Orlando, FL: While a three-year bear market has left many companies with slumping stock prices, the annual NIRI conference gave IR pros a chance to discuss the issues that are confronting IR communicators.
Topping the agenda were sagging investor trust resulting from continued corporate scandals, new Sarbanes-Oxley-related disclosure rules, and the uncertainty surrounding the long-term fate of sell-side analyst coverage following the global settlement between regulators and some of the world's largest investment banks and brokerages.
"The IR profession has certainly been pelted with more challenges than ever in the past year," said Mark Aaron, VP of IR at Tiffany & Co. and the recently elected chairman of NIRI, as he opened the conference last Monday morning.
The conference, themed "Delivering Value through IR Leadership," boasted about 1,500 attendees, according to NIRI - about one-third of the organization's total membership. The tech sector was the most highly represented sector with 17% of the attendees coming from that beleaguered industry.
In an address to attendees entitled "What Senior Management Expects from Investor Relations," Kevin Rollins, president and COO of Dell Computer, said that there "has never been a more important time" for the IR profession.
Rollins explained that the market decline and corporate scandals such as those at Enron, WorldCom, and HealthSouth have threatened the growth of share ownership by average Americans and the "rise of the investor class."
He said that IR pros "should put values even before valuation" to help resurrect confidence in corporate America.
Rollins, who shares managerial oversight of IR with the company's CFO James Schneider, said that he sees the IR function as helping to oversee the strategic direction of Dell.
"Too often, the senior management team makes a strategic decision that affects the company's valuation without consulting IR," said Rollins. "Or worse, feels that IR's perspective is of little or no value."
Rollins went on to explain that strong IR officers possess a deep knowledge of their company's business and how investors value their company's stock. He said that is the kind of knowledge that senior corporate leaders value. He added that IR officers need to have the ability to communicate as businesspeople would and "must also have financial and communications skills."
Rollins said that although Dell has separate IR and corporate communications functions, "I don't think there is a solution or structure that works in all situations." He said that it was more important for communicators to pay attention to "attitude over structure" in order to ensure messages stay consistent throughout organizations.
The conference also heard from Scott Cleland, founder and CEO of the independent stock research boutique The Precursor Group. In an address called "The Role of Independent Research," Cleland discussed the future of stock research following the settlement between regulators and large Wall Street firms. The settlement has left open the question of the future role of research in the IR mix.
Cleland spent much of his speech highlighting his work founding a trade organization of 26 independent researcher firms called Investorside Research Association. Cleland said that he hoped Investorside's logo, which runs on the front of all member firms' research reports, would eventually become the equivalent of the "Good Housekeeping seal of approval" in the world of stock research. He said that he expected firms that were truly independent of conflicts of interest, unlike nearly all of the major Wall Street firms which have been criticized and sanctioned for their conflicted research practices, would eventually represent the dominant force in stock research.