A Growing Gulf
Investor Relations Leaders Have More to Do, With Less Resources to Do It
Companies are facing an investor landscape that is unrecognizable from just a decade ago. Global capital allocation, ubiquitous information and blurring communication channels create the perfect storm where an unprepared company can find itself as a virtual bystander, as others decide its fate in the marketplace.
This new environment has forced companies — and the CFOs and investor relations officers (IRO) who manage investor relations (IR) — to radically reshape the way they communicate and interact with the audiences that affect their company’s valuation.
“Just a few years ago, IR was still primarily narrowcasting our story to a relatively small universe of analysts and current or prospective investors,” said Thaddeus Vayda, the vice president of IR at Transocean, the global offshore drilling company. “Now, investors are using a variety of information sources and channels — increasingly more from outside our company — to make investment decisions. What this means is that we must do a lot more work to help investors accurately assimilate all of this information as to how it really impacts our company. I can’t simply do that solely in an earnings release or conference call.”
Still, when Vayda first took on his role at Transocean in 2011, he did so with the confidence that Transocean had both the tools and the experience to navigate this new environment largely on its own.
It’s not hard to understand why. Few IROs know their company or industry better than Vayda — who had previously spent five years with Transocean in various financial and operational roles; and a decade covering the oilfield services industry and the company as an equity analyst. He also had the customary set of IR tools — from stock surveillance; to financial and institutional databases; to contact management systems.
Five years ago, this would have been more than sufficient.
Not today, according to Vayda. “I don’t need more information. I need more intelligence about what investors are thinking; about what companies or industries activists are targeting; and about what politicians or regulators are planning in Washington, D.C. or Brussels or Brazil. The scope of my job has just gotten bigger, and I know that is true of plenty of other people in my position.”
Long gone are the days when IR was a one-person job with a few off-the-shelf tools and a Bloomberg terminal. Today’s IR leaders have more responsibility, more accountability and — in many cases — a bigger role in advising senior management and boards on core business strategy.
But while IR jobs are getting bigger, the resources allocated to investor relations are not.