The role of an investor relations officer (IRO) has changed significantly as the way investors interact with issuers has evolved. We have developed this investor relations best practice guide in order to help IROs with their shifting responsibilities in this important position.
“CEOs must empower the IRO to be a proactive leader, building constructive relationships throughout the shareholder base to help the company mitigate various risks.”
IROs are essential for financing an organisation and for creating value, given their unique role in bridging the gaps between issuer and shareholder. This article explores how to use this position as effectively as possible to ensure that the connections with your investors remain strong and fruitful.
What makes a leading IR team?
|Understanding of both financial and non-financial reporting||Whereas once, an IRO would have reported to the chief financial officer and focused on the financials of the organisation in their interactions, a modern IR team has to be fully briefed on non-financial reporting and performance, too.
This includes environmental, social and governance (ESG) topics and remuneration. As such, the modern IRO must align with all members of the C-suite.
As investors increase their interest in a company beyond the purely financial reports, the IRO must mirror this and serve shareholders accordingly.
|Deep knowledge of your company||In order to be able to accurately sell the company to investors and attract the right mix of shareholders, the IR team must display a deep knowledge of the company. They must be able to talk knowledgeably to extract the multitude of reasons for investing as well as maintaining and increasing shareholding.
The IRO should also possess an in-depth understanding of the industry and sector to be able to pitch their investor relations efforts to a range of different targets and contacts. Different shareholders have varying expectations and requirements, meaning there is no one-size-fits-all approach.
|Focus on long-term relationships||Businesses looking to grow, scale and experience longevity in their industry need to create long-term strategies and this can only be possible with long-term investor relationships. This makes developing these connections with shareholders a priority for IR teams nowadays.
IROs can achieve this by building credibility with investors, providing the information they need, communicating the company’s strategy and explaining how it will create value for shareholders.
|Transparency||Another way to build credibility with key shareholders is to offer complete transparency at all times. It can be tempting to omit negative details when networking with investors, but when they eventually discover the truth, it can damage shareholder trust in the organisation.
A leading IR team will be honest and frank with investors, as well as providing full details on how the organisation is working to eliminate these issues and flourish in the future.
Investor relations best practices
Create an IR strategy
Communicating effectively with investors should be more than several events annually. To increase touchpoints, you need an IR strategy, but many organisations do not systematically link their strategy and investor relations efforts.
This approach risks inconsistent messaging to shareholders and blind spots where some investors who could enjoy a fruitful relationship with the issuer are ignored and do not therefore invest. A sporadic approach to communication can also be detrimental to the investors’ trust in the business and decrease the power of the equity story.
An ideal IR strategy should contain:
- A simple, clear and compelling story introducing the business and its place in the industry
- Identification of key stakeholders, including analysts, current shareholders, potential investors, journalists and even the issuer’s employees, who may sometimes represent a large portion of the shareholding
- Messages aligned with the various stakeholder groups and their level of expertise
- A plan to meet with these key stakeholders
- A professional IR website or IR section on the main website, providing information about the company, its products and services, its financials, profiles of the board, an events calendar, latest news and any other resources that would be helpful to investors
- Corporate social media account to keep investors informed
- An emergency plan for dealing with bad news
Develop an annual timetable
By creating an annual timetable, an IR team can schedule their meetings and roadshows more effectively. There are many events that must be added to the calendar straight away, including the AGM and earnings calls. This allows you to arrange the other essential IR events across the year, planning the logistics involved and being able to work on promoting them in good time to ensure attendance.
By working out the schedule in advance, you can maximise the opportunities to meet new and existing shareholders and plot meetings, investor days, capital markets days and roadshows in a manner that ensures you provide all of your key stakeholders with adequate time to show how much you value their input.
Move to hybrid events
Hybrid events allow you to increase the reach of your investor relations activities. They involve hosting the event in a physical location with some of the audience members attending in person, as well as broadcasting the event online so that remote attendees can be involved, too.
This allows you to talk to a larger audience, reducing the need to take your executives on the road in order to engage investors. You can present the information to all stakeholders at once, wherever they are based. It is also more convenient for investors who cannot clear a large enough window to travel to a physical location and attend the event.
Hybrid events save money for an organisation, reducing venue costs, refreshment expenses, travel and accommodation fees and even printing costs, as there are likely to be fewer physical attendees. They are also more environmentally friendly, using less paper and with fewer people travelling to the venue.
Company Webcast, part of Euronext Group, is a leader in producing professional webcasts and webinars for organisations, helping them host hybrid investor relations events. The platform integrates a number of interactive features, allowing attendees to fully engage with the meeting wherever they are based.
Analyse your shareholder base
Analysing your shareholder base is essential to understanding who you are talking to in your IR efforts and who you should be targeting in the future. Thankfully, The Shareholder Rights Directive II (SRD II) has made it easier to identify those who invest in your company. Once you have this information, you can dive more deeply into what motivates them, who is buying and selling your stock and who is buying and selling in your sector. As a result, you can even shed a light on how they might vote.
At a time of increased shareholder activism, it is crucial that you spot the potential for conflict before it happens and arrange to meet with activists in order to discuss the best ways to work together for the good of both investor and issuer.
For an advanced report and analysis, you can reach out to the experts at Euronext Corporate Services Shareholder Analysis. They will provide you with a data analysis featuring a comprehensive, dynamic and clear vision of your capital structure and that of your peers. They will also offer advice on fine-tuning your IR strategy based on the findings of the analysis.
Engage your investors regularly
Engaging your investors on a regular basis, in person or in a virtual format, is vital to developing the kind of long-term relationship that is essential for issuers. Regular communication maintains interaction and makes shareholders feel more connected to the business as well as better informed.
Communicating with them on a regular basis displays your commitment to transparency and increases trust in the issuer. It doesn’t have to be an in-person meeting — it could be a virtual meeting, an email or any other form of communication. As long as the dialogue continues, the connection remains strong.
Enhance your investor presentations
Eye-catching and interesting presentations are often the difference between a successful investor meeting and one that disengages or even confuses shareholders. Make sure your slides are clear and concise, with a mixture of text and graphics to keep them visually interesting.
Your presentations are there to complement what the speaker is talking about, not to simply relate the same information. If they just display the speaker’s script, they will not be interesting to the viewers.
Use them to show financial and non-financial metrics in a clear manner and to draw attention to key elements of the company’s strategy.
Receive feedback from shareholders
Feedback is an effective way to increase the effectiveness of your investor relations efforts. By asking analysts, investors or potential investors for their views on your roadshows or other meetings.
Listen to what your attendees say and use that feedback to enhance your future communications with the investment community.
How is investor relations success measured?
You can measure investor relations success through a number of metrics. The feedback you receive from IR events helps you understand its effectiveness, as do your shareholder retention statistics. The make-up of your shareholding reflects the success or otherwise of your investor targeting and engagement. The ratings from analysts and the activity on your IR website are also indicators of your performance.
How important is an IR website?
Investors and analysts want to research your company before deciding whether it is worth engaging with, so IROs should be proactive in this regard. By creating an informative website and providing all the key information in one place, you can dictate what they see and give them the details they desire first-hand. The easier it is for them to understand what your company is all about, the more likely they are to move forward with their interest.
Are virtual or hybrid roadshows effective?
Virtual and hybrid roadshows are extremely effective. They allow engagement with a wider range of attendees while being more convenient for the attendees and cutting costs for the issuer. If you use the right solution, you can maintain the interactive elements of the in-person version but with the added advantages of online events.
The benefits of effective engagement with shareholders are evident in this investor relations best practice guide. Better engagement earns trust and loyalty that fuels long-term relationships between issuers and investors. The way the parties engage with each other has shifted in recent years and it is now essential to offer a chance to interact virtually or in a hybrid format. This increases the number of people you talk to and opens up the world without having to take your executives on long and arduous tours.
For a professional and interactive webinar solution that engages your audience, request a free demo of Company Webcast.