Financial crisis IR: doing more with less
Apr 15, 2009
NIRI finds some increased activity even as budgets are trimmed
The question in a bear market is whether investor relations advances or retreats. NIRI’s latest membership survey, which looks at IR in the financial crisis, finds the strongest evidence yet of spending cutbacks.
Among the corporate NIRI members surveyed, 58 percent report budget cuts. As a result, vendors are also feeling the pain. Nearly half the IR counselors in the survey say they have less retainer business, and 71 percent of small service providers (10 or fewer employees) complain that business is down by more than 25 percent.
Mega caps with more than $25 bn in market cap are an exception. Only around one in three have made modest cuts to their IR budgets and a full 20 percent say their budgets have increased.
But despite most companies spending less, IR overall does not seem to be diminished: 80 percent of corporates say management time devoted to IR has increased or stayed the same, and 89 percent of IROs say their interaction with the C-suite has increased or stayed the same. According to Jeff Morgan, NIRI’s president and CEO, it’s a clear case of doing more with less.
‘The smaller the company, the more pressure they’re under, and IR has suffered some setbacks there,’ Morgan says. ‘Among larger caps, some of the executives are doing more breadth of work, which shows how in this tight economy, everyone’s doing what they can to make it work.’
Morgan believes shrinkage in IR counselor business is linked to small caps and micro caps cutting costs. ‘That’s shortsighted,’ he says. ‘They think they can jump back into it as opposed to staying continually connected to the investment community. We continue to have to show the value of IR to companies that are smaller and newer.’
While the survey didn’t ask about job cuts, Morgan estimates there are around 60 to 70 NIRI members currently out of work, and NIRI and many of its chapters have ‘transition’ programs to provide unemployed members with free member benefits. ‘NIRI’s like a family, and we have to take care of our family members,’ he says.
Morgan says NIRI launched the survey in response to demand for IROs saying, ‘Tell me how I’m tracking so I have some information to share with my management team.’ A total of 614 members responded to the survey in late February and early March. The results of NIRI’s next large survey, which focuses on guidance, are due out in time for NIRI’s national conference in June.
NIRI members can view an executive alert about the financial crisis survey and link to full results including breakdowns by company size, type of IR activity and IROs’ degree of experience.
By Neil Stewart