Elizabeth Judd, Writer
For the past several years, gaining ‘a seat at the table’ has been a persistent mantra for IROs, and now an increasing number of individuals within the profession are enjoying that long-coveted position.
As the investor relations role has matured and expanded, so have the perks that accompany it. Compensation is climbing, and IR is more often its own distinct function rather than an offshoot of corporate communications or finance. In fact, according to CIRI’s 2012 Investor Relations Compensation and Responsibilities Survey, 75% of IROs work for companies with separate IR departments, up from a mere 21% in 1997.
Yvette Lokker, who will become CIRI’s President and CEO on January 1, 2013, sees the increasing tendency for IR departments to stand alone as significant. “It supports the idea that there is a great need to resource this particular role,” she says.
Just as the prestige and responsibilities have grown, so have the demands. Given the rise of smart phones and iPads, IROs are tethered to their jobs as never before. “If something happens in the middle of the night, IROs have to be accessible to address it,” says Lokker. “An IRO does not have a work day that starts at nine and ends at five. It’s really a 24/7 role.”
Longer hours notwithstanding, most IR leaders applaud the way that their roles are evolving. According to CIRI’s recent survey, 74% of IROs described themselves as satisfied in their current positions, with those higher up the professional ladder happiest of all. For IROs at the Vice-President level, 89% characterized themselves as satisfied, including 40% who identified themselves as “very satisfied.”
Strategic Role: Key to Job Satisfaction
Jennifer McCaughey, Senior Director of Investor Relations and Financial Communications at Transcontinental Inc., enjoys having a truly strategic role within her company. “I really like having that link with the CEO and CFO,” she says. “In investor relations, I’m influencing them and helping position the message. It makes the job strategic, and really, really fun.”
Similarly, David Smith, who recently was promoted from Senior Vice President of Strategic Planning and Investor Relations to CFO at Agnico-Eagle Mines, sees IROs’ increasing input into strategy as an acknowledgement of the value of their contributions. He isn’t surprised that IROs are expressing greater job satisfaction. “I think it relates directly to the fact that IROs are getting more recognition and are participating at a more senior level,” he says.
Lokker maintains that as IROs began regularly informing senior management of the Street’s perspective, their professional stature grew. She sees an evolution from a role in which IROs primarily communicated to institutional and retail investors to one in which they used the insights gleaned from investors to weigh in on how the outside world might view proposed developments.
Finally, IROs have begun to scale the next mountain: engaging seriously and regularly with the board of directors. Lokker notes that this fall, CIRI presented a thought leader roundtable for seasoned IR practitioners on the value IR can bring to the boardroom; during the discussion, she learned just how many senior-level IROs are communicating regularly with directors.
Ana Raman, Director of Investor Relations at Nordion Inc., an Ottawa-based health science company, finds herself counseling management and the board with greater frequency. Her advice for others assuming this role is to cultivate internal relationships and then ask the right questions of investors and other external stakeholders.
Tamara Brown, Vice President of Investor Relations at Primero Mining, maintains that the IR role is heading in the right direction but could still be far more strategic than it is. “I think that every senior IRO should help, if not lead, in designing the strategy for the corporation,” she says. “It’s a very natural role. So much of investor relations is thinking about how a story is told and how it will be received.”
Job Market, Higher Compensation Levels
In early December, Agnico-Eagle’s Smith hired Brian Christie, a senior gold analyst at Desjardins Securities, to be his company’s new Vice President of Investor Relations. Smith was pleasantly surprised by the caliber of the applicants: “We basically had people knocking down the door to get this job, and I’m talking about people with 20-plus years of experience.”
In hiring, Smith relied exclusively on personal connections because he knew he wanted to hire one of the approximately 30 sell-side gold analysts in Canada. Sharon Mah-Gin, an executive recruiter based in Toronto, observes that this type of informal networking is commonplace. She notes that IRO jobs are often filled without professional search firms simply because the candidate pool is so small. “IR is one of those sectors where everyone knows everyone else,” says Mah-Gin. “A large amount of recruiting is done through word of mouth.”
As a consequence of the fact that former sell-side analysts and portfolio managers are competing for IR positions, Lokker finds that securing an IR position has become more competitive. She also speculates that compensation might be increasing because more people are entering from finance positions.
Compensation trends are difficult to gauge, but the data looks encouraging. Among IROs who spent 50% or more of their time on IR, total cash compensation averaged $180,500, up 9.3% since 2010, according to CIRI’s 2012 Investor Relations Compensation and Responsibilities Survey. CIRI is convinced that compensation is climbing, but the survey acknowledged that a few high payouts among IROs who exercised stock options or received cash from other long-term performance-linked incentives helped account for the sizable jump.
Bonuses are growing, too. In 2011, 85% of IROs received a cash bonus, relative to 76% in 2009, according to the CIRI survey. The median award was $20,750.
Although compensation is trending upwards, pay ranges differ enormously in this profession. “Compensation tends to vary by market cap, by industry, by title, by responsibilities, and by the number of people in the department,” says Lokker. “I’ve found that no two investor relations roles are the same.”
Agnico-Eagle’s Smith applauds what he sees as a trend for public companies to use more qualitative measures when awarding IR compensation. “In IR, there are so many moving parts,” he says. “There are probably 20 or 30 IR activities that you have to lead or participate in. You’re trying to impact the valuation of the stock, but if you’re in the gold business and the price of gold craters, then your stock price goes down, too. It’s not fair to say you didn’t do a good job because the stock price went down.”
Preparing for the IR Future
IROs with an eye on career development are closely watching the social media landscape. In the recent CIRI survey, 47% said that they use at least one social media channel for IR, up from 21% in 2010.
That said, not all IROs have taken the plunge. McCaughey notes that she is closely monitoring the use of social media within the investment community but has yet to see a compelling need to communicate via Facebook or Twitter, perhaps because her investor base is so heavily institutional.
Others have reached similar conclusions. Scott Bonikowsky, Vice President of Corporate, Public, and Government Affairs at Tim Hortons, told CIRI: “I think the role of social media as it relates to IR, so far, is emerging but overstated. There’s a lot of toe-dipping going on….”
Although social media savvy is a nice extra, what really counts, most IR experts agree, is a well-honed grasp of corporate strategy.
Primero’s Brown exemplifies how IR can lie at the very heart of how a company makes its most critical strategic decisions. In 2010, when she and the CEO formed Primero, she relied on her IR experience to determine what attributes would be most important for an intermediate gold producer. “I can tell you that my ability to have an input into strategy comes directly from the exposure I’ve gained as an IRO and from talking to investors,” she says.
Nowadays, IR gurus are less preoccupied with arguing about whether practitioners should possess a finance or communications background and more interested in how ambitious IROs can gain the experience necessary in both disciplines to succeed. And as the IR profession matures, the experience of IR practitioners is deepening. Over half the participants in CIRI’s 2012 survey had six or more years of IR experience, more than twice the proportion as in 2000.
From his vantage point as newly minted CFO, Smith believes that success begets success. As IROs rise to the highest echelons of their organizations, the reputation of the profession will continue to be burnished and the ability to shape strategy will grow. “Over time the role will be a more senior, strategic, and important position,” he concludes. “Senior executives at companies are IR people now, while 10 or 15 years ago, that would have been pretty unusual.”