Investor Relations: How to Deal With Shareholders and Analysts

Over my career, I’ve seen a dramatic change in the way public companies engage with, and communicate to, shareholders and Wall Street – and with that, an increased role for the CFO in telling the company story and building relationships with the investor community.

When I took my first CFO position, I came into it with experience overseeing investor relations, or IR. One of the most important lessons I learned is the power of asking questions and listening hard to what others had to say.

Gathering and really listening to others’ opinions, whether I agreed with them or not, went a long way in engaging with investors, analysts and others

Asking questions

I’d go to the board, the credit analysts, the portfolio managers and analysts on both the buy-side and sell-side, and I’d ask, “What are your thoughts on the company? What are the strengths, challenges and most important issues for you?”

I also met with investors who didn’t own the company stock because I learned so much from their perspectives. Those conversations sometimes helped me see the company and investors’ issues in a different light. For example, in the wake of 2008 and the ensuing low interest rate environment, an organization’s dividend policy became more significant to many investors.

Gathering and really listening to others’ opinions, whether I agreed with them or not, went a long way in engaging with investors, analysts and others, and gaining their trust and attention when it came time for me, as the company’s second-most senior spokesperson, to tell the company story.

And when I had to get in front of a room full of investors and analysts – who can be expected to ask some tough questions – the effort helped me be better prepared.

Retelling your strategy

Whether meeting with investors, analysts or the board, I was mindful that these are people who follow or work with many companies, not just the one I was representing. I couldn’t assume that they would remember everything I had said two or three quarters ago.

So when it came time to tell my narrative, I would make a point of reminding them what the strategy was all about and why the company embarked on it. Only at that point would I say, “And now let’s talk about where we are on that strategy, what the company has been doing to execute on it, and what we are going to do to move forward.”

Just as asking questions is a powerful communication tool, so is reminding stakeholders of your strategy and what you’ve done to advance it.

The “ask, listen, learn” approach also can be applied when confronted with shareholder activists. By engaging with them, management and IR can figure out which ones seem truly interested in improving the company and which ones might have other motives.

That doesn’t mean a company should take action on what even well-intentioned activists want. However, taking time to listen to activists’ points of view, learning from those and then deciding how to respond is often more productive than no engagement at all.

A strong IR team

Of course, effective IR depends in part on having a strong IR team, which is why I stayed very close to IR when I became CFO. It was important to me that IR have the communications, relationship-building and analytical capabilities to, first, make sure that the company story was clear, consistent and accurate, and second, to help the CEO and CFO effectively communicate the story to investors and analysts. 

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