Short-termism, activism and ice hockey get IROs talking
For the first two days of NIRI’s annual conference in Chicago, the hot topics of conversation were short-termism, activism, IR certification – and ice hockey.
With local team the Chicago Blackhawks playing at home on Monday night and being one win away from a third Stanley Cup triumph in six years, the big game featured in the conversations of the roughly 1,400 IROs and service providers gathered at the Hyatt Regency by Lake Michigan.
Jason Dean, Chicago bureau chief at the Wall Street Journal, kicked off the first panel discussion of the Monday by saying he hoped it would be a historic day, not just because of the stellar panels on offer, but also because the Blackhawks had the opportunity to win their first Stanley Cup on home turf in 77 years. ‘Go hawks,’ he concluded, with a few – presumably Chicago-based – IROs in the audience echoing the call.
Earlier that morning, NIRI’s new CEO and president James Cudahy, who has only been in the job three months, took to the stage to deliver his inaugural conference address. In the talk he focused on NIRI’s future plans, in particular the long-standing project to create an IR certification – an area where he has much to offer given his background working for CFA Institute. While he spoke, the big screen displayed a mocked-up business card with the initials ‘IRC’ – the proposed designation for certified IROs – following the name.
NIRI’s certification program will help boost the profession by creating a comprehensive body of knowledge and a benchmark level of competency, as well as help attract new people to investor relations careers, said Cudahy. He urged the audience to be ‘brave’ and apply for the first examination, which NIRI hopes to run in the first half of 2016.
The first general session of the conference followed, with McKinsey’s global managing director Dominic Barton giving a talk about the market’s growing short-term instincts and how IR could fight back against them.
It is an area of special interest for Barton: he set up the ‘Focusing capital on the long term’ project with like-minded investors, companies and consultants. Illustrating the problem, he explained that average holding periods for investors have collapsed to less than a year in the US and Europe. He also mentioned research that found three quarters of CFOs say they would sacrifice good investment opportunities to smooth earnings results.
So what can companies and their IR teams do in response? Barton suggested companies spend more time with intrinsic investors, which McKinsey defines as those that hold large positions for several years. He also urged corporates to spend less time giving guidance, especially short-term guidance, and create new ‘health metrics’ that measure how sustainable the company is, such as staff turnover and quality of talent.
Next up was Dean’s panel discussion. Taking their seats with the moderator was an impressive line-up of three CEOs from Motorola, Hospira and Anixter. They offered an interesting and somewhat contrary view to that just provided by Barton: when asked whether they thought short-termism was a big problem for companies nowadays, they said, in general, no.
Yes, investors had become more short-term focused, but that didn’t change how you go about running a company or your relationships with customers or staff, said Michael Ball of Hospira. The exception to that, noted Motorola’s Greg Brown, is the growth of activism – an area where Motorola has had plenty of experience over the last several years with involvement in the company from Carl Icahn and ValueAct Capital.
Following the general session, delegates had a range of smaller sessions to choose from, such as talks on whether your company is 'activist bait', widening your sphere of influence and how to get the most out of non-deal roadshows. The afternoon saw even more options in the ‘topic vignettes’ section: discussion leaders sat at tables and led conversations on around 20 different areas.
After a short break to freshen up and get changed, it was time for NIRI’s main party of the week, titled ‘A taste of Chicago’, featuring, as you would expect, plenty of deep-pan pizza and, to prevent hockey fans departing for the nearest sports bar, the ball game shown on a big screen.
Click here to read our NIRI 2015 roundup: part two.
