New Kid in Town, Part II

There’s talk on the street; it’s there to remind you
It doesn’t really matter which side you’re on.
                                                         New Kid in Town, Hotel California, Eagles, 1976

A previous post reviewed the challenges of introducing new a CEO or CFO to investors.  But what’s investor relations role when a new director joins the board?

Board refreshment is a hot topic among many activist and institutional investors. This reflects understandable investor concerns about boards’ ability to oversee evolving strategies and risks in rapidly changing environments.  Questions investors ask include:  Does the board have the requisite expertise, experience, and skills?  Is the board’s self-assessment process rigorous and objective enough to identify its own strengths and weakness and implement a plan to address?

When boards refresh themselves – voluntarily or otherwise – it speaks to the opportunity for a new level of energy, perspectives and engagement in the board room.  The good news is boards are taking action:

Board TenureSource:  Spencer Stuart Board Index 2017

The new director onboarding process is managed at the board level with the General Counsel/Corporate Secretary playing a pivotal role.  The amount of information a new director needs to absorb is daunting.  Beyond getting an overview of the company, its management team, strategies and results, new directors also receive background on the other directors, past board meetings as well as corporate, board and committee governance documents and policies.  From an investor relations perspective, information that new directors should be provided include:

  • A profile of the overall shareholder base, including investor style, turnover and a risk/opportunity assessment of key investors (e.g., recent ownership changes, sentiment, relevant activism history)
  • An outline of the overall investor relations and shareholder engagement effort including the typical message development and communications process as well as management or board access practices
  • A summary of analyst reports and investor perspective on the company, peer set and industry

Materials like these can help ensure the board is aware of investor perspectives and help inform their decisions. As a steward of corporate value, investor relations is well positioned to provide this to them.

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Lisa Ciota
President/Founder
Lead-IR Advisors, Inc.

 

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