Pamela Huggins, the head of Parker's IR team, talks about the company's collaborative IR strategy that takes in everyone from top executives to line operating managers
Parker Hannifin is the global leader in motion and control technologies, employing more than 57,000 people in 43 countries. Not every employee works for IR, though it may seem that way after speaking to the leader of Parker’s IR team, Pamela Huggins.
From the top six executives to line operating managers, many individuals help to create the company’s strategy for reaching out to investors. They collaborate in a series of regular meetings and then focus on the top 20 investors, courting them throughout the year. IR magazine recently sat down with Huggins, vice president and treasurer of the Cleveland, Ohio-based company, to talk about her IR program.
How would you describe the structure of your investor relations program?
Parker management believes the importance of IR means it should be led by a corporate officer. While investors are keen to talk to all levels of management, they want to deal with someone who has access at the highest level and is in tune with the current dealings of the company, so the IR effort is led by me in my role as vice president and treasurer.
IR here is a collaborative effort, supported first and foremost by the corporate communications department. The function also receives support from the SEC’s external reporting and legal departments, and line-operating management. IR-related strategic decisions are more broadly evaluated as a result of having these different departments involved.
How does IR involve other senior management?
IR works very closely with the Parker management committee, which comprises the top six people in the organization.
In fact, IR is a regular topic of discussion at the weekly senior staff meetings, which include operating management. We believe this level of collaboration on IR is unique. It’s something the current CFO put in place when he had responsibility for IR.
What is Parker’s approach to corporate governance?
From a legal perspective, Thomas Piraino, our corporate secretary and chief legal officer, manages governance issues, and I communicate with shareholders. For example, if there is a proxy issue, I would be the one to contact the top shareholders. We also have a data integrity team that reports to the CFO’s office. We maintain a database of information eligible for public disclosure, and the data integrity team compares this with information to be distributed externally and provides clearance upon review.
We also ensure all new members of the management committee receive proper IR training, including media training and instruction on how Parker communicates to the Street.
What about contact with investors and the availability of senior management?
Parker attends a half-dozen sell-side conferences per year, with the assistance of the management committee. We attempt to do non-deal roadshows each year with every sell-side analyst who follows our company. We hold an annual investor relations day, and we host analysts and investors at our plants, at trade shows and at our corporate headquarters.
On the international side, we carry out multiple European roadshows and a major European conference. Most recently, we’ve added an annual Asia-Pacific visit.
We also recently instituted our Top 20 program as part of our investor relations efforts. This program is uniquely designed to address the concerns of top current and potential shareholders. Each executive is assigned shareholders to court throughout the year through visits and with calls after each quarterly earnings call. This gives investors a chance to raise questions, obtain clarification where needed and make recommendations.
How frequently do you provide guidance?
We made two major decisions with respect to guidance in the past two years. One was that Parker move away from supplying quarterly guidance, so we now give annual guidance and update it each quarter. The second thing we decided to do was move away from supplying monthly order numbers, which weren’t representative of the business, and start giving quarterly orders instead.
How did investors react?
I spoke to investors beforehand and I was a bit surprised with how favorably they viewed the decision; they thought this change would reduce the volatility of the company’s stock. Parker doesn’t run the business on a monthly basis, so it didn’t make sense to report orders monthly. It was the same rationale for quarterly guidance: the company isn’t managed on the basis of quarterly earnings.
How do you collect and integrate feedback from the street about Parker’s IR program?
The investors own the company, so we go to them for feedback. We conduct periodic investor perception studies to give investors and the sell side the opportunity to voice things they might not say to us directly. Finally, we get some of our best recommendations from our Top 20 program.
