CANADIAN IR PRACTITIONER PERSPECTIVE

When the investment market fluctuates, many companies and job roles are impacted. This is especially felt by those who are responsible for investor relations as there is an immediate reaction from shareholders and often, IR budgets suffer as corporate budgets are reduced.

Anyone who has been in the IR industry for over a decade has experienced some significant ups and downs – the drop in oil prices in the ‘80s and subsequent effect on the industry and market; the significant economic and financial crash of 2008 that crossed all industry barriers; and the softening of the market being seen today. As companies struggle through these challenging times, the IRO often is required to review spending and determine what is essential, what can be modified, and what will be deferred to a later date.

Impact on the IR Budget

When the budget is being cut, how does an IRO prioritize? First of all, determine what the non-negotiable items are:  regulatory filing fees, news release costs, interim reports, etc. 

In reality, it is often not so much a case of ‘cutting’ items, but rather reducing them or determining how else to accomplish IR goals. Following is a discussion on some ideas to consider when evaluating the IR budget and meeting strategic goals.

1)    Marketing:  Re-evaluate the marketing program. Maybe there are ways to obtain effective exposure with fewer trips. Combine marketing trips with conferences. Send fewer executives on each trip. Determine the key centres to visit, and cut or delay others.

2)    AGM:  Review the annual meeting and determine what is necessary. Is a large venue really needed? Consider holding a ‘virtual AGM’, utilizing technology and the website to reach shareholders, rather than a large venue. Provide basic refreshments instead of hors d’oeuvres – many have experienced the shareholder who tours AGMs to eat. 

3)    Print Less:  Make full use of minimal mailing requirements and Notice and Access regulations to decrease the cost of printing and mailing materials for AGMs. Drive shareholders to the website for materials – most hard copies end up in the trash as society becomes more Internet focused. Shareholders want immediate information, so they will likely download your reports long before they arrive by mail. 

And scrap the glossy annual report – it's out of date by the time it reaches shareholders. Consider a minimal MD&A/financials report in black and white for print. Make a separate glossy marketing book that can be printed in minimal quantities and easily updated on a quarterly or semi-annual basis – and ensure it’s on the website and announced to shareholders via a release and social media tools.

4)    Maximize the Value of the Website:  Drive shareholders to the website and keep it as fresh and up-to-date as possible. This can be a very low cost but effective means of communication, provided that you pull individuals to it in addition to pushing information out. In order to do that, you need to add information regularly so that the website doesn’t become stagnant or boring – new content is key in today’s environment of short attention spans. 

5)    Use Technology and Social Media:  In order to pull people to the website, consider using some form of social media to interact in various ways. This can be seen as difficult if a company does not sell consumer products, but in reality, every company can use social media to some extent to further communicate their story. Consider blogs, a corporate Facebook page, monthly updates, videos, webcasts and/or social media releases to increase search engine optimization and traffic to the website if tools like Twitter don’t seem appropriate for the company. Host a ‘social room’ or ‘newsroom’ on the website that contains continuously updated and fresh content. Shareholders will start visiting regularly when they realize that new information is regularly available.

6)    Outsource:  Often, the first cut to the bottom line is staff, as companies try to reduce administrative expenses related to salary, benefits and other perquisites that come with full-time staff. That said, it may not be an ‘all or nothing’ situation – funds may be allocated to hire a consultant on a part-time basis to assist with projects. 

The reality is that at some point in every IRO’s career, he or she will be asked to ‘do more with less’. Thankfully the advancements in technology have made it easier to communicate effectively with shareholders in a fairly cost conscious manner. Conversely, shareholders also expect more and better communication from companies. It is a challenge when budgets are cut, but there are ways to continue to meet IR goals with less money. Now if only there was a way for IROs to clone themselves in order to have more time!