Institute for the Development of Financial Markets (IRFR)

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• Institute for the Development of Financial
  Markets (IRFR)
• Annual Russian IR Forum 26 September 2008
• Positioning the IRO for success

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Positioning the IRO for success

• Importance of the IRO role
• Key objectives
• Strategic positioning
• Defining the IRO role
• Managements responsibilities
• IROs responsibilities

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Importance of the IRO roleKey IRO objectives

• Optimise understanding and rating of your stock
  in any given market conditions thereby
  minimising the cost of capital
• Support the share price
• Maximise managements degree of business freedom
  to pursue its strategy
• Promote an orderly and liquid market

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Importance of the IRO roleStrategic Positioning

• Know objectives, set additional goals and work to
  achieve them
• The IRO role within the organisational structure
  should be carefully considered
• Investor Relations is a strategic function of
  senior management therefore
• Responsibility of BOTH management and the IRO to
  position the role for success!

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Defining the IRO role

• Managements responsibilities
• Benchmark, position and support

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Defining the IRO roleOrganisational positioning

• Clearly define the reporting structure to
  eliminate conflicts
• IRO reports to the CFO - IR seen as a financial
  role requiring communications expertise (often
  the most logical arrangement given the questions
  analysts ask)
• IRO reports to the CEO IR integrated with
  communications and marketing and reports to the
  CEO
• IRO reports to a different senior executive
  usually in smaller companies

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Defining the IRO role Convergence IR/Financial
PR

• Co-operation between IR and Corporate
  Communications on financial media relations
• Increasing tendency for IRO to speak to
  journalists
• Dotted line reporting between Corporate
  Communications, CFO and IRO

CFO
CEO
Head, Corporate Communications Financial media
spokespeople
Head of IR IRO
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Defining the IRO roleSelecting your IRO

• IR requires a multi-disciplinary approach -
  successful IROs come from a wide variety of
  backgrounds
• Consider that the nature of the IRO will
  determine the level of authority and support
  required
• Be aware of current remuneration ranges and
  trends aim to recruit and retain a quality IRO!

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Defining the IRO roleAccommodate access

• Promote open door access to management builds
  IROs credibility with analysts and investors
• Physical proximity of IR to management aids
  ready access

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Defining the IRO roleBenchmarking global
averages

• Size of IR team Micro-caps 2.2 employees,
  mega-caps 6.3 (EEMEA 3.2)
• Reporting 50-55 of IROs report to the CFO, 30
  to the CEO
• IRO communication with CEOs - 48 daily/weekly
  basis, with CFOs - 75 daily/weekly basis (EEMEA
  40 counsel CFO weekly, 28 daily) (W. Europe
  52 counsel CFO daily)
• Budgets annual IR budget 742,900
• IR and PR 70 have separate IR and PR depts
  (EEMEA 80)

Source Global Trends in Investor Relations
2007 (The Bank of New York Mellon)
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Defining the IRO role

• IROs responsibilities
• Promote IR and aim to achieve credibility.

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Defining the IRO rolePromote the role of IR

• Continually educate management about the role and
  value of IR
• Aim to earn the commitment of the CEO and the
  senior management team
• Understand your corporate culture and structure
• Promote informal access to management to
  complement formal open door policy

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Defining the IRO roleEnhance through planning

• Create an IR plan which reflects structure and
  objectives of team
• Should fit companys market cap, sector, business
  model and the investment characteristics of its
  share
• Should be sensitive to the companys current
  stage in its life-cycle

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Defining the IRO rolePromote integrated
communication

• All communication originating from a company
  affects corporate value creation/destruction
• Unified messages increase investor confidence -
  build a good relationship with communications
  colleagues before a crisis or big event occurs

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Defining the IRO roleCo-ordinate internally

• Work with colleagues to ensure one-voice policy
  through
• Limited group of agreed spokespeople
• Formal agreement on material information
• Queries from analysts and investors referred to
  IR
• Regular meetings between the IR and PR department
• Ensuring all messages at divisional level echo IR
  and Senior Management messaging
• Best practice adopt a disclosure committee
  approach

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Defining the IRO roleMaximise the efforts of the
IR team

• Negotiate the position of IR within the
  organisational structure
• Define components of budget and maximise fully
• Delegate to expert colleagues
• Share internal resources
• Outsource to agencies as well as Shareholder ID
  which has an external focus use outsourcing for
  internal health checks!
• Benchmark, conduct perception studies and improve
  communication skills through expert coaching to
  achieve BEST PRACTICE

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Defining the IRO roleAchieve personal credibility

• Position yourself in a strategic role
• Attend board meetings!
• Be visible and knowledgeable about your company
• Expand skills finance, regulation, corporate
  governance
• Project an executive presence!
• Identify and attempt to meet award winning IROs

Achieving credibility creates platform for future
access to resources and further success!
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Bree Schuette Simon MCommunications Tel 44
(0)20 7153 1530 Mob [phone] schuette_at_mcomg
roup.com
Louise Slater MCommunications Tel 44 (0)20
7153 1276 Mob 44 (0)7968 792 391 slater_at_mcomgrou
p.com
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