NIRI 2017 conference roundup – part two
What better way to start your third day at NIRI than a session of pep talk and coaching? Connie Dieken, author of Become the Real Deal, urged IROs to go beyond their role as ‘a company’s side airbag’ and aim for strong influence.
To do so, they should follow three steps: connect (what does your audience value? what’s its knowledge gap?), convey (use dual-track projections, a presentation plus slides, tell a story instead of facts) and convince (transfer ownership: shift the idea so the audience will embrace it, focus on solutions not problems). A slight upward lift of your mouth corners – ‘the magic move’ – can prevent a ‘hostile resting face’ killing all your efforts, she told her IRO disciples.
An interesting debate took place at one of the breakout sessions on the theme of ‘being the board’s valued partner’, moderated by AMD’s Ruth Cotter. J Kevin Buchi, board director at Impax Labs, and Michael Pocalyko, CEO of Monticello Capital, both agreed IROs have a role in synthesizing third-party information and reporting investor views to the board.
‘Go deep but be quick,’ advised Buchi, an advocate for information set out ‘in three bullet points, not endless reports’, while Pocalyko prefers quantitative material. ‘Be knowledgeable on what the board is looking for with regards to its long-term strategy,’ he said.
Cotter suggested IROs volunteer to insert themselves into the onboarding process for new directors, offering to help with company history or providing feedback on perception studies. If there is no formal board access for IROs, they should use their CEO or CFO as a vessel of communication, Buchi said: ‘And if your CEO has an ego, put his[or her] name on the email.’
A focus on careers was up next with Tabitha Zane from TopBuild, Angie McCabe from WellCare Health Plans and Terri Anne Powers, the North American IR director of French firm Veolia Environnement presenting case studies. Moderator Carol Murray-Negron, president of Equanimity, revealed 88 percent of IROs had started out with no career plan. Nearly two thirds of them would consider a new role offering an advancement opportunity, while 38 percent would do so for better compensation.
Before moving to a new company, Zane said IROs should consider market cap size (‘you’ll often hear you need large-cap experience’), department size (‘will you be gaining management experience?’), shareholder base (‘do you really like retail investors?’) and reputation on the Street (‘ask sell-siders’).
‘Don’t discount service providers if you want to break into IR,’ said McCabe, who also advised every IRO to find a mentor. ‘And think long term, as sometimes one step backwards can lead to taking two steps forward.’ With a large number of former analysts now competing with career IROs for jobs, Powers recommended putting an emphasis on any differentiating asset you may have, such as experience with government issues, communication challenges or dealing with an activist. ‘Be open-minded to relocating or changing industries if needed,’ she said.
IR veteran Mickey Foster moderated the general session on the evolution of regulatory and sustainability disclosures, which featured Elisse Walter, former chair and commissioner of the SEC and now a board director of the Sustainability Accounting Standards Board (SASB), as well as Peggy Foran, chief governance officer and corporate secretary at Prudential Financial. SASB’s goal is to have non-financial disclosure required in the 10K, Walters explained, with companies deciding which ESG matters are material to their business. ‘Sustainability reports are often overwhelming and also lacking in consistency, when investors want standardized methods and metrics,’ she said.
Putting non-financial information in the proxy statement is a good place to start, Foran suggested. Asked whether the revocation of the Paris Accord would impact ESG disclosure, Walters said that the power of the marketplace ‘will mean we’ll get there eventually.’
The final session of the day focused on ‘managing for the long term in a short-term world.’ Sarah Williamson, CEO of Focusing Capital on the Long Term (FCLT) Global, called for quarterly guidance to be abolished. She recommended setting up five to six KPIs ‘on which you can report consistently and historically.’ A survey of US IROs revealed 43 percent would also prefer to eliminate quarterly earnings calls.
On the question of hedge funds, Chris Stent, founder of Mission Street Capital Advisors, stressed that these short term-oriented investors shouldn’t be excluded, but rather be limited to 10 percent of engagement time. IROs should concentrate their efforts on a list of 10 to 20 long-term targets, he added.
Wednesday, the last day of the conference, started with an overview of NIRI’s new certification program, the Investor Relations Charter, and ended with the very moving testimonial of Dan Nevins, a severely wounded former soldier who reinvented his life as a yoga instructor.
In the meantime, delegates returned to the main ballroom to listen to Wells Fargo’s global economist Jay Bryson (‘oil will stay low, rates will rise slowly’) and Don Rissmiller from Strategas (‘our labor force peaked at 67 percent in 2001’) being questioned by NIRI CEO Gary LaBranche. There were a few chuckles in the room when someone from the audience asked what would happen demographically when baby boomers ‘finally’ retire and die: will cybernetics fill the gap? ‘Robots may one day replace economists, but not IROs,’ Bryson joked.