Bringing investor relations into the boardroom

As boards—not to mention regulators and other stakeholders—put greater emphasis on board diversity and shareholder engagement, the need for IR professionals at the table is growing
By Chaya Cooperberg

Here’s a question for boards to consider: is it time to add an investor relations expert to your slate?

IROs are indeed starting to take on director roles in corporate North America, and with good reason.

In this era of heightened board visibility, the best corporate directors do much more than check a box on the skills matrix. In addition to financial expertise, strategic experience and industry knowledge, they must possess the ability to listen and engage well with shareholders. And best practice suggests board composition be diverse not only in gender, but in experience as well. A successful career IR professional brings all this to the boardroom table.

Investor relations officers play an increasingly strategic role within public companies. Senior practitioners are not only strong financial communicators to the investment community, they are valued advisers to their boards and executive management teams. They have helped steer companies through transformative events, mergers and acquisitions, executive transition and a broad assortment of crises and issues, including matters of governance and compensation. They have developed a deep expertise on their company and can speak with authority on their industry. And, critically, IROs understand how to build and manage relationships with the investment community, a field increasingly dotted with activist shareholders.

These are all skills that translate well in the modern boardroom, particularly as the skill set required of corporate directors expands.

Katherine Vyse exemplifies the value that IROs can add to a director slate. Vyse, who retired in 2013 as partner and senior vice-president, investor relations at Brookfield Asset Management (TSX:BAM.A), recently joined a corporate board, and chairs the compensation, nominating and governance committee.

“IROs bring a number of competencies to the boardroom including analytical thinking, ability to manage complexity, knowledge of capital markets, corporate governance, relationship building and interpersonal skills, and I think for newer companies, potentially major shareholder relationships,” Vyse says.

She points out that boards are tasked with a long list of issues that shareholders care deeply about, particularly in the areas of corporate governance policies and practices, financial reporting and dividend programs, all of which “IROs know intimately.”

In short, the investor relations profession, with its diversity of gender and strategic experience, represents a unique pool of talent for boards.

Vyse, who was named to the Diversity 50 in 2013, a Canadian database created to help corporate directors identify board-ready diverse candidates beyond their own networks, both represents and advocates the search for directors that hail from non-traditional backgrounds. “Extensive research demonstrates that board diversity enhances shareholder value,” she says, “and it’s not just diversity of gender but ethnicity, geography, background and function. Boards are increasingly looking beyond traditional retired CEOs and CFOs, accountants and lawyers… for those that have recognized expertise in a particular function.”

As shareholder demand for engagement with directors grows, the case for bringing a former IRO aboard builds. The director role already requires more than 200 hours a year and adding meetings and calls with shareholders is a new and incremental time requirement.

Earlier this year, the Institute of Corporate Directors issued guidelines for boards on shareholder engagement. It recommends knowing the company’s most significant holders, including details such as the investor’s strategy, philosophy, track record and the structure and hierarchy behind the investor’s decision-making process. This is an area of core competency for IR professionals that can be of meaningful value on a board committed to increasing engagement.

After all, says Vyse, “public companies strive to deliver shareholder value, so who better than an investor relations professional to form part of a team that provides insight and guidance into positioning the company and its initiatives with the shareholder base?”

Chaya Cooperberg, former VP of investor relations and communications at Progressive Waste Solutions, is on the Canadian Investor Relations Institute board. E-mail: Chaya.cooperberg@gmail.com.

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