Investor Relations Key Performance Indicators
Since embarking upon a career in Investor Relations in 2016, I have often thought about how do I track and illustrate my effectiveness and performance as an Investor Relations Officer?
Many people’s reaction may first go to the idea of how did the stock price perform during the IROs tenure? The problem here is that an IRO does not actively put money to work, so he or she has no direct impact on the stock price performance.
The second reaction might be to look at the trading volume of a stock during an IRO tenure. Again, the IRO does not actively trade stock, so he or she has no direct impact on trading volumes.
Therefore, in order to track IRO performance, one needs to identify key performance indicators that the IRO can directly control and likely result in positive impacts on the stock price and trading volumes of the underlying stock.
The Top Seven Ways to Track IRO Performance and Impact
Investor Interactions
How many investor interactions does the IRO do in a given day or a given week? Interactions illustrate a level of respect and engagement of the buy-side and sell-side community. While market cap may impact interactions, I would argue that good IROs can overcome the market cap obstacle.
Interactions include email chains, phone calls, and site visits, each item representing one interaction. Clearly, the more the better.
Proxy Voting
Proxy voting represents a spot indicator on the level of engagement the IRO has with the investor community. Engagement can be tracked by Annual Proxy Voting results, or Transactional Proxy Voting results, think M&A events.
Covering Analysts
The covering analyst universe represents an indicator as to how relevant and important your company may be to the investor community. The larger the list, the more relevant you are to investors. Successfully servicing a large community of analyst illustrates a level of engagement and competency. Furthermore, actively seeking out as large a list a possible illustrates a higher level of competency.
Analysts Added / Fired
Adding supportive analysts and removing disruptive analysts from your community represents IRO value-added activity. The key is that you only want to remove disruptive analyst for significant errors e.g., creating combative situations in investor meetings, inability to fill an NDR, etc. Removing an analyst for having a different investment thesis is shareholder and credibility destructive.
Shareholder Value Unlocked
This indicator represents a glamor metric that illustrates the impact the IROs education and engagement efforts may have led to a positive outcome.
Solo NDRs / Corporate Events
An IRO that can handle non-deal roadshows and corporate events solo without management is worth their weight in gold. Such an IRO represents a force multiplier that allows the CEO and CFO to focus on running the business versus always meeting with investors. An IRO that is respected by Wall Street represents a high-value utility executive to his or her company.
Negative Analysts Converted
The only way a sell-rated analyst changes his or her mind is if the IRO of the company in question is actively talking to the sell-rated analyst. The IROs conversations with the negative analyst will almost always lead to a change in rating at the appropriate time. An IRO that can constructively engage with a sell-rated analyst provides immense value to a public company.
Wishing everyone an epic Tuesday!
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