Why Investor Relations?
• Direct means to inform existing and potential investors
• Essential communications function for a publicly traded company to– educate investment community– shape investor perception
• Indirect means to impact shareholder value
Investor Relations Rationale
• Stock Price reflects expectations of future returns on capital employed
• Lack of information creates uncertainty and a discount to stock price
• Institutional investors largely influence stock price movement
• The financial community is an integral part of a company’s many publics
What is Investor Relations?
• Key element driving a company’s business communications strategy
• Outreach program for key publics– primary focus: financial audiences
• analysts / financial institutions / investment bankers
– secondary focus: external / internal audiences
• media / government / suppliers / customers • management / employees
The I.R. Message
• Company performance & objectives
• Business strategy– Markets / Products– Growth strategy– Future vision
• Financing Policy• Operations controls and
risk management• Compensation
philosophy: management and employment practices
What are the objectives of I.R.?
• Intangibles– Enhance shareholder
value– Support fair valuation
of common stock– Minimize stock price
risk due to uncertainty over performance
– Shape / enhance perception of company commitment to growth
• Tangibles– Maximize analyst
coverage • sell- and buy- side
– Develop / maintain balanced investor base
– Target financial institutions
• domestic / international
– Track stock valuation
How is I.R. practiced?
• Build I. R. Team – Senior
Management– Finance– Communications– Legal– Outside expert
help
• Appoint I.R. point person
How is I.R. practiced?
• Establish / implement disclosure guidelines– legal– regulatory – SEC compliance
• Identify company spokesperson(s)– financial issues– business / product
issues
How is I.R. practiced?• Define company’s business
strategy and develop matching I.R. strategy:– written communication
• news releases • quarterly / annual report
– interviews / conference calls
– visits / one-on-one meetings
– road shows / management presentations
– personalized contacts– special events
How is I.R. practiced?
• Build I.R. contacts– database / research firms– Mailing list (e-mail!)– institutions / analysts /
financial media
• Establish an I.R. communication schedule– regular news: products,
markets, business– financial reports
How is I.R. practiced?
• Keep management informed and involved– analysts reports– stock valuation– perception on Street– stock price behavior
in context of industry– competition– I.R. activities
Keys to Success in I.R.
• CEO commitment, involvement, support• Sense of urgency from Senior Management• Consistent and credible public reporting &
communications• Clearly articulated, credible business
strategies• Articulate, creative vision of the future• Open discussion of financial results &
expectations• Regular & frequent contact with investment
community• I.R. backup through a pro-active, creative,
strategic communications strategy
The Ten I.R. Commandments
1. Follow the Laws of Disclosure!2. Know Your Investors and Your Analysts3. Manage Your Investors’ Expectations & Gather
Feedback4. Communicate Openly in Good Times and Bad 5. Limit Yourself to a Few Key Messages6. Do not Hype7. Do not Deliver Negative Earnings Surprises8. Do not Covet Peer P/E Multiples9. Always Monitor the Competition10. Monitor Investor Sentiment & Market Trends
I.R. Relationship Structure
InvestorRelations
ChiefFinancialOfficer
BusinessGroups
Staff Groups
FinancialReporting &
Treasury
PortfolioManagers
Buy-SideAnalysts
Corporate Secretary
Executive Management Sell Side
Analysts
Practical Steps to Take
• Take stock of current and ongoing I.R. efforts
• Identify areas in need of improvement or strengthening
• Match existing data base / analyst coverage with available universe
• Analyze communications channels
Practical Steps to Take
• Plan one or two creative events for immediate implementation– road show (institutionally
sponsored)– investor meeting (New York,
Boston, West Coast or at company facility)
• Get On-Line– Establish an internet presence– keep web site active and relevant
Useful Resources for I.R. Practice
• NIRI National Investor Relations Institute
– 703-506-3570• Stock Exchange Specialist and
Communications Executive
• First Call On-Line database to track analysts / news reports 800-347-7822
• Technimetrics On-Line database to track institutions, investment strategies etc. 212-509-5100
• Stockwatch Quick tracking service for stock moves: highly personalized service (Chemical Mellon is one)
Useful Resources for I.R. Practice
• Vickers Institutional Directory Detailed listing of all investing institutions, domestic and international
• Bloomberg / Dow Jones News Wire News tracking and stock movement service
• Zacks Investment Research & corporate analyst watch
• Bullseye Institutional investor tracking service -- monthly update based on public registration
Strategic Investor Relations: Summary
For a Public Company --• Investor Relations & Corporate
Communications must be synonymous: One cannot thrive without the other !
• CEO involvement and open, consistent, credible communications are a must
• Image Public Perception Stock Price
About the Speaker
• Laura has over 14 years’ experience in corporate communication and marketing for major corporations.
• As an internet marketing consultant, she plans & executes internet marketing strategies for over 50 firms.
• Laura's internet marketing articles are featured in international magazines.
• Her writing and research serves as the knowledge base for the Inc.com and Small Business Assoc-iation sponsored site for Internet Marketing.
• Laura granted Sybex Computer Books rights to distribute her work "PowerPoint Presentations and Templates" on the CD-ROM accompanying their book Mastering Office 2000 Premium Edition by Gini Courter and Annette Marquis.