IR: a lifeline in hard times

As companies in our energy economy struggle for survival, everything is on the table. That’s also why there’s a strong case to be made for continuing to invest in investor relations
By Chaya Cooperberg

Last summer, I advertised for a mid-level position on my investor relations team, based in Toronto. The responses rolled in, with the calibre and seniority of applicants higher than I anticipated. More than half of the résumés were from Western Canada—economic refugees of the energy crisis. These investor relations professionals were prepared to move, at their own expense, for an opportunity to work with a public company outside of the oil and gas and mining sectors, in a province with broader opportunities.

In 2015, as Alberta’s energy producers, developers and explorers cut operating expenses and pulled tens of billions of dollars from their capital budgets, more than 40,000 jobs in the sector disappeared. That number has since climbed to more than 100,000. Stocks have been decimated, with some companies’ share prices diving more than 80%. It’s no wonder that investor relations professionals in the energy sector are feeling the pain, with some joining the ranks of the unemployed and others taking salary cuts or mandatory days off.

But what of the companies they work for? While cutting back on IR functions may be common in tough times, investor relations is often one of the last corporate departments to remain—and with good reason, particularly in companies that are broadly owned by both institutional and retail investors. IR professionals are the front line and can help calm shareholders’ nerves and maintain their confidence, both in coordination with the CEO and CFO as well as independently.

ARC Resources Ltd. (TSX:ARX), an oil and gas company headquartered in Calgary, views its investor relations program as an even more critical function since the energy crisis began. “In times like this, it’s even more important to be out on the road, talking to investors,” says David Carey, senior vice-president, capital markets at ARC. “Investors have a huge number of choices of where to invest and they don’t need to be in your sector, let alone your company. You need to continue to show them why you’re still relevant.”

He points out that the senior team needs to help investors understand not only how a company is positioned through the down-cycle, but for the eventual recovery. “When times are tough, strong management can really be a differentiation.”

Even so, investor relations practitioners need to be prepared to do more with less.

Yvette Lokker, president and CEO of the Canadian Investor Relations Institute (CIRI), has seen issuers in the resource sector reduce their investor relations expenses. In the more dire situations, some companies in the oil patch have shrunk their teams from two or three individuals to one. CIRI has seen its membership from Western Canada decline as a result, and is offering IR practitioners temporarily out of work a year without national dues. “It’s a way to support them as they have supported us,” she says.

Aside from headcount and salaries, Lokker suggests, “there are things you can look at in the IR budget to cut back, such as travel, collateral materials or professional development.”

For CEOs and CFOs in the energy sector, maintaining a senior investor relations practitioner (as opposed to donning that hat themselves) allows them to focus on their operational and financial priorities, including managing the cost structure and the deployment of capital. Lean times require increasingly lean corporate budgets, but seen this way investor relations is an investment that delivers returns.

At a recent investor conference in New York, Carey noted the decline in presenting companies compared with a year ago. Investors appreciated his company’s attendance and were impressed with the longer-term story ARC Resources shared. This level of ongoing communication sends the right message to prospective shareholders who aren’t simply focused on the next quarter. As Carey says, “These are the long-term investors, the ones you want.”

Chaya Cooperberg is vice-president of investor relations and corporate communications at Progressive Waste Solutions in Vaughan, Ont. E-mail: chaya.cooperberg@progressivewaste.com.

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