During the NIRI 2022 annual conference in Boston, James Beech sat down with board chair Victoria Sivrais and Matt Brusch, the newly appointed president and CEO, to discuss post-pandemic IR initiatives and surprising proxy season trends
Matt Brusch: I’ve been associated with NIRI for many years at this point and it’s incredibly important to me: a critically important community. I’m very familiar with the history of the organization and the folks who codified what it meant to do this new profession called investor relations – excellence in financial communications.
You’re using its convening power to bring folks like this together at events, create these wonderful networking opportunities, and to create standards of practice, create the credentials we now have. The responsibility is incredible and it’s a weighty one – I don’t take it lightly.
Talking high-level vision, I like that NIRI is a sort of shining city on the hill of the IR profession. We have a thriving, diverse and growing membership. NIRI is the first organization people think of when they’re thinking of IR professional development. We have this network of folks who rely on each other and want to come together at events like this. This is the world’s largest IR professional development event.
NIRI has a seat at the regulatory table in Washington, DC, at the SEC and on Capitol Hill advocating for the profession and more broadly for public companies. We’re looked to and asked for comments on relative or relevant issues for the profession.
We’re in a great place. We have an excellent board – very strategic, very engaged – and we’re currently wrapping up our 2022-2025 strategic plan, which will be a great roadmap for the future. We’re going to focus on NIRI’s important mission of elevating and advancing the profession. As Steve Jobs said, I think the best way to predict the future is to invent it. That’s what we’re planning to do.
Matt Brusch, NIRI
MB: The recognition that IROs need each other. It can be a relatively lonely role, so recognizing that and creating connecting opportunities in innovative ways [is important]. During the pandemic, we added 20-30 events to facilitate those connections people weren’t having.
We’ve recently created an online and on-demand investor relations program. It was a paper-based, in-person provisioning program and now it’s all online, virtual. It’s the idea that IROs need lifelong learning; we need to develop that and deliver it in different learning styles. We need to ensure we’re delivering learning across this tenure spectrum to everyone from those who are brand new to those who have been in the profession for 20 plus years.
Victoria Sivrais: Activism really escalated in the last couple of months, which I think is interesting, and a lot of people thought ESG was going to be what they hung their hat on from an activist perspective. I haven’t seen that come to fruition – that’s not to say it won’t, but activism has been very traditional this proxy season around business operations, valuation, management teams and strategies. But proposals on climate risk, say on climate, climate disclosure, human capital disclosure – those have increased pretty significantly, although most of them are not passing.
That’s the next leg, now we’re seeing an influx of new proposals around those areas. Next year and the year after, you’re going to start to see more support for those.
Of course, there is the headline-grabbing activism that everyone sees with mega-caps and the big-name activists. What I’ve actually been seeing is more of what I would call ‘quieter activists’, those that are working behind the scenes to try to effect change without going into a full-blown proxy battle.
That has surprised me. It’s not always ValueAct or Elliott – sometimes it’s these smaller firms that want to effect change. They know they can and they’re using a similar playbook.
Victoria Sivrais, NIRI
VS: The easiest way to defend against an activist is not to have one in your stock – and that comes down to the basics of strong investor relations and investor engagement programs.
Retail investors are a very different kind of animal to deal with. Smaller-cap companies have a much smaller retail base than mega-caps, obviously, but engagement is still important. I think you’re seeing companies trying to find innovative ways to engage with the retail investor community but it’s a bit early days yet.
I think most public companies have kind of ignored that stakeholder group, which is probably not the best plan.
MB: It’s a burgeoning topic. I think companies are increasingly thinking about how to address these issues, recognizing that all their stakeholders are important. I think the pendulum has swung a bit from Milton Friedman’s theory of shareholder primacy.
Companies are recognizing they are in communities; they have employees, customers and suppliers. The 2022 Edelman Trust Barometer shows that businesses are the most trusted of the institutions it studies. I think companies need to begin considering [having a say] and having a strategy.
VS: I think it’s probably one of the top questions I get asked by my clients and when I talk to other IROs. There are just so many factors they have to weigh up on whether or not they’re going to take a stance. When talking about the Russia-Ukraine war, there are financial, operations and employee human capital implications so figuring out how to balance those stakeholder groups is a really tough decision for some clients.
When the Black Lives Matter movement was starting to gain traction, companies were asking, Should we say something on our earnings calls, or should we say something in a presentation? By no means was every company coming out and taking a stance. Those that are more consumer-facing absolutely did come out a lot more than, you know, an industrials company in Iowa.
I think there are implications that have to be weighed. It’s really about what is best for the world we live in, while also balancing the fact that you have a stakeholder group that cares about the financial implications of the stances you take. I don’t think there’s a black-and-white answer.
It’s definitely not the case that you should absolutely always take a public stance on a social issue. It depends on the issue, the implications, whether it is driven by your stakeholders and also what your business does.
VS: Investors, particularly US investors, are expecting that to be the case more often than not now, though I think they’re probably still in the minority. But every company I talk to that is trying to set targets is going to the next level to figure out how to tie [those metrics] to executive compensation. When they’re out there talking to investors at roadshows, it comes up almost every time so I think you will see that become mainstream over the next couple of years.
VS: Having done IR through some cycles, you create your communication strategy based on long-term prospects, acknowledging that there will be cycles, and I think investors recognize that. But communications excellence is all about setting those long-term goals and continuing to deliver the results, quarter after quarter, with proof points along the way.
VS: That’s a really interesting point because when I see companies trying to talk to investors, they’re pretty young, so they’ve only seen the financial crisis. They’ve never seen a normal recession so they think doomsday is coming but the reality is it’s unlikely to be that scenario again. Companies are talking to investors and saying, Okay, let’s look at a normal cycle and a normal recession and see how we perform.
I’ve had the conversation probably 18 times in the last two weeks: how and when should we start to talk about our recession planning or how we’re going to perform in the recession? Really, most consumer-focused firms are starting to talk about it but there’s an interesting dichotomy.
There are those who have fared pretty well through Covid-19 and they’re not feeling the hurt at the gas pump. Then there are those who don’t have as much or didn’t have the same kind of trajectory throughout the pandemic, and they are absolutely feeling it – they’re having to redo their budget, they’re having to think differently. So the lower price-point consumer items is where I think the hurt is. Those who are doing big-ticket consumer purchases, they’re not quite feeling the hurt yet. It’s a very interesting dynamic.
VS: You’ve got to communicate the long-term strategy of business, and there are going to be ebbs and flows within any business cycle, so being able to communicate well to the investment community how you performed in past cycles is pretty critical so it can understand how you’re going to perform in this looming recession.
I think most companies are on a stronger footing than they were historically so they have tried to put things in place to mitigate the impact of the recession.
Of course, there was a lot of government help to cushion the blow but the agility of firms to maintain liquidity, staffing and the business through a situation most of us had never seen in our lives was pretty amazing. Most have emerged from the pandemic much stronger and better capitalized, so I would think most are pretty well prepared for a recession to come.
