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New Trends in Investor Relations

New Trends in Investor Relations. National Investor Relations Institute (NIRI) U.S.A. National Investor Relations Institute (USA).

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New Trends in Investor Relations

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  1. New Trends inInvestor Relations National Investor Relations Institute (NIRI) U.S.A.

  2. National Investor Relations Institute (USA) NIRI was chartered in 1969 as a professional association of corporate officers and IR consultants responsible for communication between corporate management, the investing public and the financial community. Located near Washington, DC, NIRI is the largest professional IR association in the world with more than 4,000 members representing 2,000 publicly held companies and $5.4 trillion in stock market capitalization.

  3. Our Mission NIRI is dedicated to advancing the practice of investor relations and the professional competency and stature of its members. (Adopted 1992) Members must sign NIRI Code of Ethics Membership can be terminated

  4. NIRI Board of Directors

  5. NIRI Members • A “typical” NIRI member • Background in Finance or Communications • Has 10 or more years of IR Experience • Titles • 33% Vice President/Assistant VP • 27% Director • 13% Manager • Their Company • U.S.$500 million to U.S.$5 billion in market capitalization • Staff of 2 – 3 in IR department

  6. NIRI’s Focus: Global IR • Information • Education • Advocacy • Community/Networking

  7. NIRI’s Focus: 1. Information • Body of Knowledge www.niri.org • Weekly: IR Weekly e-newsletter • Monthly: IR Update magazine • Regularly: IR Practice Research • Regularly: Executive Alerts • Regularly: IR Advisor • NIRI Ethics Council • Confidential advice

  8. NIRI’s Focus: 2. Education • 12+ Instructor led courses yearly • 20+ Online webinars annually • 3 day Annual Conference • University Relationships • U. of Michigan, U.Cal. Irvine • NIRI Standards of Practice • NIRI Bookstore

  9. NIRI’s Focus: 3. Advocacy • International Organization of Securities Commissions (IOSCO) • Washington, U.S.A. • Securities and Exchange Commission • U.S. Congress • Peer Organizations • Global IR Societies • GIRN (Global IR Network) • CFA Institute

  10. NIRI’s Focus: 3. Advocacy • Raising IR profile and status • IR as a profession • Gaining influence • In the C-Suite (CEO, CFO, COO)

  11. NIRI Chapters

  12. NIRI’s Focus: 4. Community/Networking • Online Membership List • Company, industry, location • Social Media – NIRI groups on • LinkedIn • Face Book • Twitter • Topical & Issue Communities • Emerging Issues Committee

  13. Our World is Changing: Financial Market Trends Exchanges/Bourses Sell-Side: Investment Banking Buy-Side: Institutional Investors Regulations Financial Communications Economic Slowdown

  14. Exchanges/Bourses Trends Global For-Profit Exchanges NASDAQ-OMX NYSE-Euronext Horizontal Expansion Equities, options, futures Vertical Expansion Complete IR services Websites Surveillance And much more

  15. Exchanges/Bourses (continued) Lost Linkage between Listing & Trading Wholesale vs. Retail Separation Darkpools/Alternative Trading Systems Fairness (Best Price) Transparency (Who is trading your stock)

  16. Sell-side: Investment Banking Where is the added value? Information readily available Fair disclosure and data services providers Cost Cutting Research limited Lost Commissions (Dark pool competition) Direct Market Access, program trading Sell-side elimination/consolidation Lehman Brothers Merrill Lynch Bear Sterns IROs must prioritize, job more difficult

  17. Evolving Buy-Side Hedge Funds Long-term trend: hedge funds growing Institutional investing going away Research is from within Some short term, others long-term More cooperation with other funds & firms Pension fund may own a hedge fund More Communication with IR departments Hedge funds no longer feared, are accepted But, no increase in transparency

  18. Evolving Buy Side (continued) Sovereign Funds Growing! Expect an increase… Funding from Economies in Asia Oil & gas Relatively unaffected by market Long term, passive investors Investment in projects in own countries Many are following code of conduct International Monetary System

  19. Evolving Buy Side (continued) Passive Index Funds Versus active mutual funds Copy index performance Attractive to U.S. investors Difficult for IR Beyond reach of communications Can influence stock price

  20. Evolving Buy Side (continued) Private Equity Rapid growth before downturn Availability of capital Cyclical business Quiet, but lurking Stay prepared for takeovers Spin off companies as IPO

  21. Regulatory/Governmental Trends • Abusive short selling is everywhere • Governance & Activism • Board • Shareholders • “Say on Pay” – in U.K. • Corporate Social Responsibility • “Green” movement

  22. Regulatory/Governmental Trends (cont’d) • Transparency & Consistency • XBRL Extensible Business Reporting Language • U.S. Top 500 countries in 2009, more in 2010 and 2011 • IFRS International Financial Reporting Standards • Global regulation convergence • Briteline test • Meaningful principles

  23. Communication Trends • Growing importance of web • Migration from static to usable data • Web is first point for information • Contact • Financials • Communications hub/social media • Corporate blogs • Investor forums • Twitter, FaceBook, LinkedIn, Ning

  24. Our World is Changing: Economic Trends 2009, 2010 • Layoffs • Commodity price fluctuations • Global downturn • Strength of U.S. dollar • Less capital for growth and borrowing

  25. Global Trends in IR: NIRI and Bank of NY Mellon Survey • Key findings • 90% of all respondents have increased or maintained the same level of communications with analysts and investors • Financial companies led all sectors with regard to increasing their communications (67%) and were the most likely to have changed their outlook horizons (65%). • T he most frequent shift in IR messaging • Credit concerns (66%) • Outlook horizon (50%) • Cost-cutting (50%). • Growth of potential investor opportunities in 2009 seen in the U.S. (69%), the U.K. (51%) and Continental Europe (51%)

  26. Effect of volatility of the financial markets on IR department’s communications activities with analysts and investors?

  27. Coping with Financial Crisis: NIRI Member Survey • Key findings • Increased phone calls from the buy-side • International Road shows have decreased • Interaction with C-Suite (CEO, CFO) has increased • Change in earnings guidance – some have limited or eliminated guidance • Less effect on IR for large companies • Members are making due with less!

  28. Investor Relations • How does IR evolve to meet the changing world?

  29. Evolving IR to meet anevolving world 1. IR foundation Consistency Credibility Transparency Responsiveness 2. Focus on Buy-side 1st then Sell-Side 3. Be aware of market participants Traders (short term) Hedgers (medium term) Investors (long term) 4. Use corporate market access to your advantage Not just for brokers Dark Pool offerings Stand-alone web offerings

  30. Evolving IR to meet anevolving world 5. Balancing outward communication with intelligence gathering What are investors thinking Is activism coming 6. Know company intimately Income statement Balance sheet (especially now) Debt structures Governance

  31. Evolving IR to meet an evolving world 7. Reach out and understand all investors/users Traditional institutions Hedge funds Passive investors (index funds) 8. Champion financial communication mediums Traditional print Website information Social networking

  32. Evolving IR to meet an evolving world 9. IR in turbulent times Do not hide or cancel meetings Communicate company’s value & growth story If stock price declines from market pressures rather than specific events, push value Monitor stock performance relative to peers Continue to use IR best practices Circle around to potential investors you’ve contacted in the past couple of years – things have changed and they may be interested Make sure employees are communicating and know the company message, as they are some of your best spokespersons

  33. Evolving IR to meet evolving world 10. IR is the gatekeeper Proper disclosure Proper transparency In a manner that is: Consistent Credible Responsive

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