Hot summer days in New York provide the perfect setting for long lunches, and this was one of those days. A light breeze tempered the 80-degree heat and bursts of sunshine peeked through the office towers in Manhattan’s downtown core. This was the kind of New York day office workers love. They cut out early for lunch to sit by the nearest fountain and munch bite-sized pieces of sushi or deli sandwiches.
Tom Walek, president of Walek & Associates and vice president of communications for Niri’s New York chapter, chose the spot for our meeting – Milos on West 44th Street. Carol Murray-Negron, vice president of investor relations at Avon Products and president of Niri New York, joined us, as did Catherine Mathis, vice president of corporate communications at the New York Times Company and director of Niri New York. The topic of conversation: the changing role of investor relations. Milos’ minimalist decor and intimate atmosphere gave us the perfect setting. With the arrival of drinks, glasses were raised to toast – you guessed it – ‘Another beautiful day, in New York.’
Then we launched (and lunched) right into it.
IR: How is investor relations changing?
Mathis: The IR role’s visibility is increasing within the corporation. Murray-Negron: And it’s much more broad-based and marketing focused.
Mathis: There are several factors behind this. If you look at the trend in the US, you’ll see people are becoming more interested in business topics. Partly because more people have self-directed 401K plans and have become consumers of the kind of information we provide. Also, as part of the internet revolution, there are more IPOs and those companies need someone who knows the language of Wall Street to communicate their stories. The other factor is executive compensation. More executives are compensated using options and the value of their options is tied to their stock price. In order to get proper valuation for their stock, companies are hiring IROs to tell their stories to the Street.
Walek: And let’s not overlook the very definition of Wall Street and the structure of the market. Stock is traded in so many places these days, it’s not just a one exchange marketplace. There are third markets, capital markets, global markets and 24-hour markets, and somebody has to keep an eye on all of those.
IR: Aside from hiring more staff, what are some of the techniques IROs are developing to deal with these new demands?
Murray-Negron: Posting the most frequently asked questions on your company’s web site helps. Also, using e-mail to communicate, though I personally never use e-mail to answer analyst and shareholder questions, unless they are very straightforward.
Mathis: Conference calls are certainly a much more efficient way to reach a large audience.
Murray-Negron: Also outsourcing. We don’t have time to run all the numbers to develop the targeting programs. It’s very time consuming and people just don’t have the staff. So, the use of the Carson Group or other companies, not only for stock surveillance but for providing targeting information, is a tremendous help.
IR: What are some of the skills that today’s IRO needs that weren’t necessary ten years ago?
Mathis: Anyone coming into investor relations has to have good communications skills and a financial background or basic knowledge. The other thing is a certain amount of internet savvy in terms of both doing competitive analysis within the department and getting information to the financial community.
Walek: Communication is becoming more important. For years the investor relations and public relations departments of many companies existed perfectly happily and quite apart from each other. And what unites them nowadays is communications.
Murray-Negron: We invite sell-siders to some of our PR events.
Mathis: Also, media representatives now want to get on conference calls. That’s another way the two departments are coming together.
IR: How do you feel about the media coming on to conference calls?
Murray-Negron: Well, she is the media! [referring to the New York Times’ Mathis]
Mathis: It is a trend. They are coming on, generally, but only in listen-only mode. Niri has some very good statistics on the number of companies that allow individual investors and media on conference calls and you can see a significant growth year after year (see Open calls, above).
IR: Any predictions for what we’ll see happening in the future?
Murray-Negron: I think you’ll see more IROs involved in the development of strategy, generating ideas particularly when a company is looking to change its mission or direction.
Mathis: Another big change will come with the globalization of the markets and continuous trading. That will create both challenges and opportunities for IROs. People will want more information, more often. If it’s 24-hour trading, our hours are probably going to have to change.
Walek: If it’s 24-hour trading, you really have to consider how you are going to handle that from an IR perspective. Are you going to have IR representation 24 hours-a-day? I’m not sure the answer is yes, but it’s going to be up for discussion.
Murray-Negron: Somebody from Nasdaq told me earlier this week that we probably won’t go to 24-hour trading here in the US. There is not enough business, so they are going to move with the sun, starting with Japan, but not physically on site 24-hours. This maybe buys us a few years until we figure out how to deal with it!
Open calls
According to a recent National Investor Relations Institute survey there has been a significant increase in corporations opening their analyst conference calls to individual investors and the media.
The survey shows that of the 83 percent of companies that currently conduct conference calls, 82 percent allow individual investors real-time access, compared to 29 percent in a survey conducted nearly two years ago. Of that same 83 percent, 74 percent allow the media access to their calls, compared to only 14 percent two years ago. Moreover, adding those companies that still restrict their calls to investment professionals but expect to open their calls, the number of companies providing open access within 2000 should increase to 90 percent for individual investors and 86 percent for the media.
The study, conducted during February 3 to 16 of this year, surveyed 225 senior investor relations officers by phone, representing approximately 10 percent of Niri-registered companies.
