VIENNA, VA: The National Investor Relations Institute’s Board of Directors has reversed its longstanding policy against IR consultants accepting stock for services - a decision that already has some pros rethinking their compensation strategies.
VIENNA, VA: The National Investor Relations Institute’s Board of
Directors has reversed its longstanding policy against IR consultants
accepting stock for services - a decision that already has some pros
rethinking their compensation strategies.
Woody Wallace, founder and chairman of The Investor Relations Company
and a member of NIRI’s Senior Seminar, said that until the recent NIRI
decision, he never considered swapping stock for services, even though
he’d seen some of his colleagues make millions doing so.
Recently, Wallace was approached by a small investment bank in Atlanta
looking to exchange up to 350,000 shares valued at $1 a share for a
year’s worth of IR services. ’We’re seriously considering this, but we
wouldn’t be if it wasn’t for the nod from NIRI,’ he said. ’It’s not a
But let’s face it: they’re a small company who can’t afford the
services, and this could turn out to be a tremendous account for
NIRI’s original rationale behind the prohibition was to prevent the
appearance of conflicts of interest and to address concern over the
SEC’s investigation of consultants who allegedly promoted stocks in
order to artificially inflate their prices. While those situations have
not changed significantly, NIRI has acknowledged that stock is the
preferred ’currency’ of many new economy start-ups.
’We also found that the policy was forcing companies to go to stock
promoters flying under an IR banner,’ said NIRI prexy Lou Thompson. ’As
a result of the rule, the companies were not availing themselves of
legitimate, sound IR consulting.’
Regardless of the NIRI decision, there are still those in the IR
community - like Rein Nomm, president of IR consultancy Rein Nomm &
Associates - who will not take stock in client companies. Nomm, a former
president of NIRI’s Michigan chapter, said aside from the obvious
conflicts of interest, ’A lot of (the stock) turns out to be worthless
Nomm even claims to regularly turn away business from smaller ’bulletin
board’ companies. He pointed out that most NYSE- and Nasdaq-listed
companies still pay cash for services.
’I really hope this is not the way this industry is headed,’ he
’That’s just not the way I want to do business.’