Paris, la ville lumiere, temple des amoureux, leant a certain magic to the occasion of the third Investor Relations Magazine Eurozone Awards. The French capital wrapped the ceremony at the Hotel Inter-Continental in glamour and sophistication, aided and abetted by the leadership of Christine Ockrent, one of France’s most high-profile financial and current affairs journalists, who compered the proceedings.
During the day, the same hotel had been the venue for the IR in the Eurozone Forum, a two-day conference also organized by Investor Relations magazine. But as night fell, the bright lights came on and black ties and evening dresses replaced business suits. Sipping from their glasses of champagne, IROs merely smiled inscrutably at anyone daring to ask whether they were expecting to be honored with any of the covetable awards as the evening went on. A demure sip of the bubbly was the most common answer.
The edge was slightly taken off the charm of the night when Ockrent said the survey underlying the awards showed a weaker consensus about improvements in IR. In fact, only 72 percent of respondents said the overall quality of Eurozone IR had improved. It may sound like a healthy percentage but it’s a drop of 16 percent since last year and 14 percent since 1999.
The study, conducted for the third year by Amsterdam-based market research institute TNS Nipo, involved interviews with 631 sell-side analysts, buy-side analysts and portfolio managers in 15 countries across the Eurozone and beyond. All were asked their opinion about the current state of investor relations, specifically those areas they thought had improved or were still in need of improvement, and those areas they deemed most important.
Some respondents pointed out that a downturn in the economic environment was the main reason behind their perception of a fall in IR quality. Investor relations officers often failed to communicate the consequences of the slowdown for their companies, or they waited until the last moment to do so, which led to negative surprises. Respondents also deplore the lack of credibility of some information received, sometimes judging it to be doubtful or manipulated. As one of the people consulted put it, ‘There’s a lack of honesty in the information. Companies say what investors want to hear.’
But on the upside there are still firms that really know how to handle the investment community. These were the ones identified by the research as the best in class and therefore required to step up to the stage to receive their awards.
And the winners were…
Finnish telecoms giant Nokia was the superstar of the Eurozone for the second year, scooping six of the top awards. The financial community acknowledged the company’s superior effort in IR by rewarding it with the prestigious Grand Prix for best overall IR, leaving Ahold and Vivendi Universal in second and third place, respectively. ‘Nokia is honest with the market and gives accurate information,’ one respondent said. ‘They rarely disappoint us. They have good communication in general with investors; they provide detailed financial reporting; and they give thorough explanations about their strategy.’
Kari Tuutti, IR manager at Nokia, is pleased the investment community appreciates the IR program, even after seeing Nokia’s stock price sink over 50 percent between the 2000 and 2001 awards events. ‘In such a tough environment for the industry, it’s good to see the financial community appreciated our commitment,’ he comments. ‘We have continuously updated our information, and we haven’t hidden anything even if we didn’t have positive things to say.’
One of the secrets of Nokia’s succeed is, in Tuutti’s words, ‘Lots of work, traveling, speaking, argumentation, teaching and convincing.’ Nokia’s five-person IR team based in Finland has responsibility for communication to the European financial community. But they enjoy strong support from the top-tier executives and middle management who are directly involved in investor meetings.
As a tech company, Nokia has shown that it knows how to use technology to communicate with investors. Indeed, it was recognized for best use of the internet for IR and best use of virtual conferencing by the survey. The respondents appreciated the quantity and quality of the information provided via the internet and the easy-to-use web site. ‘They have a good web site and, as a primary source of information, they always post things on the internet first,’ enthused one analyst responding to the survey.
Tuutti points out that Nokia began webcasting extensively 18 months ago, providing quarterly conference calls, broker seminars and other virtual investor meetings on the web. When talking about virtual conferencing, respondents stressed the fact that when Nokia publishes its results, there is a simultaneous presentation in Finland with executives presenting the results live on the internet. ‘They are the pioneers in this area,’ adds another respondent.
Nokia also won accolades for its annual report for the second year. Respondents liked the document for being visually attractive and appreciated the fact that ‘it’s less boring than others and it’s very clear.’ Finally, Nokia collected the awards for best corporate governance and best board communications.
Satisfaction guaranteed
One of the prizes that the Finnish company didn’t take home this year was for best investor relations officer. The surveys in 1999 and 2000 picked out Nokia’s Ulla James as the finest IRO in the Eurozone, but her name didn’t come up this year, perhaps because she now heads Nokia’s global IR function from Texas. ‘That’s why I have received the award – because she hasn’t participated. Otherwise it would have gone to her again,’ is the modest comment of this year’s winner, Kiran Bhojani, senior vice president of investor relations at E.On, the Frankfurt-based utility giant. He was a finalist in the last two surveys conducted for the Eurozone Awards.
Bhojani couldn’t hide his joy at receiving the prize in an emotional speech. He dedicated the award to his wife because of her understanding and her patience: ‘How many times have I had to postpone or cancel vacations just to attend my duties at work and she has always put up with it?’
Bhojani tied for best IRO with another German, Oliver Schmidt of Allianz, who was pronounced ‘a very proactive communicator.’ Schmidt admits he wasn’t expecting to receive this prize and therefore it ‘has been a real surprise.’ He says the award recognizes the ‘exhausting’ job his six-person team has been doing during the year. ‘I’m very happy for my team because they invested lots of effort. We saw all the investors and analysts and we tried to answer all their questions.’ He also explains that as a consequence of Allianz’s merger with Dresdner, the IR team will increase to ten people.
German champions
If Finland is proud to have a company such as Nokia win so many awards, Germany must be delighted to have so many companies rewarded. Eight different German firms collected prizes in recognition of the good job done in different areas of the IR discipline. Claus Ehrenbeck, head of IR at engineering firm Aixtron, explains that behind this success lies the fact that ‘by law, German companies have to provide more information now.’
However, the quantity of information wasn’t precisely the reason for which Porsche, the sports car maker, received the award for best communication of shareholder value by a Eurozone company outside the FTSE Euro 100 index. The firm refused to publish quarterly results, which cost it its place on Frankfurt’s Mdax stock market index back in August. Investors and analysts stressed ‘the clarity, transparency and credibility’ of Porsche’s communications with financial markets. And Manfred Ayasse, head of IR, says the award confirmed the ‘nonsense of quarterly reports, which increase stock market volatility.’
For its part, Aixtron received two awards for best disclosure policy and best roadshow, both of which awards were among a group of seven presented solely to companies outside the FTSE Euro 100 index. Ehrenbeck couldn’t attend the event because he was complying with his IR duties – presenting quarterly results to the investment community. He explains one of the secrets of his company’s success: ‘Our policy is to disclose the figures in the evening, after the markets have closed. This way, investors can sleep at night on the decision they want to make.’
Deutsche Bank’s victory for best financial advertising was slightly clouded after the ceremony by the news that the company’s third quarter results were leaked a day before they were due for release. A major fiasco, particularly since the bank has been at the forefront of improving disclosure standards in Germany. Still, Deutsche Bank’s IRO – collecting this award for the third year in a row – denied responsibility for the award. ‘This is the only aspect of IR I am not responsible for,’ he joked. That didn’t stop survey respondents being impressed: ‘It has more aggressive advertising than other financial institutions,’ commented one.
A similar light was cast on Deutsche Telekom. After receiving the award for best investor relations in a loss-making stage, it was criticized for issuing preliminary third quarter results without a breakdown by geographical region or business division.
Beyond that
But the night wasn’t just an event exclusively dedicated to Germans and Nokia. Other companies from other countries also had the opportunity to collect prizes from the hands of the sponsors.
For instance, Jurgen Pullens, IRO at Dutch global food company Nutreco, received the award for best crisis management by a non-Euro 100 company. ‘A series of incidents in the past few years have raised awareness of food safety, quality issues and of the environmental impact of food production. I see the award as a recognition for our strategy of having a robust portfolio and for our clear policy of working to high standards and of being open and honest with all stakeholders,’ explained Pullens.
Nutreco actually accumulated the same number of votes as Publicis Groupe, Qiagen, Valeo and Unibail, but the tie was broken by the fact that Nutreco was the only one to have dealt with an actual crisis. While the other companies were commended for their response to downturns in their respective sectors – IR as usual, in the eyes of Investor Relations magazine – Nutreco had to explain the impact of foot and mouth disease on its pig farming and animal food production. As one respondent said, ‘They reacted very quickly to investor concerns and were able to remove these concerns.’
The Spanish IR community was represented by Inditex, the fashion group owner of popular clothes store Zara, which walked away with the award for best investor relations for an IPO. The Coruna-based firm was admired by investors and analysts for ‘easy access to management, the [information about the] main lines of the company and its objectives for the future.’
Jose Maria Alvarez, IRO at Inditex, is thrilled to receive an award based on ‘a voting process involving over 600 people who have decided that you have done a better job than other companies.’ He explains that the IR team was directly involved in the process of becoming a listed company, elaborating upon the prospectus information and visiting institutional investors. ‘It was a huge effort which would be useless if we couldn’t keep it going consistently after the IPO,’ states Alvarez.
Female communication
In Paris, one of the things that became clear is that in IR, women have lots to say. One of the attendees commented that the high proportion of women in IR is ‘because women know how to communicate more and better than men.’ One of these better communicating women is Ulla Paajanen-Sainio, vice president communications and IR at Finland’s Aldata. The software product company was recognized as the non-Euro 100 company making the most progress in IR. ‘You wonder sometimes if you are doing a good job and this prize is like confirmation,’ says Paajanen-Sainio. Talking about compatriot Nokia’s success in Paris, she says the firm is ‘a good inspiration for us but they are in another category.’
Indeed, Nokia is the IR benchmark for many other companies, which must outperform the Finnish company if they’re going to become superstars in the next round of the Investor Relations Magazine Euro Awards. It’s a big challenge. On the other hand, even those companies that walked away without any prize still enjoyed a night of glamour in the city of lights.
