Canadian IROs out of survival mode

Oct 01, 2009

Upbeat think tank participants focus on growth

(Discussion at the closed-door think tank was private; this article’s comments are from separate conversations this week with IR magazine.)


This time last year investors’ questions were all about balance sheet risk. Now they’re about signs of recovery and future growth. That’s according to one of the 40 IROs who gathered today at the TMX Broadcast Centre in Toronto for the fifth annual IR Magazine Canada Think Tank.

‘Canada has come out of the crisis looking pretty good,’ says John Stephenson, portfolio manager at First Asset, author of a new book, Shell Shocked: How Canadians can invest after the collapse (Wiley, 2009), and one of today’s think tank discussion leaders. ‘The Toronto Stock Exchange is the world’s most global exchange – more global than the S&P 500 – and people are going to want to hear that story. Our stocks are attractive to a global audience.’

Stephenson says he has as much contact with companies now compared to before the crisis but he is taking a more targeted approach. ‘Instead of going to everything, I’m trying to be much more choosy. I would rather know more about less. I’m making decisions about which companies are the best at what they do, then I’m working to understand that model really well.’

Flora Wood, head of IR at Aquiline Resources and Laramide Resources, says she has seen investors’ time horizon shift. ‘Those interested in a short-term gain have turned over. The ones we’re left with have a much longer-time horizon. One surprise was that retail investors, who we thought were more short-term, ended up with a long-term outlook.’

One of the day’s most popular discussions was about social media, with evidence starting to show that Twitter and blogs have taken hold as primary sources of investment information for analysts and institutional investors. Think tank participants discussed how they’re using social media technology for both internal and external audiences, and how they’re monitoring social networks for information about their own company as well as their peers.

Another session covered governance hot spots including executive compensation. Next year Canadian banks and a handful of other companies will face say-on-pay votes. ‘How do you bring in the shareholder’s view?’ asks Bill Mackenzie, an adviser to Hermes Equity Ownership Services, former head of ISS Canada and, until recently, director of special projects for the Canadian Coalition of Good Governance (CCGG).

‘A lot of funds just flick the Glass Lewis or Riskmetrics switch and vote accordingly,’ he continues. ‘The CCGG believes shareholders should formulate a dialogue directly with the board, particularly on executive compensation issues. For example, they could have a meeting with the compensation committee chair without management present. IROs could play a role here.’

‘I get nervous when people talk about multilateral links between the shareholder community and different parts of a company,’ counters Neill May, a partner at Goodmans, a law firm. ‘I’m trained to think about consistency of message.’

Mackenzie acknowledges the challenge IROs have in engaging with index funds that don’t have the manpower or ability to engage with them on governance issues. ‘Getting through to them is probably a bellyache for IR people,’ he says.

IR magazine holds annual think tanks in New York, Palo Alto and London in addition to Toronto. Today’s event was sponsored by Broadridge, CIRI, Marketwire and TMX Group.

By Neil Stewart