The broad program at NIRI’s 2007 annual conference in Orlando gave IR insiders the chance to take stock of the profession and build on their own skills – yet they also had the opportunity to see how the function is viewed by others.
In keynote addresses at the June 3-6 conference, some of the nation’s highest-profile CEOs and investors gave their assessment of the role of the IRO. Appearing on the opening morning were Clarence Otis, chairman and CEO of Darden Restaurants, and John Thain, CEO of NYSE Euronext.
Both said the job of IR is critically important – and not for the fainthearted. ‘Companies are constantly engaged in efforts to create value, but if you aren’t communicating those efforts that value won’t be realized,’ Otis said.
The IRO’s work also goes beyond the company and its investors, he added: ‘You help the American public, directly and through the press, understand our free enterprise system.’ Thain, for his part, said the transparency and value IR adds are ‘crucial to the functioning of any stock exchange.’
The position involves facing up to CEOs with criticism or conflicting views from Wall Street. ‘It takes courage to do that,’ Otis admitted. He recounted Darden’s early IR struggles convincing investors of the need to spend money on national advertising –once a novel concept in the restaurant industry.
He also discussed a lesson he learned as a director at Verizon, which was ‘pummeled’ by analysts for years for its $25 bn bet on a new fiber optic network only now getting credit in the stock price. ‘Sometimes you have to blaze the trail,’ Otis said.
Thain said NYSE Euronext’s plans to create a global trading platform will increase liquidity and lower capital costs. ‘But you will have to spend time on your international shareholders,’ he warned. ‘It makes your jobs harder.’
NASDAQ president and CEO Robert Greifeld took to the podium the next day to offer his take on the complicated IRO-CEO relationship.
‘I’m probably very difficult for an IRO to handle,’ he said. ‘I have a perpetual view that my stock is undervalued. I watch every crimp in our stock and expect an instant answer on who is buying and who is selling. I see the IRO responsibility as very challenging. The position has been elevated, and rightly so, in the organization chart.’
Following Greifeld, a panel of investment gurus shared their thoughts. Gary Black, CEO of Janus Capital, was dismissive of the position, stating it was filled with ‘less talented folks’ and losing its prominence. ‘The IR function will decline over time because of Reg FD,’ he said. ‘All the information you need is out there.’
Joseph Rice, chairman and founder of the private equity firm Clayton Dubilier & Rice, disagreed: ‘The way we present ourselves to the public and to regulators is increasingly important. The IR function will be more and more important as days go by.’
Jason Yeung of Morgan Stanley Investment Management said IROs were helpful overall. ‘In any business there is a certain amount of optimism and [salesmanship],’ he noted. ‘But the best IR people are those who know the business cold and can say, This is our competitive advantage in the most credible and objective way possible.’
