ Fochler admits. ‘My focus in the year 2000 is to address topics that relate to basic IR.’
Some investor relations communities beat Austria hands-down for ‘as-and-when’ pragmatism. Take Australia. Despite the relatively sophisticated level of IR in the country, it still has no representative body. But there is now one on the cards.
‘The Australian Securities and Investment Commission has published a paper called Heard it on the Grapevine which contains proposed conduct for analyst briefings,’ explains Ian Matheson of Computershare Analytics in Sydney. ‘It’s a watershed event focusing people’s minds on the need for a united body. As IR has evolved, so has the desireability of an organization to respond to issues and government proposals.’
Matheson is part of a steering committe set up this year to look into the creation of an IR society. ‘The consensus is that it’s high time that a group be formalized,’ he accepts. ‘But given the size of the country it really required someone to come along to make it happen. That’s what the steering committee is doing.’
The finer details remain unresolved. The types of membership, the body’s corporate form and its very name – probably the Australasian Investor Relations Association or Institute – are undecided but Matheson predicts a launch date of July or August. ‘Then hopefully we can join the IIRF,’ he suggests. ‘So far I think we’ve been notable by our absence.’
Mean machine
Australia and Austria are clearly able to again galvanize themselves for a rumble if need be. But the more proactive organizations don’t allow themselves to be caught on the hop. Take the IRS, for instance. The group has a clearly defined, almost regimental structure to its campaigning. ‘We have a professional public affairs committee (PPAC),’ says Chris Milburn, IRS chairman. ‘Its brief is to look at policy and to raise the awareness of the society and get its voice heard.’
Sometimes it simply isn’t feasible to put each issue to the entire society. ‘It’s the committee that forms most opinions,’ accepts Milburn. ‘But it does depend on the issue. At times we will survey all of our members to get a more comprehensive view of the society.’
Likewise, in Canada Ciri also has a special section whose remit is to keep an eagle-eye on issues that might affect the practice of IR. This issues committee is headed up by chairman David Mills and is almost as old as Ciri itself, suggesting that tooth-and-nail campaigning is pretty much a part of the institute’s raison d’etre. ‘We used to be part of Niri. When I was president we made the transition to a separate, autonomous body and at the time there were a few things that needed addressing in Canada, so we set up the issues committee almost straight away.’
Niri also has a structure in place for addressing relevant issues. ‘We have an external affairs committee (EAC) which looks at government issues,’ says Thompson. ‘That’s the preliminary stage but it’s the board of directors that ultimately decides what action to take. So the board acts as the issues committee when things are brought to it by the EAC.’
Having a mechanism by which a society’s big cheeses can get things done is fine but that’s not an advertisement for strength in numbers. Do associations’ rank-and-file members give a tinker’s cuss for the issues that matter? ‘I think they do,’ says Milburn at the UK’s IRS. ‘We use our web site to communicate with our members, sending e-mail asking their opinions on certain issues, and we generally get a high response. In this way we can get the views of our members established quickly and comprehensively.’
And the society as a whole likes what it sees. ‘When we surveyed our members this year we found that they were keen to see their society employing a more proactive role,’ says Milburn. ‘They like what we are doing and they want more of the same.’
As for Canada, Mills argues that the structure of Ciri’s issues committee is flexible enough to keep it in tune with the views of the wider Ciri membership. ‘It’s kind of a floating group,’ he says. ‘Its membership depends on the issue under examination. As chairman, I call upon people who I think will have something valuable to offer. So there’s no core group.’
Niri members, however, are fairly reliant on Thompson for their society’s vim. ‘There aren’t many corporate letters coming in from members,’ he concedes. ‘I think people look to the Niri board to lead. But then that’s my job, so obviously people look to me.’
And boy, Thompson certainly puts his back into it. He’s clearly of the view that making your voice heard involves more than 12-page letters and roundtable discussion; and he’s recently been on a speaking tour of other hopefully-interested bodies. ‘I’ve spoken to numerous groups,’ says Thompson. ‘I’ve just given a speech to 250 corporate lawyers, carrying our message of what we think is wrong with the SEC’s proposed regulation. We’ve also been in contact with the Association for Investment Management and Research and try to coordinate our efforts, although we don’t agree on every point.’
In the spotlight
Niri also has sufficient sway to use the media to bark out its message. ‘I’ve done numerous interviews with the media,’ says Thompson. ‘I’ve been on CNBC, Bloomberg, and I’ve spoken to Business Week.’ In the UK, meanwhile, the IRS often has its gripes printed in the letters page of the Financial Times.
Naturally, the heavyweight kudos required to feature in such esteemed media comes with time and effort. If, say, the Belgium Investor Relations Association approached a national television channel, offering to air its views, it might well receive an answer of the Don’t call us, we’ll call you variety. But then, that’s all the more reason why effective campaigning helps. The IRS certainly sees the pay-off. ‘We feel that our voice is increasingly recognized,’ remarks Milburn. ‘Now we’re invited round the table of various committees; our view is being sought by policy-formers.’
‘Part of our mandate is to be proactive,’ points out Ciri’s Mills. ‘That applies to education and to policy-forming. We measure success by our results and also by simply being at the table.’
‘In these kind of processes, you have opinion leaders. We want Cira to be one of them,’ states Fochler. ‘And I do feel that our profile has been raised. And the proof of that is that one of our members, Brigitte Juen of OMV, is on the supervisory board of the Vienna stock exchange. That proves that we’re well-respected and seen as a driving force.’
