PAST IS PROLOGUE The Way-Wayback Machine BY AL RICKARD, CAE H
ow far is “wayback?” In this “Past is Prologue” column we typically reach back about 20 years to highlight some of the IR Update coverage of key issues of that era, often with
lessons and insights for today’s IR practice. It turns out this idea has been done before. In the “Chairman’s
Note” in the January 2004 issue of IR Update, then-NIRI Chair Mark Aaron wrote about how he came across a June 1990 issue of IR Update while cleaning out a filing cabinet. “I began to read it and, lo and behold, there was quite a prescient
roundtable discussion among some then-senior-level practitio- ners, analyzing key IR issues for the upcoming 1990s,” he wrote. “Te question was asked whether companies were ‘succumbing to the emphasis points of institutions that are greed driven and short-term oriented’—and most did not accept that notion. We’ve learned differently in the past decade.” Other comments that Aaron highlighted included:
• While CEOs and CFOs are worthy resources, good investor relations practitioners can describe the components of a company’s value accurately and in depth, and perhaps even more persuasively than the CEO or CFO. After all, IR people are communications professionals.
• Management is the principal value driver, and getting management to focus on valuation and let investor relations people talk about it is half the value of investor relations … the real force behind creating value is what management does in driving the business.
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• The uncertain future of the brokerage analyst function will accelerate company/investor contact. Institutions are doing research more thoroughly. They want to get inside the business. Unless investor relations professionals are very knowledgeable about the business, buy-siders will go around IR.
• This year’s level of activism and voting should be a definite wake-up call. The time is fast coming when all companies need to start paying attention.
• The governance issue has created an opportunity for investor relations. It has elevated IR beyond the process, or mechanical level, to the issue level where IR professionals can shine with their issues experience and knowledge of Wall Street.
• IROs should be aggressive about involving themselves in the governance process. They’re eminently qualified on the basis of their conduit role between the company and the Street.
• The trend toward housing the IR function in finance also reveals the growing bias of having the investor relations professional possess business/finance credentials over the traditional communications/public relations background.
Te more things change… IR
Al Rickard, CAE, is Editor-in-Chief of IR Update and President of Association Vision, the company that produces IR Update for NIRI;
arickard@associationvision.com
niri.org/ irupdate
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