Investor Relations - A Practical Guide - Investis

Company Management
Paul Froud, Head of Investor Relations, London Stock Exchange Group plc
The investment community places significant
emphasis on the quality of a company’s Board, and
in particular its management team. Institutional
investors may well insist on meeting key
management prior to investing, and will expect to
maintain a dialogue with the company’s Chief
Executive and Finance Director. Effectively, this
means that these directors will have to commit
time to meeting and speaking with shareholders,
potential investors, sell-side analysts and
journalists. Although companies will involve their
advisers, and in some cases, specialist
consultants, the investor relations function cannot
be outsourced wholesale.
Despite investor contact naturally being more
concentrated around the publication of company
results, it is not uncommon for Chief Executives
and Finance Directors to spend c.10 – 20 per cent
of their annual time on investor relations. Naturally,
time allocated to investor relations activities will
very much depend on a number of factors – the
number of shareholders in the company, whether
the share register mostly comprises institutional or
private investors and whether the company is
actively seeking new investors, as well as the level
of news flow and company announcements that
require explanation or comment. As well as direct
contact with investors, company management and
investor relations personnel will also need to
allocate time with sell-side analysts and the media.
The time commitment necessary will again be
determined by the level of company activity and the
extent to which a company wishes to raise its profile.
Investor relations activities may also extend or
internationalise for a company as it grows in size,
profile and following. Larger sized companies, as
well as those with either a very large or
internationally dispersed following, will normally
employ an Investor Relations Officer to support
the Board with the company’s investor relations
duties, such as preparing investor presentations,
company announcements, website content and
liaising with the company’s advisers on investor
relations matters. In mid and small sized
companies it is typically the Finance Director that
carries out these responsibilities alongside the
Chief Executive.
One commonality between large, mid and small
sized companies however, is that alongside its
advisers, a company’s Board should regularly
review the company’s investor relations strategy
and investment case, as well as evaluating whether
the current contact programme is meeting its
objectives, examining the composition of its
existing and target shareholder bases, and
appraising the effectiveness of the channels the
company uses to communicate with the
investment community.
The Investor Relations Team 27