In a Clutch

In a clutch … that is being in a tense, difficult or stressful situation or crisis.  A clutch player is someone who can be counted on to perform (or outperform) in such situations.

Clutch players possess common leadership qualities[1] including:

  • Focus – It’s more than concentration, it’s knowing and staying fixed on the ultimate endgame
  • Discipline – Maintaining your center, avoiding distraction and being rooted in the fundamentals
  • Adaptability – Flexing and responding given the situation, pressure points and vulnerabilities
  • Being Present – Being in the moment and mindful of situational nuances, impacts and context
  • Constant Striving/Fear & Desire as Motivators – Complacency is the enemy of greatness and friend of the mediocre.

Why bring all this up?  Because these qualities are essential to confronting a corporate crisis … when clutch performances are required.  The good news is these qualities can be developed and programs focused on embodied, mindful or centered leadership can help.

But equally, if not more, important to navigating dynamic, chaotic crisis situations is to actually have a crisis plan, know it and practice it.  Crisis management plans need to be an integral part of a company’s enterprise risk management process and should be informed by and evolve with the company’s strategies and risk tolerances.

Now, what does a crisis management program look like?  Most experts indicate such a program should:

CompassIdentify Risks and Priorities:  Its essential to identify key operational and reputational risks, but nearly impossible to anticipate everything. So, establish guiding principles to guide the risk assessment process.  Such principles could be centered around priorities like protecting people (employees, customers and communities), preserving corporate reputation, minimizing operational disruption or preserving assets, etc.

PencilDevelop the Plan:  The crisis plan should include well-crafted decision matrices robust enough to handle an array of contingencies as well as contain escalation protocols, key communications templates and an outline of roles/responsibilities and work flow.

Team tableForm the Team:  The crisis team should encompass a variety of disciplines and expert resources (both internal and external) to guide and execute the response.  The people involved may be different depending on the type of crisis and decision matrices can help identify this.

ArrayPractice the Plan:  Practice enables crisis team members (internal and external) to build relationships and trust with each other.  Whether it’s a table-top simulation or a robust fire drill, practice will make you faster and nimbler when the need is real. It can also help identify areas where additional training, support or resources may be needed to reduce risk.

Danger signKnow How to Deploy: Work the plan. Gather information and stay focused on guiding principles.  Leverage the plan’s communication process and regularly share information as appropriate with key internal and external stakeholders.  After an event, let your guiding principles prioritize an integrated recovery plan.

Magnifying GlassReflection: After a crisis, conduct a post-mortem of root causes and what went well and what didn’t during the response. Reflect on underlying factors and take action to correct, mitigate, improve. Communicate key findings to stakeholders such as employees, customers, suppliers, communities or regulators as appropriate.

In a clutch, investor relations officers will be talking with investors nearly non-stop during a crisis.  So, think through the best ways to communicate with investors, who the key influencers are and who may need to be prioritized for outreach whether by you, your management team or board post-crisis.

Other Practical Tips for IROs:

  • Crisises aren’t always a surprise. Warning signs often abound. Develop a bullet-point outline for top of mind issues. Yes, there will be holes and you can’t anticipate everything, but it will be faster than starting from scratch.
  • Keep a key contact list with you – at home, the office, your briefcase. Even better, save a PDF copy to your phone, tablet and laptop – you’ll almost always have one of these with you.
  • Be prepared to handle a crisis remotely. Develop a process checklist or reference sheet (see sample) that contains emergency contact information and login IDs for key vendors such as your newswire service. Again, keep a copy with you and on your electronic devices.

 

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

[1] Sullivan, P., Clutch: Why Some People Excel Under Pressure and Others Don’t.

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.

 

And The Nominees Are . . .

If you’ve ever been involved in an activism campaign, you know activists are smart . . . they’re well-advised . . . and they are likely go after seats on your board.  With the director-nominating season in full swing, more than a few companies will be dealing with activists seeking board seats.

Sophisticated activists know the mechanics of your by-laws, understand the director-nomination process and are prepared to request and complete your D&O questionnaire.  So, it’s unlikely they’ll make a technical mistake when nominating directors.  They also understand the importance of passive investors and the role of ISS and Glass Lewis in the proxy process.  So, to garner support for their director nominees, activists are beginning to consider issues of diversity, overboarding and independence when making director nominations or creating a dissident slate. 

To de-escalate an activism campaign or avoid a proxy fight, many boards are engaging and granting activists board seats.  Engagement can give boards certain advantages including the potential ability to: 

  • Better control the agenda;
  • Negotiate director-nominee qualifications and background;
  • Set expectations for activist-director roles and behaviors; and,
  • Enter into a stand-still agreement to mitigate the disruptive effect of an activism campaign.

Of course, once an activist is on the board the challenges don’t end. It’s important for directors to remember the human element:  treat each other with respect; be candid and engaged, and put your fiduciary responsibilities to shareholders first.

Now what’s the role of investor relations in all this? I believe this is where investor relations’ role as a steward of corporate value comes to the fore.  As a steward, investor relations champions corporate value on behalf of the company’s owners under the direction of the owners’ appointed representatives – the board and management. Investor relations hears the voice of the company’s owners and has a responsibility to regularly communicate investors’ viewpoints internally.  This includes providing context around investor perceptions of valuation, management credibility, peer and industry performance as well as the overall competitive environment.  

It’s also important for investor relations to share perspectives on investor behavior – not only about activists and their followers, but how the existing investor base is or may change.  Such knowledge can help inform decisions as the interplay of who enters or exits a stock can affect valuation, signal confidence in the company’s strategies and be indicative of potential proxy fight outcomes. 

In the end, activism brings change on many levels. Investor relations needs to deal with that as the corporate narrative evolves. The notion of being a steward of corporate value can help center investor relations’ focus and approach to navigating that change.

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