The story of how compensation and roles and responsibilities are shifting for Canadian IROs is a triumph of the tortoise over the hare: slow, steady progress logged over many years. The good news is that IR compensation continues to be on the rise, as are prestige and levels of job satisfaction reported by Canadian practitioners.
One sign of how the IR role is evolving is its proximity to the C-suite. In the 2019 Investor Relations Compensation and Responsibilities Survey conducted by CIRI and Global Governance Advisors, 36% of IROs report to the CEO, up from 32% in 2013. What’s more, an even greater number of Canadian IROs have a direct line to the CFO; today, 43% of survey respondents report to the CFO, up from 27% in 2013.
Along with greater access to a company’s key decision-makers, Canadian IROs have seen modest increases in compensation, the survey also found. Total cash compensation for Canadian IROs averaged $202,200 in 2018, up from $199,000 in 2013. Just over one-third (34%) earned at least $225,000, which was in line with results from 2013 (35%). In addition, more IROs find themselves at the very highest end of the pay scale. In 2018, 22% of respondents earned more than $300,000, up from 19% in 2013.
“Over the past few years,” says Yvette Lokker, CIRI’s President and CEO, “CIRI has seen significant changes in the Canadian capital markets, many of which have impacted the role, responsibilities and compensation of IR professionals in Canada.” She notes that such changes mean that IROs are increasingly recognized by Boards and executives for the strategic value they provide.
Lokker maintains that one critical change to capital markets driving the evolution of IR in Canada is a need to deliver more effective investor meetings in the wake of MiFID II. Another is the emphasis on ESG (environmental, social, and governance), three areas in which IROs have been playing pivotal roles.
CIRI’s findings for Canadian IR professionals are consistent with broader trends within public relations. “We’ve definitely seen steady growth in PR salaries over the last few years – not by leaps and bounds but certainly companies are willing to pay well for strong communicators,” observes Michelle Dunnill, Branch Manager for The Creative Group, a Robert Half company in Toronto. She also notes that “communications is certainly taking a more strategic role in organizations overall.”
Strategic Input Counts
Compensation increases were seen within some pockets of the IR industry more than others.
Peter Landers, Partner at Global Governance Advisors, points out that bonuses increased both for Canadian IROs at small-cap issuers (under $100 million) and at large-cap issuers (over $5 billion). In 2018, the median value of short-term incentive compensation increased for small-cap issuers to $20,000, up from $14,300 in 2013. Similarly, for IROs at companies with over $5 billion in market cap, this form of compensation increased to $55,000, up from $33,000 in 2013. On the other hand, for IROs at companies with market caps in the $1-$4.9 billion range, there was a decrease in short-term incentive compensation to $20,000 from $40,600 in 2013.
No clear explanation for these results has been found, observes Landers. He suggests that perhaps because more IROs at small caps are performing their jobs without an IR team, the higher short-term incentive compensation may be a recognition of the fact that they are accomplishing more with less.
Landers also points out that total cash compensation is often higher within Canada’s mining and oil & gas sectors. “Whether it’s an IR professional or a governance professional,” he says, “we tend to see a premium paid to oil & gas and mining companies when compared to other industries.” Specifically, average total cash compensation for IROs in mining increased 8% from 2013. For those in oil & gas, the increase was higher still at 24%.
If IR has steadily become a better paid career path, it is also more satisfying, as Canadian IROs increasingly enjoy a much-coveted seat at the table.
The CIRI study shows several signs that IROs are being valued for their strategic input. Canadian IROs are, for instance, engaging more regularly with their Boards. The lion’s share of IROs (92%) prepare reports for the Board, up from 84% who did so in 2013. Meanwhile, 51% present to the Board, compared to 39% in 2013.
In addition, more than half of IROs (53%) contribute to the company’s strategic plan and nearly three-quarters (72%) have executed IR elements of the company’s strategy.
“It’s been interesting to see the IR role become more strategic each time we do this survey,” says Lokker. “Not only is the IRO more involved in the strategic efforts of the company itself, but the fact that the IRO is being involved shows that the importance of investor relations for companies has advanced, too.”
To purchase a copy of the full survey results, click here.
IR Budgets and Team Size
One reason why IROs might be seeing slightly larger paycheques is they’re working harder. The CIRI survey found that 42% of companies have just one full-time IR professional on the IR team, versus 36% operating solo in 2014.
Another important trend is that after years of watching IR budgets shrink, the average IR budget (excluding allocated overhead but including staff compensation) increased 8% from $725,000 in 2018 to $782,300 in 2019. What’s more, projections for 2020 suggest even bigger budgets ahead. While 62% of respondents expect budgets to remain the same, 33% foresee an increase and only 5% anticipate a decrease.
Perhaps most encouraging of all is that the number of Canadian IROs who rate themselves (on a scale of 1 to 5) a ‘5’ or a ‘4’ in terms of professional satisfaction is rising. Today, 75% of IROs report ‘4’ or ‘5’ satisfaction ratings, versus 71% in 2014. In addition, while 82% of IROs saw the senior IR position as a career position in 2014, 89% do so today.
Not surprisingly, the most satisfied IROs, the survey notes, tend to be involved in more strategic IR activities. These activities range from managing the IR budget and developing IR strategy to participating in the Disclosure Committee and contributing to their company’s strategic plan.
Lokker emphasizes that the findings of the latest CIRI survey show that IROs are increasingly valued for their contributions – and that IR as a function has gained a whole new level of respect from executives and the organization at large. “Yes,” says Lokker, “IROs are doing more strategic things and those are definitely advancements in the profession. But to me what’s most important is that these changes speak to the increased stature of the IR role within public companies.”
Sidebar: What IROs Need to Know About the Gender Wage Gap
For Canadian IROs, the gender wage gap is both a professional reality and something they must address with investors and other stakeholders as the number of shareholder proposals targeting this issue continues to grow.
In 2018, CIRI’s recent survey found, male IROs on average received total cash compensation of $229,200, while their female counterparts earned $184,300. This $45,000 pay gap – or a gap of 19.6% – represents progress. In 2013, the gender wage gap for Canadian IROs was $7,000 greater, and so the gap has narrowed 3.4%.
These results seem to mirror what’s happening in Canada more broadly in terms of the gender pay gap. According to a study by the Department for Women and Gender Equality Canada, in 2018 female employees aged 25 to 52 earned $4.13 less per hour, on average, than did their male counterparts. This means that they earned 13.3% less per hour, or only $0.87 on every dollar earned by men.
This study also found that the gender pay gap is narrowing – but not particularly quickly. Over the last 20 years, the Canadian gender gap in hourly wages narrowed by $1.04 – or 5.5%.
While Canadian IROs are not yet required to report on the gender pay gap or even analyze pay practices as they relate to gender, their counterparts in the U.K. have been required to do so for a few years, explains Mike Delikat, Partner at Orrick’s global employment law practice in New York City and a member of its pay equity taskforce. He notes that this fall, U.S. companies began reporting to the Equal Employment Opportunity Commission pay numbers on their practices by gender, race and national origin.
“One thing to watch,” says Delaney Greig, Manager, Engagement and Policy, for the Shareholder Association for Research and Education (SHARE) in Toronto, “is how these efforts in the U.S. and the U.K. translate into Canada over time.” She notes that a number of Canadian companies are disclosing information on gender-pay practices for their workforce at U.K. subsidiaries. “This is a trend to watch,” says Greig. “Will companies that have to report on this internationally start to report for Canada, too?”
Although regulatory gender-pay mandates are not yet that common or comprehensive, public companies in Canada and elsewhere are feeling increased pressure from shareholders to take pay equity more seriously. This is especially true since U.S.-based multinationals are reporting on pay gaps around the world, including for employees in Canada.
Shareholder advocates like Arjuna Capital and Trillium are keeping the issue in the public eye by launching shareholder proposals and by publishing scorecards, according to Delikat. He notes that “Citigroup was the first of the major global banks to make voluntary disclosures of their pay gap analysis in response to shareholder proposals. As a result, the proposals were dropped and Citigroup became the only big bank to receive an ‘A’ on Arjuna’s pay equity scorecard.” The takeaway is clear: Responding proactively to the gender-pay climate can be a way to avoid problems down the road.
Danny Kaufer, Partner at Borden Ladner Gervais in Montreal, offers a similar perspective. He emphasizes that public companies concerned about their reputations need to follow gender-pay developments closely. “Yes, there are shareholder proposals and companies are still resisting them and are largely being successful resisting them,” he says. “But doing so allows for a certain amount of naming and shaming.”