The Investor Relations Officer is the primary link between investors and management, making the flow of information between the two parties essential to the company’s success. Additionally, delivering insights on how the Street views the company helps to position senior IROs as trusted advisors to the C-suite and Board of Directors. But, identifying which information to present to these senior stakeholders (and how) is a critical element of building that influence and securing a seat at the table.
“It’s important for the executive team to understand and appreciate the direct line of communication between the IRO and the Street,” explains Matt Tractenberg, investor relations partner at Q4. “Reporting on engagement and providing feedback from conversations with investors can provide executives with timely insight on how the company’s strategy and messages are being received.”
This information can help the C-suite and Board of Directors gain confidence that the company’s strategy has been accepted and has value to investors. It can also show management that a strategy, trend, or objective is misunderstood and needs clarification.
Where to start
Creating meaningful, actionable reports begins with understanding what management is looking for and how they process information in order to measure the effectiveness of the IR program.
Matt suggests reviewing past reports and coordinating with the individual in control of board materials, which is likely the General Counsel, or the CFO, or CEO office. This is the quickest and most effective way to learn what management is expecting, what data is most important, what topics should be avoided, and how changes might be received. Armed with this insight, IROs can see where content and/or format improvements might be made and how to thoughtfully roll those changes out.
“In my experience, the executive team and board don’t appreciate sudden, drastic changes to materials because it requires that they relearn how to interpret the information presented. It’s generally better to make slow and steady improvements, implemented in a controlled way,” offers Matt.
C-suite report must-haves
Although no standard report format exists, there are certain elements that should be included to effectively communicate valuable insights or updates on your IR program. The elements to include are:
· Performance: While there are several alternatives to how best to measure performance, this is a key metric in any report. Whether stock price, valuation, or some other results-driven category, performance should be illustrated on a year-over-year basis and relative to something, such as peer group, industry, or some other meaningful comparison.
· Perception: Conveying what is top of mind for investors and sell-side analysts is important. Matt suggests sharing the three to five most asked questions over the last 90 days to communicate what the Street is focused on and concerned with. This is an opportunity to share authentic feedback and illustrate whether or not your strategy is resonating with the investment community.
· Consensus/Sell-side: A C-suite report should include a summary of consensus estimates and ratings. The report should present what investors expected, compared to actual results, as well as how they anticipate the company will perform against future guidance. Matt stresses: “It’s critical that management is fully informed about what the street expects. I never want to surprise a corporate board.”
· Program Updates: Matt adds that he’ll typically include an update on IR program efforts over the past 90 days as well as a preview of the next 90 days. This might include updates on conferences, NDRs, analyst days or even high-priority one-on-ones. Including this “look back” and “look forward” allows the IRO to tie efforts to strategy and illustrate the department’s level of engagement with the Street.
· Shareholder base composition: It’s very important to regularly update management on the current shareholder base, especially how it has changed on a year-to-date basis. Specifically, the IRO might report on who currently owns the stock by investment style, as well as detail the 10 largest shareholders and how they’ve changed their position on a year-over-year basis.
These five elements are table stakes that should be considered for any C-suite report. Keeping reports between three and six slides is highly recommended, but an IRO might also consider adding discussions around message absorption, how your company is perceived relative to specific industry themes, or even a peer performance analysis.
Standardize for efficiency
Even if only comprised of a handful of slides or written pages, the creation of C-suite reports can be an arduous process. Matt suggests that IROs look for every opportunity to standardize and automate the creation of these reports, rather than the labor-intensive approach of starting from scratch each quarter.
“Tools that standardize report building already have many of the quantitative components of those table stake slides pre-loaded, meaning reports can be generated in seconds and then tailored as needed,” says Matt. “What used to take up to three days to compile can now be delivered overnight – an incredibly welcome time savings, during what is likely one of the busiest and most stressful week’s of the IRO’s quarter.”
Providing context and transparency
Because Wall Street’s investment cycle is oftentimes long, presenting regular C-suite reports establishes a regular cadence of measurement, so your leadership team can measure the effectiveness of IR efforts.
“In creating these reports, remember to remove all personal views and deliver the salient perception points and reactions to your IR efforts,” Matt elaborates. “It’s imperative that materials are presented in the most transparent and balanced way possible.”
This approach gives management and boards an unbiased view of the Street’s perception of your company, as well as an important measurement tool.
For more guidance on how to make a real impact with data, read our post on Activating Intelligence for the IRO of Today and Tomorrow.