While few doubt the necessity of a global umbrella organization like the International Investor Relations Federation (IIRF), disagreements arise as to exactly how such an organization should be structured. ‘I think there is a legitimate need for the IIRF as the association of associations,’ comments Kay Bommer, managing director of German investor relations society, DIRK. ‘Meetings facilitated by the IIRF with heads of other associations I value highly.’
The IIRF was set up in 1990 to serve national IR associations around the world. Since then it has grown to encompass 25 member societies, ranging from mature market associations such as NIRI, CIRI, the UK’s Investor Relations Society (IRS) and DIRK to newer entities in eastern Europe and beyond.
Yet practical and logistical considerations are hampering efforts to increase the scope of the organization. ‘DIRK and the IIRF have looked into establishing an international education project but I think it’s almost impossible to create worldwide standards for IROs,’ Bommer says. ‘The organization is also fundamentally Europe-based so it’s difficult to involve the Canadians, the South Americans and the Asians because it invariably involves a lot of travel.’
Some, like Lee Godfrey, former COO of Precision IR, admire the values of the organization but doubt that it can realize its ambitions. ‘In some circles, the reputation of the IIRF has been tainted due to declining attendance at the annual conference, added to the group being perceived as a revenue generator for the organizers rather than a global movement to improve investor relations,’ says Godfrey. Others echo his sentiments but refuse to be quoted on the record.
Lacking support
‘Presently the IIRF annual conferences lack the support of many of the big international associations,’ comments one industry insider. ‘It is not targeting the national societies but the individual IROs and I’m not sure that should be the job of the IIRF.’
Eyebrows were raised when CIRI, the Canadian IR association, pulled out of the federation. Sylvia Biggs, head of professional development at CIRI, explains why: ‘We’ve been genuinely trying to devise a way the two associations can work together, but it was difficult for us to find a member who could attend the IIRF meetings, and we concluded it was less pressing than the other priorities we are facing.’
The blame for poor attendance should not be laid entirely at the IIRF’s door, maintains Godfrey. ‘I think people have forgotten that the IIRF isn’t an independent body – it belongs to the individual societies,’ he points out. ‘It belongs to all the societies, and if it’s failing it’s the societies that really need to be looking at themselves and asking why that is.’
Bommer agrees. ‘It would help the IIRF if national societies would put more effort in but it’s difficult,’ he says. Many of the national societies do not have the resources.’ One important issue is the value of the IIRF to the mature organizations. ‘The IIRF definitely has a role,’ says Lynge Blak, chairman of both IIRF and DIRF, Denmark’s IR society. ‘The US, UK and Canada have a growing number of corporates who have started becoming more international, and many of them have had an interest in being serviced and given information on roadshows and regulation compliance.’
Independence and governance There are also concerns about the IIRF’s independence, and confusion about its relationship with other bodies, like the IR Global League and International Investor Relations Services (IIRS). ‘Look at the contracts the IIRF gives out to run services; they generally go to entities related to the organizers, the people who set up the IIRF,’ confides one source. Until 2004 the IIRS, an IR firm run by IIRF founder Neil Ryder and Tim Beyts, was the organizer of the IIRF annual conference.
Others believe the federation has addressed the issue of independence between the IIRF and IIRS. ‘I think the largest conflict of interest is now sorted,’ says one source. Blak maintains that in 2004 the IIRF opened up the conference for tender and ‘had five contenders for the contract’. And he emphasizes that ‘this year’s conference in Tokyo is being organized by an independent freelance conference organizer who will run all the logistics.’
There is another negative perception that the IIRF may find difficult to shrug off, however. The IR Global League was set up three years ago as a self-populating program of public and private events – including AGMs, roadshows and capital markets days – in order to prevent corporates from planning conflicting events. ‘The idea is good, but obviously it needs some kind of independent body to verify whether or not this is a thing worth signing up to – which is where the IIRF comes in,’ notes Godfrey. ‘Theoretically it would charge a fee of about $750 a year to subscribe, with 30 percent going to whoever sells it. So if it partners with NIRI, NIRI would get 30 percent, 30 percent would go to the management team and 40 percent would be retained by the IIRF. Obviously, if it were to work, the management team would make a lot of money out of it on the back of the IIRF. I thought that was a bit dishonest because the IIRF was positioning it as the IIRF’s IR Global League, which it isn’t really.’
Blak denies any governance conflicts. ‘Currently the IIRF owns 47.5 percent, another 47.5 percent is owned by the consortia that established the IR Global League, and I myself own 5 percent. So the IIRF has ultimate control because it’s got the biggest stake,’ he explains. ‘We have the control we wish; we have three out of five members of the board.’
Investing in the future
Godfrey clearly believes the IIRF should act quickly to change its image. ‘I think the IIRF needs to cut all ties with the IIRS and IR Global League to regain credibility,’ he says. ‘Ultimately, the federation – and its bylaws and its raison d’être – is commendable, but it has become tarnished and may need to relaunch and rebrand itself.’
And 2007 could mark a turning-point for the federation. The hope is that this year’s conference, being held in Tokyo in December, will mark a step forward, bringing Asian corporates closer to those in the rest of the world.
The organization has also published a document on best practice. ‘It’s the first time the IIRF had been able to introduce best-practice guidelines, with the help of our mature members,’ remarks Blak. ‘We can also help members who want to raise their profile internationally and we hope more societies will see the value of this.’
In an increasingly integrated global marketplace, the case for facilitating international discussion has never been stronger. With so much to gain, societies should be pulling together, pooling resources and fostering understanding of practices further afield.
