Our Blog: The Podium

“View from the C-Suite: What Management Wants from Investor Relations” was the theme for NIRI Boston’s April event. For a chance to listen to a panel of C-level executives speak candidly to a room full of investor relations professionals, I quickly reserved a car and “zipped” over to the meeting. The panel featured three esteemed executives from the region, including Richard F. Pops, Chairman, President & Chief Executive Officer, Alkermes; David D.R. Hargreaves, Chief Operating Officer, Hasbro and Donald Muir, Chief Financial Officer, Lionbridge.

The audience was eager to hear what these top executives expect from a strong IR team. The panel consistently reinforced that IR professionals are most effective when they are knowledgeable, well organized, involved in strategic planning, and are able to stand up to management to ensure best practice.

When it comes to corporate governance, board members and shareholder activists are usually on opposite ends of the spectrum. But at separate conferences in New York and Boston this month, the two camps expressed a surprisingly similar view about the most effective way to deal with the anticipated increase in shareholder activism in 2011: better communication.

According to a study by law firm Schulte Roth & Zabel (SRZ), 76% of activists surveyed identified “dialogue/negotiations with management” as the most effective activist strategy to achieve desired results. None of the other proposed strategies – shareholder resolutions, publicity campaigns, proxy contests or litigation – received more than 16% of the vote.

Results of the study were highlighted at SRZ’s Shareholder Activism Conference in New York, which I attended as part of an invited group comprised mainly of hedge fund and private equity fund managers.

Hello again. We took a bit of a hiatus from blogging this summer, but we are now back to share a Halloween story sure to scare you straight!

Unless you are one of the 33 Chilean miners that were trapped underground for the past two months, you have likely been watching the drama unfold on Capitol Hill as the Business Roundtable and the U.S. Chamber of Commerce challenged the legality of the SEC’s new proxy access rule 14a-11, which allows qualifying shareholders to nominate directors for election at shareholder meetings and requires the corporation to include those nominees in the standard proxy statement. The petitioners claim that the new rules are subjective and violate federal and state law and the United States Constitution, and that the SEC did not assess the effect of the rules on efficiency, competition and capital formation. As a result, implementation of the rule has been delayed pending a resolution of the Court of Appeals. So the new proxy access rules will most likely not be implemented until the 2012 proxy season, at the earliest. Upon hearing this news, public corporations across the nation let out a collective sigh of relief.

The term “shareholder activism” can sometimes send a shiver down your spine and conjure up all kinds of unwelcome events – unhappy shareholders, proxy contests, shareholder proposals, 13D filings and withhold vote campaigns, to name just a few.

I recently moderated a NIRI Virtual Chapter webinar on “Shareholder Activism Trends.” The participants, consisting mainly of IROs at mid- and small-cap companies, were polled on several questions. The first question was, “Do you have a detailed plan in place for dealing with shareholder activism?” The majority answered “no.”

It may not be feasible to have a detailed plan for dealing with a threat that can take so many different forms. The lawmen and bandits who fought it out at the infamous O.K. Corral in 1881 had no idea how the showdown would play out – and neither will you if your company becomes an activist’s target. But that doesn’t mean you can’t be prepared. Here are four steps.

For months leading up to your S-1 filing, you probably have been singularly focused on creating that massive tome. You have spent significantly more time with your lawyers and auditors than with your own family -- and you cannot even begin to imagine a time when you won’t be spending every waking moment with your bankers. So now that you’ve left the long nights (and great food spreads) at the financial printers behind, it’s time to focus on investor relations. You need to hit the ground running with IR as soon as your company prices its offering, so here are 10 “to do” items before then:

1) Develop your IR website. The IR website must be ready to go live on the day of your IPO pricing. It is most cost-effective to hire an IR website hosting provider, which will develop your site and aggregate content such as news releases, SEC filings and stock data. You also need to prepare additional content for your site such as “Frequently asked Questions,” management biographies and fact sheets. Your website is arguably the most important vehicle you will have to communicate with investors, so make sure it has everything that investors need and expect.

Earlier this week I moderated a NIRI webinar with three senior-level investor relations officers representing the finance, real estate and retail industries. The panelists highlighted some new initiatives that IROs should consider in 2010 which, according to the Chinese calendar, is The Year of the Tiger. This just might have been the world’s only “Tiger”-related discussion in the past few weeks that had nothing to do with a certain golfer with a PR problem.

Within Chinese culture the number six is auspicious and considered good for business. So in keeping with this theme, here are six ideas that arose from the panel discussion that are worth considering as you develop your investor relations plan for the coming year.

To whom is the corporation accountable? Before SOX, majority voting, proxy access and “say on pay,” director elections were democratic in name only, and the lines between board and management were blurry at best. Except for the occasional gadfly at an annual meeting, boards rarely communicated with shareholders directly.

Today, after nearly a decade of turmoil in the markets and changes in the regulatory environment, the insulated board is a thing of the past. Shareholders are coming to view directors as leaders whose perspectives may diverge from those of management, who are empowered to exercise independent judgment on matters of consequence, and who are accountable for corporate performance.

A small but growing number of boards, recognizing that investor expectations have changed, have made dialogue with shareholders a formal priority. They are experimenting with new approaches for nurturing this interaction and learning from the experience. Although systematic programs for board-shareholder communications are still atypical in Corporate America, it is not too early to make some observations about what the more successful efforts have in common.

Recently, Sharon Merrill Associates President Maureen Wolff and I spoke on “Navigating the New Proxy Access Rules” at the NYSE Euronext’s “Building Blocks for Successful Investor Relations” conference. The event attracted great attendance from CEOs, CFOs and investor relations officers – despite some obstacles getting downtown with the Yankees World Series victory parade taking place at the same time about a block away. Some things you just can’t plan for. As a life-long Red Sox devotee, it was rather painful to hear the million-plus Yankees fans lined up on Broadway cheering for A-Rod and company. Wait ‘till next year I guess.

When investor relations practitioners get together these days, we tend to discuss the same general questions, gripes and concerns: When will we see an upturn in the economy? Why can’t we have a better understanding of who owns our stock? Will the Yankees buy another championship next year? What effect are dark pools having? But one topic that should be getting significantly more attention in the IR world is the inevitable change in shareholder proxy access. If two proxy-related proposals from the SEC are implemented, the changes in proxy access will have a profound effect on the boardroom and board/shareholder communication. It’s time to get ready.