new trends in investor relations
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New Trends inInvestor Relations
National Investor Relations Institute (NIRI)U.S.A.
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National Investor Relations Institute (USA)
NIRI was chartered in 1969 as a professional association of corporate officers and IR consultants responsible for communication between corporate management, the investing public and the financial community.
Located near Washington, DC, NIRI is the largest professional IR association in the world with more than 4,000 members representing 2,000 publicly held companies and $5.4 trillion in stock market capitalization.
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Our Mission
NIRI is dedicated to advancing the practice of investor relations and the professional competency and stature of its members.(Adopted 1992)
Members must sign NIRI Code of EthicsMembership can be terminated
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NIRI Board of DirectorsChair: Bina Thompson
Vice President, Investor Relations
Colgate-Palmolive Company
Don De Laria
Vice President, Investor Relations
Regal Entertainment Group
Jenny Kobin
Vice President, Investor Relations &
Corporate Commun.
Inspire Pharmaceuticals
Elizabeth Saunders
Co-Founding Partner
Ashton Partners
K. Blair Christie
Senior Vice President, Corporate
Communications & Investor
Relations
Cisco Systems, Inc.
Carol DiRaimo
Vice President of Investor Relations
and Corporate Communications
Jack in the Box, Inc.
Catherine Mathis
Senior Vice President, Corporate
Communications
The New York Times Company
Douglas Wilburne, CFA
Vice President, Investor Relations
Textron, Inc.
Derek Cole
Vice President, Investor Relations & Corporate Communications
ARCA biopharma, Inc.
Jeff Galow
Vice President, Investor Relations
Quanex Corporation
Nicole McIntosh
Director of Investor Relations
Waddell & Reed Financial
Bradley Wilks
Chicago CEO and Managing Director
Sard Verbinnen & Co.
Sally Curley
Senior Vice President, Investor Relations
Cardinal Health, Inc.
Barbara Gasper
Group Executive, Investor Relations
MasterCard Incorporated
David Prichard
Vice President, Investor Relations & Corporate Communications
Corn Products International
Mona Zeehandelaar
Principal Investor Relations
Towers Perrin
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NIRI Members • A “typical” NIRI member
– Background in Finance or Communications– Has 10 or more years of IR Experience– Titles
• 33% Vice President/Assistant VP • 27% Director• 13% Manager
– Their Company• U.S.$500 million to U.S.$5 billion in market capitalization • Staff of 2 – 3 in IR department
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NIRI’s Focus: Global IR
1. Information
2. Education
3. Advocacy
4. Community/Networking
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NIRI’s Focus: 1. Information Body of Knowledge www.niri.org
Weekly: IR Weekly e-newsletter Monthly: IR Update magazine Regularly: IR Practice Research Regularly: Executive Alerts Regularly: IR Advisor NIRI Ethics Council
Confidential advice
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NIRI’s Focus: 2. Education
12+ Instructor led courses yearly 20+ Online webinars annually 3 day Annual Conference University Relationships
U. of Michigan, U.Cal. Irvine
NIRI Standards of Practice NIRI Bookstore
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NIRI’s Focus: 3. Advocacy International Organization of Securities
Commissions (IOSCO) Washington, U.S.A.
Securities and Exchange Commission U.S. Congress
Peer Organizations Global IR Societies GIRN (Global IR Network) CFA Institute
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NIRI’s Focus: 3. Advocacy
Raising IR profile and status IR as a profession Gaining influence
In the C-Suite (CEO, CFO, COO)
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NIRI Chapters
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NIRI’s Focus: 4. Community/Networking
Online Membership List Company, industry, location
Social Media – NIRI groups on LinkedIn Face Book Twitter
Topical & Issue Communities Emerging Issues Committee
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Our World is Changing: Financial Market Trends
Exchanges/Bourses Sell-Side: Investment Banking Buy-Side: Institutional Investors Regulations Financial Communications Economic Slowdown
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Exchanges/Bourses Trends Global For-Profit Exchanges
NASDAQ-OMXNYSE-Euronext
Horizontal ExpansionEquities, options, futures
Vertical ExpansionComplete IR services
WebsitesSurveillanceAnd much more
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Exchanges/Bourses (continued)
Lost Linkage between Listing & Trading
Wholesale vs. Retail Separation
Darkpools/Alternative Trading Systems
Fairness (Best Price)
Transparency (Who is trading your stock)
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Sell-side: Investment Banking Where is the added value?
Information readily available Fair disclosure and data services providers
Cost Cutting Research limited
Lost Commissions (Dark pool competition) Direct Market Access, program trading Sell-side elimination/consolidation
Lehman Brothers Merrill Lynch Bear Sterns
IROs must prioritize, job more difficult
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Evolving Buy-Side
Hedge Funds Long-term trend: hedge funds growing
Institutional investing going away Research is from within Some short term, others long-term More cooperation with other funds & firms
Pension fund may own a hedge fund More Communication with IR departments
Hedge funds no longer feared, are accepted But, no increase in transparency
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Evolving Buy Side (continued)
Sovereign Funds Growing! Expect an increase…
Funding from Economies in Asia Oil & gas
Relatively unaffected by market Long term, passive investors Investment in projects in own countries Many are following code of conduct
International Monetary System
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Evolving Buy Side (continued)
Passive Index Funds Versus active mutual fundsCopy index performanceAttractive to U.S. investorsDifficult for IR
Beyond reach of communicationsCan influence stock price
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Evolving Buy Side (continued)
Private Equity Rapid growth before downturn
Availability of capital
Cyclical businessQuiet, but lurkingStay prepared for takeoversSpin off companies as IPO
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Regulatory/Governmental Trends
Abusive short selling is everywhereGovernance & Activism
BoardShareholders“Say on Pay” – in U.K.
Corporate Social Responsibility“Green” movement
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Regulatory/Governmental Trends (cont’d)
Transparency & ConsistencyXBRL Extensible Business Reporting Language
U.S. Top 500 countries in 2009, more in 2010 and 2011
IFRS International Financial Reporting Standards
Global regulation convergenceBriteline test Meaningful principles
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Communication Trends
Growing importance of webMigration from static to usable data
Web is first point for informationContactFinancials
Communications hub/social mediaCorporate blogsInvestor forumsTwitter, FaceBook, LinkedIn, Ning
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Our World is Changing: Economic Trends 2009, 2010
• Layoffs
• Commodity price fluctuations
• Global downturn
• Strength of U.S. dollar
• Less capital for growth and borrowing
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Global Trends in IR: NIRI and Bank of NY Mellon Survey
• Key findings • 90% of all respondents have increased or maintained the same
level of communications with analysts and investors
• Financial companies led all sectors with regard to increasing their communications (67%) and were the most likely to have changed their outlook horizons (65%).
• T he most frequent shift in IR messaging• Credit concerns (66%)
• Outlook horizon (50%)
• Cost-cutting (50%).
• Growth of potential investor opportunities in 2009 seen in the U.S. (69%), the U.K. (51%) and Continental Europe (51%)
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Effect of volatility of the financial markets on IR department’s communications activities with analysts and investors?
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Have any recent analyst questions prompted you to shift your IR communications messaging in any of the following areas?
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Emerging market demand
Country risk
Consumer demand
Currency risk
Rising cost inputs
Cost-cutting
Outlook horizon
Credit concerns
Yes No
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Coping with Financial Crisis: NIRI Member Survey
• Key findings – Increased phone calls from the buy-side– International Road shows have decreased– Interaction with C-Suite (CEO, CFO) has
increased– Change in earnings guidance – some have
limited or eliminated guidance– Less effect on IR for large companies
• Members are making due with less!
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Investor Relations
• How does IR evolve to meet the changing world?
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Evolving IR to meet anevolving world
1. IR foundationConsistencyCredibilityTransparencyResponsiveness
2. Focus on Buy-side 1st then Sell-Side3. Be aware of market participants
Traders (short term) Hedgers (medium term) Investors (long term)
4. Use corporate market access to your advantageNot just for brokers Dark Pool offeringsStand-alone web offerings
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Evolving IR to meet anevolving world
5. Balancing outward communicationwith intelligence gathering
What are investors thinkingIs activism coming
6. Know company intimately Income statementBalance sheet (especially now)Debt structuresGovernance
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Evolving IR to meet an evolving world
7. Reach out and understand all investors/users
Traditional institutions
Hedge funds
Passive investors (index funds)
8. Champion financial communication mediumsTraditional print
Website information
Social networking
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Evolving IR to meet an evolving world9. IR in turbulent times
Do not hide or cancel meetingsCommunicate company’s value & growth story
If stock price declines from market pressures rather than specific events, push value
Monitor stock performance relative to peersContinue to use IR best practicesCircle around to potential investors you’ve contacted in
the past couple of years – things have changed and they may be interested
Make sure employees are communicating and know the company message, as they are some of your best spokespersons
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Evolving IR to meet evolving world
10. IR is the gatekeeperProper disclosureProper transparency
In a manner that is:ConsistentCredibleResponsive
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