What do investors really think about IR? How should debt IR differ from equity IR? What will be the impact of the Higgs proposals? What can be learned from the introduction of the Sarbanes-Oxley Act in the US? Investor relations in the UK has a lot of key questions it wants answering.
IR magazine’s UK conference, to be held in London on June 30, intends to address these important issues and bring clarification to some of the areas of uncertainty. Titled ‘The issuers meet the investors’, the conference will bring together investors, analysts, senior management, journalists and IROs from the UK and the US. The aim is to let each group share its knowledge while gaining invaluable insight into the disparate parts of the investment community.
As always with IR magazine’s conferences, you count on no tedious PowerPoint or long speeches. Take the Socratic panel, for example, which will be chaired by Richard Torrenzano of the US-based Torrenzano Group. The session will deal with a hypothetical crisis based around a fictitious UK company, and the panel will consist of people who would be involved in a real-life corporate crisis, including a CEO, CFO, non-executive director, PR officer, IRO, legal counsel, journalist and an institutional investor.
As the scenario develops, the panelists will be asked how they will act in response to the crisis, and will seek to involve the audience as key constituencies. Their individual actions will have a domino-effect on each other and, as the situation unfolds, Torrenzano will change the conditions to ensure the pressure stays on.
The session will conclude with the audience’s judgment on how the panelists could have made more effective decisions. For all involved, the exercise will illuminate the interaction, communication and IR involvement in a modern global company.
‘The object is for the audience to see the different kinds of roles people play,’ says Torrenzano. ‘Most people never get to peek inside all the different functions. They want to know what’s happening inside the IR department, what’s happening inside the CEO’s office, what type of advice the lawyer is giving and what the media is looking to cover. With this Socratic panel, everyone will get to see a crisis unfold from a whole number of vantage points – both inside and outside the corporation.’
Another high point of the conference will be an Oxford Union-style debate on the Higgs report. The debate will examine the role of the senior independent director and other board roles, and will look at who controls the nomination process. Dominick Sutton, director of news and commentary at BoardEx, will be involved in the debate and says he is looking forward to a range of opinions being expressed. ‘In certain areas the Higgs report is thought to be an attack on the unitary board which defines UK board practice, and also on the function and cohesion of boards,’ he says. ‘Other individuals argue that the Higgs proposals are necessary reforms and will improve the board process. So it will be very useful for people to have an opportunity to debate the proposals and even vote on them in real time.’
A further area of discussion will be provided by the US IRO panel session titled ‘All you ever think about is Sox’. The US panelists will participate via live videoconferencing and will be discussing how US IR programs have changed, and what innovations are being introduced. As panel member David Dragics, vice president of investor relations at CACI International, says, ‘The changes represented by Sox impact US IR officers on a daily basis. The abuses of regulation and securities law, and the increase in regulation, have produced a more skeptical investor community – the credibility of corporate management and the competence of corporate boards is being challenged.’ Dragics and the other panel members will explain how they have attempted to overcome these challenges.
A further panel session titled ‘Why do investors vote the way they do?’ will explore the voting process. ‘Investors at large are becoming much more interested and active,’ comments Ken Ayers, chairman of the NAPF Investment Council, who will be involved in the panel. ‘Shareholders have been voting and expressing their opinions more. They haven’t necessarily been voting in sufficient quantity to overturn the board’s recommendations, but it has been in sufficient quantity to make the boards take notice.’
Colin Melvin, director of corporate governance at Hermes Pensions Management, adds, ‘There is significant pressure on institutional investors both from their clients and government to take seriously the rights and responsibilities of shareownership. Moreover, many institutional investors recognize that by taking an active interest in the ways in which companies are directed and controlled, they can increase the value of their clients’ investments. Voting is a key part of this process.’
Further panel sessions include ‘Meet the shareholders’, ‘Equity and bond IR convergence’, and a gameshow titled ‘I’m an IRO – get me out of here!’ which will give tips on how to win an investor relations award. There will also be an informal networking lunch with buy-side analysts and fund managers, and awards for best IR by sector as a taster for the IR Magazine UK Awards gala ceremony in the evening.
As BoardEx’s Sutton says, ‘IR just keeps gaining in importance. When we had a period of continually rising – or the expectation of continually rising – equity value, everybody did well. But now that equity values have been falling substantially over the last couple of years, we have an environment in which the City is very interested to know exactly why a company’s decisions are made.’
The conference is designed as a forum where this need for knowledge and information can be met – not just through debate among the expert speakers assembled on stage, but also through feedback from the audience. With this in mind, every attendee will have an interactive handset and microphone for instant and quantifiable polling and feedback. Indeed the conference will leave no stone unturned in its exploration and examination of the investor relations function. Any further questions?
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Crisis leader
Richard Torrenzano is a recognized world leader in crisis management. As chairman and CEO of the Torrenzano Group, a New York-based strategic communications firm, he specializes in building and protecting corporate reputations. During his career he has counseled chief executives and boards of major international corporations in the US, Europe and Latin America, as well as several heads of state.
He cites the decade he spent at the NYSE from 1982 to 1991 as one of the highlights of his career. During a period of rapidly developing public policy issues, historic levels of market activity, unprecedented change in world affairs, and intense global media coverage, Torrenzano was a member of the Big Board’s management and executive committees, and held the position of senior vice president. Indeed, he managed the public policy and communication strategies for the market crash of 1987. Later in his career he helped with communications in the aftermath of the 1998 collapse of Long Term Capital Management. ‘If you look at the three biggest disasters in the last 100 years, I’ve worked on two of them,’ laughs Torrenzano. ‘Just not the crash of 1929,’ he concedes.
At the request of President Reagan, Torrenzano was instrumental in negotiating the landmark 1986 China-US symposium on financial markets in Beijing. That meeting galvanized the opening of the stock exchange in Shanghai, and moved China towards capitalism. In 1990, again at the request of the president (Bush the 1st), Torrenzano helped plan the NYSE’s USSR-US Moscow seminar on financial markets, which served as a catalyst for the opening of new exchanges in Moscow and St Petersburg. ‘It was incredibly exciting to be at the heart of the formation of things that will have a profound effect on these countries for years to come,’ comments Torrenzano.
At IR magazine’s UK conference, Torrenzano will be leading a Socratic panel, and will be sharing his expertise on dealing with a corporate crisis. ‘It’ll be very interactive and there’ll be a few surprises along the way too,’ he says. ‘It will be one of the most interesting discussions you’ve ever seen.’
