IROs with aspirations to improve often look to a handful of role models: those investor relations professionals who have exemplary relationships with institutional investors and the media, whose corporate stories are well told and whose stocks have risen steadily over time, and who are then recognized with industry achievement awards.
Success is an ever-moving mark, of course, but those at the top of the IR game today emphasize many of the same virtues. Among the most often cited reasons for success is an excellent IR team, including active participation by the CEO and CFO. Says Rudy Sankovic, Senior Vice President of Investor Relations at TD Bank Group: “We have an experienced management team who likes meeting with investors and offers open, candid, and balanced views.”
Another common theme is maintaining a strong program over time. Janet Drysdale, Vice President of Investor Relations at Canadian National Railway (CN), attributes her company’s IR success to “our consistency. We have a long track record of providing investors with relevant, timely information.”
For IROs aspiring to reach the pantheon of IR greats, one challenge is that those at the peak continue to experiment and get stronger. As Janet Craig, Senior Vice President of Investor Relations at Loblaw Companies, puts it: “There is always room to improve and learn and grow.”
CIRI spoke about future plans with several IROs who recently won awards from IR Magazine. Drysdale confessed some trepidation about winning an award after her first year in a new position because “the inevitable question is: ‘What are you going to do for an encore?’” Although a dazzling second act is never easy to pull off, some of the most highly regarded Canadian IROs offered a few ideas about what a worthy encore might entail:
Shoring Up the Basics. David Carey, Senior Vice President, Capital Markets, for ARC Resources Ltd., says that the feedback he receives from institutions is “somewhat bipolar.” Existing shareholders are uniformly positive and don’t fret about the company’s relatively high valuation; prospective investors, on the other hand, are impressed by the company’s IR story but are concerned about the hefty stock price.
“We need to come up with ways to help the new investor understand our value proposition,” explains Carey. “The new investor is saying: ‘Show me you can create the value.’ For our existing investors, some of whom have been with us for all of our 18 years, they know us, they trust, and they have confidence in our continuing ability to deliver value.”
Carey maintains that the best way to convince new shareholders about the company’s prospects is through its roadshow presentations, investor days, and the material presented on the IR site. “What we’re going to have to bring home to those investors is the quality of the asset base and our line of sight towards the future,” he says.
Pat Marshall, Vice President of Communications and Investor Relations for Cineplex Inc., also pays close attention to the basics, especially the responsiveness of the IR team. “We try to return every call within a maximum of two hours – and we pretty much do,” she says.
For Marshall, clearly communicating Cineplex’s strategy is a top priority. To make sure the story isn’t told with too much financial jargon, Marshall imagines reaching an audience of people like herself – or even her mother. “I ask myself, ‘If I explained our story in this way, would I understand it? And would my mother understand it?’ And if I can say ‘yes’ to both those questions, then we’re clear,” she says.
Videoconferencing. Marshall envisions videoconferencing as an increasingly important tool for her IR team. “As more and more pressure falls on management’s time, traveling long distances is difficult,” she says. Often, videoconferencing can deliver some of the benefits of seeing the management team “on a personal level,” she explains.
Sankovic is also planning to increase his use of videoconferencing with Cisco’s Telepresence Options. “We don’t get to Europe and Asia as often as we’d like so we’re trying to use technology to stay in touch with investors on a regular basis,” he explains. Although Sankovic emphasizes that technology can’t replace face-to-face engagement, he believes that it could be an increasingly important tool now that the technology has reached impressive levels. “You literally feel like the investor is right across the table from you,” he says.
Widening the Investment Net. In the coming year, Craig is looking to reach new audiences with the story of Loblaw since its acquisition of Shoppers Drug Mart, and anticipates focusing on shareholders in both the U.S. and Europe.
At TD Bank, Sankovic also plans to intensify the focus on different types of investors. He points out that while most IR shops concentrate almost exclusively on equity investors, his IR team devotes 20%-25% of its time to fixed income investors. “Our bank is doing more debt financing, and we’re starting to meet more with fixed income investors. They have a different tilt to their thinking. They’re more interested in the safety and soundness of the balance sheet,” he says.
In addition, Sankovic is looking to the U.S., Europe, Asia, and even the Middle East for investor prospects. While 70% of TD Bank’s current investors are Canadian, he sees opportunities elsewhere in the world, but will target only those investors with a long-term focus. In the Middle East and Asia, for instance, he is considering visiting more sovereign wealth funds.
Profiling a Deeper Bench. Every 18-22 months, CN holds an investment community meeting in which the company showcases the C-suite, as well as the company’s roughly 30 vice presidents, explains Drysdale. Although not all vice presidents make presentations, they attend the lunch and dinner and investors have an opportunity to meet them personally.
“We feel the strength of our management team is a competitive advantage. But to get credit, investors have to see the strength and meet the individuals,” says Drysdale. She acknowledges that introducing individuals deeper within the organization is “higher risk from an IR perspective” because the executives don’t have the same experience interacting with institutional and retail investors. And yet, she says, spotlighting how everyone within the organization is working towards implementing a common strategy is “worth the extra effort.”
Similarly, a goal for TD Bank, says Sankovic, is spending “time profiling the next tier of management.” Later this year, TD will bring on a new CEO, and Sankovic plans to showcase not just the chief executive’s direct team but individuals slightly lower down the org chart, as well. “It is important to keep profiling our management team so investors feel TD has a deep bench,” he says.
Bolstering the Website. One of Carey’s proudest achievements is his company’s website. Because half of ARC’s shareholders are retail, he believes that the information presented on the site goes a long way toward leveling the playing field.
What makes ARC’s site stand out is its use of video, especially segments such as Myron’s Minute, a quarterly conversation with the company’s CEO Myron Stadnyk. “Video gives the opportunity for that retail investor to feel like he gets to know our CEO or CFO or COO,” says Carey. “He hears them answer the same questions our institutions are asking them. It’s a really important part of our IR program.”
When asked about future plans, Drysdale says that she’s reexamining the IR section of the CN website, making sure “we have the right information available and that it’s in the right place.” Because CN publicly reports weekly operating metrics, investors regularly visit the IR site. She wants there to be plenty of useful data “in easy to access formats.”
Social Media. Carey is active on the social media front, a strategy he plans to continue. ARC has a presence on Facebook and Twitter and includes corporate videos on YouTube. “Do I personally spend time on those channels? No, but I have a lot of grey hair,” Carey laughs. He recalls that 18 years ago, when he was helping envision an IR strategy for the Athabasca Oil Sands Trust, the seasoned practitioner running the IR team decided that an IR website was not a necessity. “Will social media end up [as important as the IR site]?” he asks. “I don’t know, but I don’t think it’s something I want to ignore.”
On the other hand, Sankovic is skeptical of social media: “As we talk to investors, [social media is] really not on their radar screens. They still prefer the old-fashioned way of doing business, which is face to face.” Craig says that she doesn’t believe in social media because she still has plenty of areas where she can bolster her IR program. And Marshall believes that when it comes to IR, “we’re still early in the game.”
Although award-winning IROs are considering many different paths for future success, the one thing they agree on is the necessity of continuing to evolve. “The bar,” concludes Drysdale, “is always being raised. And it’s a fun environment to be in because IR is changing all the time.”