Elevating Investor Relations: Thoughts from NIRI Annual Conference
Upon returning from the 2024 NIRI Annual Conference, our team shares insights to help Investor Relations Officers (IROs) and investor relations teams on strengthening their operations for enhanced results. Here are the top takeaways:
Communicating a compelling investor story is more important than ever
With macroeconomic and capital market dynamics in flux it’s more important than every to make sure you have solidified your corporate strategy and you are clearly and concisely getting that message to your investors. You access and cost of capital can be negatively affected if you are not.
“ESG” has been weaponized; ignore the politics
Investors, some managing over $20 Trillion in assets, still want to know what the material values are that will drive your performance and theirs. Engaging investors on how you are lowering risk and driving financial performance are still very much in vogue and you shouldn’t miss out on that significant pool of capital by allowing the politics to blow you off course. Make sure you are integrating your ESG/Sustainability/Employee & Community messaging into your investor relations message and getting credit for it in the market.
Coordination with Boards of Directors is key
How often do Board’s connect with your investor relations department and when was the last time you did? Your IRO can be the tip of the spear, they can hear disgruntled shareholders and will likely know what is not resonating long before anyone else in the company. Boards should make it a point to connect with the IRO outside of the quarterly board presentation and find out what is going on. IROs, make sure you stay in close communication with your CEO/CFO and that they know what you are hearing before you take it to the boss’s bosses.
AI is the new buzzword
It is clear that IROs still in the dark about its capabilities and that companies are not yet considering the knock on affects it may have on power demand or on data security.
Companies are actively preparing for activism
As activism sets new records every year, IROs are getting more experience in private engagements. However, they are rarely involved in public fights – having counsel who can help you identify your own weaknesses and has seen a fight from start to finish is imperative in successfully navigating engagement with an activist.
Proxy advisors aren’t the judge and jury anymore
More and more, larger funds, especially the big three passives of BlackRock, State Street, and Vanguard, are using their own voting criteria to make judgements on “bet the company situations,” as opposed to blindly following the recommendations of ISS or Glass Lewis. Knowing who can be swayed and how is crucial in a contested situation.
Understand index inclusion
What do you qualify for and what are their methodologies? A management team and IR can drive significant fund flows through passive indexes without spending hours with investors on due diligence calls.
Measure your IR program in a way that makes sense to your company’s goals and industry
Take sell-side coverage as an example: there’s not an ideal number, and you need to consider quality, too. Measuring the impact of IR is not always about the numbers, either, and perception studies can be a great tool to measure the qualitative aspects of IR.
Guidance continues to be a powerful tool to effectively build credibility with investors
Clearly communicating assumptions and underlying drivers is important, and remember to thoughtfully communicate if there’s a downward change.
Data privacy is a top buy-side concern
Make sure you’re providing the disclosures investors are looking for, and that you’re prepared if a data breach occurs. In fact, consider this your annual reminder to refresh and update your organization’s crisis communications plan.
Finally, the IR community remains strong. There is nothing like connecting with some of the best and brightest IROs in the business. Our team is looking forward to future opportunities to discuss the dynamic world of investor relations and help companies globally as they navigate the current environment, mitigate risks and build a strong IR program.
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To connect with FTI Consulting’s Investor Relations team, please contact [email protected].
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The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.
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