Investors are increasingly demanding corporate information from the horse’s mouth — so much so that 40 percent of CFOs expect to spend more time on investor relations this year.
“Personal contact is a key differentiator,” says Bill Bruno, senior vice president at Greenwich Associates, which recently queried public-company CFOs about their IR practices. As institutional investors continue to bypass Wall Street analysts because of Reg FD, he explains, management teams understand that face-to-face meetings are the best way to communicate “tone and confidence.”
As a result, according to the research (part of Greenwich’s annual U.S. Equity Analysts Research Study), CFOs can expect to increase the time they spend conducting one-on-ones and conference calls. Currently, about 60 percent of public-company CFOs spend the equivalent of 2 to 5 days a month on IR. One in 10 say they work on IR up to 10 days a month.
Paul Gifford, vice president of IR for Goodrich Corp., has found that meeting requests from buy-side analysts, as well as hedge funds, have increased “pretty dramatically.” His solution is to supplement conference presentations with more plant tours, group meetings, and individual meetings with investors willing to come to the company’s Charlotte, N.C., headquarters. “Companies have to get creative in order to meet the demand,” agrees Maureen T. Wolff-Reid, president of Sharon Merrill Associates, an IR firm based in Boston. She has also seen an increase in such things as “investor days” (where groups of investors meet with management) and small dinners in New York with CEOs and CFOs.
Is there a downside to all this face time? “Only if it takes away from a CFO’s other responsibilities,” says Bruno. Ultimately, he adds, “a CFO must decide what will have the greatest impact on shareholder value.”