Winning an award for most improved investor relations is a bit of a dubious honor because it implies a previous inadequacy. At least that’s how Carl Lukach, vice president of IR at DuPont, saw it when he heard the award had his company’s name on it at the conclusion of this year’s IR magazine-commissioned survey of more than 2,900 investors and analysts.
But his opinion has since changed. ‘At the awards event, I got a whole new sense that that’s the award to win,’ Lukach admits. ‘And we hope to win the same award next year.’
Lukach says he has been working hard on his own assessment in the last 18 months. ‘We didn’t do a lot of the conventional perception studies,’ he points out. ‘We just did the old-fashioned one-on-ones with a lot of buy-siders and some sell-siders. We got down to what’s holding them off from taking a larger position, what it is about our disclosure and specifically our IR they don’t like.’
One thing DuPont realized was that, although it is essentially a science company, it had never communicated its pipeline or how it prioritizes research and development (R&D). Now the Delaware-based firm is disclosing what is forthcoming from its agricultural and industrial businesses and has introduced new metrics around R&D.
‘We watched what a lot of other companies did well and replicated it,’ explains Lukach. DuPont has also added more narrative to its unique databook, a downloadable compilation of historical financial data.
View from the top
While DuPont is a good case study for anyone looking to improve IR, other companies have also been honing their strategies. Cisco Systems’ John Chambers, who tied this year for best IR by a chairman or Ceo, made changes to the way he handles earnings calls after getting complaints they were too long, says Blair Christie, vice president of corporate communications and investor relations. ‘We weren’t getting to guidance fast enough,’ she adds.
Using new shorter calls, Cisco is now pointing investors more often to the web for things like its ‘tech talk’, which focuses on key business areas. Chambers is easy to prep for conference calls, says Christie, who concentrates on giving him a mental picture of the event ahead of time. ‘It’s a template,’ she says. ‘We talk through the largest investors, the top three messages and the top three investor concerns.’
Procter & Gamble’s Ceo, AG Laffley, who tied with Chambers for the award, is similarly easy to coach, says Chris Peterson, P&G’s general manager of IR. ‘It’s because he’s close to and in touch with the business,’ Peterson explains. ‘He travels all over carrying out strategy and innovation reviews, which gives him the pulse of the business. Plus, his explanations are easy to grasp.’
As the most elemental skills in IR involve giving guidance and actual results, Kim Johnson, the outgoing IR chief for the Hartford Financial Services Group, says it was good being recognized with the award for best disclosure policy.
Analysts praised the level of detail in the Hartford 10Qs as well as the accessibility of the Cfo, controller and line chiefs after the company reports earnings. ‘So many people spend a lot of time writing Sec filings and never get to see how investors view all the work they do,’ Johnson says.
Perennial performer
GE also excelled in matters high and low, taking three awards including the grand prix for best overall IR in the mega-cap group. In fact, GE is a perennial leader in these awards – and a pioneer in IR. Last year its vice president of investor communications, Dan Janki, hosted 40 investors on a special tour of GE’s oil and gas operations, starting off at headquarters in Florence, Italy, then heading for site visits in Qatar, Abu Dhabi and the United Arab Emirates. Part of Janki’s strategy is to get investors out and about with GE’s business teams. ‘We want to make it real and tangible,’ he says. ‘New York’s convenient, but we like to get investors out into the business to meet management way down in the organization.’
One perception study respondent noted the ease and courtesy of Coach’s IR chief, Andrea Shaw Resnick, ‘even on the stupidest question. It’s always easier to do IR when you’ve got a good story to tell and the numbers to back it up,’ says the former sell-side analyst. ‘The downside is that there is always someone looking to short the stock or trying to find chinks in the armor.’
Back to basics
Nokia, which was voted as having the best IR by a continental European company in the US market, has one of the world’s biggest and busiest IR departments. With about 100 analysts, ‘we are probably the most extensively covered company on earth,’ says Nokia’s head of IR Bill Seymour.
Nokia’s good reviews may be due to the fact that, with 50 percent of its investors in the US, it moved the global IR team and its Cfo from Helsinki to New York this year. But Seymour says a lot of what his team of eight accomplishes is down to some prosaic factors. ‘We try to call back as soon as possible and not use voicemail,’ he explains.
Some of the most intense IR may come during an Ipo. Gary Kohn, vice president of IR at Colorado-based Western Union, started an IR team from zero when his company split off from First Data last September. He had a compressed time period, with only three months to write a registration statement ‘laying the groundwork for why we’re a good investment, without overselling it.’
Double-sided campaigns
IR messages can be worked into corporate image campaigns too, says Katy Giffault, director of advertising and marketing communications at Connecticut’s United Technologies, which was judged as having the best corporate advertising. Her print and internet ‘Curious’ campaign worked on two levels: for the customer and for the investor, showcasing products alongside messages about key metrics like the company’s record total shareholder return.
Another winner this year is Toyota, recently the subject of a debate by business analysts about whether it is the world’s most sophisticated corporation. The 295,000 employees of Toyota really are motivated by the concept of kaizen, an obsessive obligation to be better, says Steven Curtis, investor and media relations chief in North America. ‘Our goal [to be shareholder-friendly] has consistently been the same since we listed here in 1999,’ Curtis says. ‘But we are constantly evaluating the method to get there.’
For those who learn or improve investor relations by role-modeling, the carmaker is one to watch: even Microsoft founder Bill Gates has wondered aloud about what he can learn from Toyota.
