Some months are better than others. For many IROs, January and February were busy, and March could be busier still. For one, boards have come under fire to become more independent: an Investor Responsibility Research Center survey has found increased independence in 2000, and the SEC is pressuring mutual funds to do the same.
The SEC kicked off 2001 as a fierce advocate of independence. In addition to board independence it has been reminding companies of its audit rules which seek more independence of auditors. As SEC chairman Arthur Levitt relinquishes his position, all eyes settle upon the new administration to see whether his populist crusades will flourish or flounder.
Levitt will be remembered for many initiatives, not the least of which is his recent enfant terrible, Regulation FD. A new Thomson Financial/Carson survey finds that companies have contradictory interpretations of FD compliance. For instance, nearly 40 percent of TF/Carson’s clients believe they are not allowed to provide guidance on a conference call if they haven’t previously given it through a press release. On the other hand, over 60 percent believe this practice is acceptable. They can agree on some things: webcasting is good. Nearly one third of respondents say they are webcasting their earnings conference calls since FD’s introduction. Nearly one quarter say they’ve implemented a formal disclosure policy. Companies agree that too much individual time with analysts is foolish. Many refuse to draft analyst reports or help analysts with their models, and when it comes to one-on-ones, many firms are instead opting for intra-quarter guidance.
And despite the tight-lipped tendencies, a Pondel/Wilkinson report finds that analysts and fund managers are still requesting one-on-one meetings with corporate management.
What are IROs to do? Investors’ demands and regulatory restrictions are the polar forces tearing them apart. To make matters worse, they feel themselves buckling under bearish markets (A Barron’s/Pegasus Research study predicts more than one third of the internet firms it looked at are destined to burn through their cash by year end). This is the time when they may throw caution to the wind and do all those things FD forbids.
There are two key factors to consider during these volatile months. First, most IROs have learned their chops during bull markets – look how Niri membership has exploded in the last decade. And second, it takes bad times, not good times, to see what people are made of.
When cash-strapped companies are up against the ropes, IR budgets – like advertising budgets – suffer. Ironically, these are the times when good communications become increasingly important. Uncertain times can break a company. But then again, uncertain times can make an IR department.
