Money talks
IR professionals are out on the road – physically or virtually – they market to new investors and maintain the shareholder base with hundreds of investor meetings a year. They are the eyes and ears of the C-suite on the Street and an essential element of defense should an activist shareholder or short-seller show up on the register. So why don’t IR roles command a higher salary?
This conversation might be less about salary and compensation and more about proving the value of IR – but where IR is valued, it is often better compensated (budgets allowing).
So what are IR professionals earning? According to the IR Magazine Global IR Salary & Careers Report 2020, the global median salary range for IR heads is $150,000-$199,999 and $75,000-$99,999 for IR officers. But that has remained unchanged since 2017 and there are a number of variants behind the median.
Larger market-cap companies tend to offer higher salaries, for example, and IR professionals in North America are paid the most globally: 41 percent of IR heads in the region take home between $250,000 and $349,000 before a bonus, and 39 percent of IROs fall into the $150,000-$199,999 pay bracket.
Those in Asia are paid significantly less: 55 percent of IR heads there take home $100,000-$149,000, while 58 percent of the region’s IR officers have a salary of less than $50,000.
‘There are a number of different factors that affect compensation,’ explains Smooch Repovich Reynolds, managing partner at ZRG Partners, with length of time in the role, career path into IR and any additional responsibilities all playing a part. But investor relations isn’t something people specifically train for.
‘This profession is still a combination of many different backgrounds,’ explains Repovich Reynolds. ‘People don’t go to college or university and say, I want to study IR. They fall into it at some point in their career.’
This doesn’t go unnoticed by management and is something Steve Rubis, a former sell-sider turned IR professional, says can limit compensation. ‘Many executives view IR as a utility position,’ he notes. ‘Many companies see it as rotational, a training ground for a higher-level finance job. But viewing IR as rotational limits its perceived value as a value-add contributor to the C-suite.’
He adds that at some firms, the value of IR is recognized only once an activist or short-seller shows up in the stock: 'The definition of good investor relations can be more subjective than one might realize.'
A young profession Aside from the personal specifics of an IRO’s career path or the company he or she works for, Repovich Reynolds also notes the youthfulness of IR as a profession. ‘If you think about a chief general counsel, for example, that profession has been around for more than 100 years,’ she says. ‘IR – as a formal, bona fide profession – has been around for just 35 years.’
But while IR’s relative newness might impact compensation today, it also means the role is still evolving: from one that was closer to PR and communications to one focused on finance and now moving toward a greater focus on strategy. What this means in turn is that compensation is also evolving.
IR professionals need to think outside of IR, says Repovich Reynolds. ‘It’s human nature to check off a list, right?' she says. 'I have 10 responsibilities and if I do those 10 responsibilities then I should either be promoted or get paid more. But what people miss is that if you want to be highly compensated, you have to be viewed as a senior business executive leader in the organization as much as you are an IR officer.’
So how do you do this? Adding new areas of expertise and responsibility is the route many are taking, adding finance, treasury, ESG, strategy or corporate responsibility to the IR role. ‘When you bundle areas of responsibility, it drives compensation up,’ says Repovich Reynolds. In fact, the IR Magazine Salary & Careers Report 2020 shows that 70 percent of investor relations professionals also hold non-IR responsibilities. Corporate communications is the most common additional duty at 36 percent, but just under a quarter have responsibility for corporate strategy as well as IR.
Steve Rubis, former sell-sider turned IR professional
The value of IR You want to highlight the work you’re doing, says Rubis, advising IR professionals to build and track their own departmental statistics.
‘If you can track what you’re doing, then you know how much you’re interacting with the sell side and the buy side,’ he says. But you also need to let others know – and he advises those in IR to look at what the corporate governance team is doing.
‘In the proxy filings, the corporate governance team highlights the percentage of investors it met with during proxy season,' he points out. 'The IR team should be pushing to do the same – IR should be saying, Look at our program: we had this many investor meetings and met with X percent of the shareholder base throughout the year. IR should be showing off those numbers and fighting for that information to be in the proxy.’
The way IR is viewed – and compensated – varies from company to company, of course. One of the things Rubis says surprised him when he made the transition into IR was ‘the amount of prep work involved’, and he believes companies where that preparation and detail is appreciated will place a premium on IR. ‘There are organizations that value prep and process very much. Those companies are likely to pay more,’ he says.
Then there’s the sector influence. Repovich Reynolds notes that biotech/life sciences (where IR professionals are expected to have either an MD degree or a PhD in the sciences) and financial services (specifically roles in asset management) command higher compensation. What you did before IR – studying for a pharmaceuticals PhD, for example – can have a big influence on your career path, which is where sell-side comparisons might come up.
Smooch Repovich Reynolds, ZRG Partners
The sell-side influence When IR Magazine looked at career paths for the Global IR Salary & Careers Report 2020, it found that ‘there is little difference between IR heads and IROs with regards to coming from a corporate or capital markets background. The main differences lie in more IROs coming from corporate finance and more IR heads having previously worked on the sell side.’
So perhaps the idea that IR is somewhat under-compensated comes from the fact that it is a sometime career path for former sell-siders – who are more likely to take an IR head position and who bring with them the glow of potential wealth.
There’s a lot more to it than money, however: compensation simply isn’t the real driver behind a career in investor relations. Rubis says he has found the work-life balance to be far more attractive in IR than on the sell side, with tenure rather than sometimes short-lived merit helping to build compensation over time instead of the rush for wealth seen on the sell side.
It is also increasingly about cultural fit, something Repovich Reynolds describes as having become a real priority. ‘There has been a dramatic increase in the last five years of candidates wanting to ensure that the cultural fit and alignment with the CEO, CFO and management team are as close to perfect as possible,’ she says.
‘If the cultural fit is right and the person brings the right experience, I have to tell you that compensation will work itself out.’
