Our Blog: The Podium

Investor Relations for the New CFO - Six Steps for IR Success

By David Calusdian, Executive Vice President & Partner

*Originally appeared on Samuel's CFO Blog. Samuel Dergel is Director and Search Consultant at Stanton Chase International. Mr. Dergel specializes in Executive Search for Chief Financial Officers.

As the new CFO of a publicly held company, somewhere on your extensive “to do” list is implementing an effective investor relations program. Whether or not the IR function was a well-oiled machine when you arrived, or virtually non-existent, there are key areas you need to address immediately to ensure that you are effectively taking the IR reins. So here are six steps for success as you accept responsibility for the IR function.

1) Understand your shareholder base. Research the investment styles of your shareholders to determine why they may have bought shares– and what might cause them to sell. See what type of investor concentration you have in your shareholder base. Identifying whether your shareholders are weighted toward a growth, value or income investment style, for example, can offer insight as to what they are expecting the company to achieve near or long term. Also investigate whether there are known “activist” firms among your shareholders, and what catalysts usually cause them to initiate a proxy fight. Make it a priority to speak with your shareholders by phone as soon as possible, and then meet them in person within your first few quarters as CFO. Also consider an investor perception audit to understand the sentiments of your shareholder base -- and identify any misperceptions about the company -- to most effectively build your IR program.

2) Review (or create) a disclosure policy. A comprehensive disclosure policy guides a company’s communications with the investment community. Make sure that as the new CFO, you are comfortable with the disclosure philosophies outlined in the document. For example, maybe it is time to revisit the company’s guidance policy or disclosure committee processes. Ensure that the corporate spokespeople listed in the disclosure policy are still appropriate. Make certain that you understand all of the communications channels at your company. For example, is the company tweeting, hosting its own Facebook page or maintaining a corporate blog? You want to know every disclosure outlet that may be supplying investors with information directly from the company.

3) Develop your IR Plan. Conducting investor relations without a plan is akin to venturing out on a journey without a destination or a compass. The first step is to determine your plan’s goals, which should directly correlate to the company’s IR needs (e.g., a more diverse shareholder base, greater sell-side coverage or even enhanced credibility). Then, to achieve those goals, develop a strategy that takes into consideration your company’s messaging, investor targeting and outreach.

In scheduling your investor meeting calendar for the year, determine which covering investment bank would be most appropriate to introduce you to investors in a particular geography. Then layer in a couple company-sponsored roadshows where you can introduce the company to potential new sell-side analysts as well as additional targeted investors. Dovetail your roadshow schedule with your conference calendar. Determine which conferences would be the most effective for you to attend, and then proactively solicit invitations.

4) Develop investor positioning. At the foundation of your IR plan should be the company’s IR message, and the mortar that holds it all together is an investment thesis that aligns with your long-term business model. The key messages within all of your communications to the investment community should answer the question, “Why should investors buy the company’s stock?” Develop an investment thesis that is specific, financially focused and conveys the company’s value drivers. Stay away from general statements like “strong management team” and “positioned for growth.” Instead, highlight more concrete factors such as market share potential, end market growth, margin enhancement opportunities, and your ability to reinvest cash for value creation.

5) Establish or review the IR website. Your company’s IR website is one of the most important destinations for investors seeking information. Without consistent oversight, it can oftentimes become outdated or contain inaccuracies. Make sure that your site has all of the features and content investors have come to expect on IR sites, such as “push” notifications, robust Frequently asked Questions, investor presentations and a quarterly results tab complete with conference call transcripts. Some companies also are now complementing their IR website with social media tools, like Twitter and SlideShare, to broaden their communications.

6) Establish a news release pipeline. Investors buy stocks on information. So it’s important to have a regular stream of news about your company to build awareness, enhance credibility and create buying opportunities for potential shareholders. There is no “right answer” as to how often you should issue releases, but a substantive (i.e., not fluffy) release every few weeks usually keeps companies on investors’ radar screens. If you have an IR, PR or marketing professional in the organization, discuss the news release strategy with them and how it ties into your corporate goals. If you are on your own in this endeavor, meet with key operations people to determine which upcoming corporate milestones would be newsworthy. Remember, if the primary audience for the news release is the investment community, make sure it is written with them in mind. In other words, tone down the technical mumbo jumbo and marketing superlatives and explain how the announcement fits in with the company’s strategy for increasing shareholder value.

A public company’s valuation is dependent upon its financial performance as well as the communication of those results to investors through good investor relations. As the CFO, it’s your responsibility to make sure that the IR program is well executed. By completing these six steps, you should have a solid foundation in place from which to build an effective IR program for your new company.

David Calusdian, an executive vice president and partner at Sharon Merrill, oversees the implementation of investor relations programs, coaches senior executives in presentation skills and provides strategic counsel to clients on numerous communications issues such as corporate disclosure, proxy proposals, shareholder activism and earnings guidance. David’s clients are focused in the industrial, life sciences and technology sectors.

Subscribe to our weekly email: Investor Relations Around the Web

Disclosure, Reg FD, Board Communications, Conference Calls, Investor Relations Agency, Investor Meetings, Guidance, Disclosure Policy, Shareholder Communications, Earnings Call, Social Media, Investor Relations, Earnings, Investor Relations Firm

Subscribe to The Podium!

Connect with your Investors

Establish a sincere connection with investors to communicate key messages during your Investor Day. Download our free e-book on effective presentation habits, and learn to deliver ideas with confidence and clarity.

Delivering Effective Presentations

When it's time for a change

Whether planned or sudden, it is crucial to communicate the succession of high-profile positions effectively. Download our three-part e-book and learn the best way to craft a plan for CEO, CFO and Board of Directors transitions.

Download Your Free eBook: Communicating Management Transitions 

Be Proactive, Not Reactive

With our new Proxy GamePlan, we create a year-round, data-driven strategic roadmap for effective shareholder engagement. Implement a best-in-class program rooted in a deep understanding of your company’s proxy practices, shareholder voting trends and peer landscape.

Learn More About Proxy GamePlan

Find Effective IR Counsel

Whether you’re seeking external IR counsel for the first time or evaluating your current provider, you need a firm that understands your strategy, adapts to your culture and tells your story. Download our free guide on how to assess the effectiveness of an investor relations firm.

How to Assess  an IR Firm

Activism Defense

No company is immune to shareholder activism. Sharon Merrill helps boards of directors and executive management teams identify the activist red flags lurking in your shareholder base, assess your governance risks and develop an action plan to prevent, detect and neutralize any threats. Download our free white paper, “Leveraging Institutional Shareholder Relationships to Reduce Activism Risk,” and learn how the best defense against activism is a strong offense.

Download Activist Defense White Paper

Captivate your Audience

Speaking persuasively is critical in today’s competitive business environment. Effective speakers use voice techniques and body language that project authority and credibility. Download our free e-book, “A Guide to Delivering Captivating Presentations,” for insight into good -and bad- presentation habits, and learn how to improve your skills.

Become a Persuasive Speaker 

Perceptions Matter

How do you ensure that investors clearly understand your strategy, growth drivers and market position? The most effective way is through a perception study. By periodically taking the investment community’s pulse you can avoid the knowledge gaps and misperceptions that hurt valuation. Download our free whitepaper, Why Perceptions Matter, to learn more.

Download your free copy of  'Why Perceptions Matter' 

Common Topics:

More topics