IR30: ‘IR should represent investor sentiment to management & the board’
Melissa Marsden has been in IR for more than 35 years, during which time she has developed and implemented strategic communications programs for IPOs, Fortune 500 firms and turnaround situations. As she prepares to retire at the end of the year from her most recent role as head of IR at Iron Mountain, she shares her thoughts on technology, regulation and bringing the C-suite round to the IR way of thinking
What has been the biggest change in IR during the course of your career and how has this shaped IR?
The impact of technology has had a profound impact on IR over the course of the more than 35 years I have been involved. From the requirement to produce physical annual and quarterly shareholder reports to manual faxing of earnings releases individually to key contacts (on curly thermal paper, no less!) and the ability to level the playing field through webcasting, the administrative aspects of the function have been irreversibly streamlined.
This has allowed IROs to focus on more value-added activities such as investor targeting, deeper engagement with investors and analysts and being an effective conduit between management, the board and investors.
How has technology changed IR as a job? Has this been for the better or worse?
From an IR program efficiency standpoint, it would be hard to argue that the changes brought about by technology have been anything but for the better. That said, technology has also enabled the proliferation of technical trading platforms and allowed for more passive algorithmic investment that can have a significant impact on market valuation and is often disconnected from company fundamentals.
How has regulation shaped IR over the years? Do you think this has been positive or negative?
Certain regulations that emerged from the great financial crisis can represent a significant administrative burden for smaller public companies. But while it often seems like drudgery, the regular practice of compliance with those regulations has likely instilled greater mindfulness around financial controls.
Probably the most meaningful regulation to shape IR in the US in recent years was Reg FD, which had many company executives walking on eggshells until the practical implications were better understood. In general, the requirement for simultaneous, broadcast disclosure to level the playing field has been a good development for the investing public. More recently, Mifid II has the potential to shape IR, but some investors and analysts still appear to be grappling with the ramifications.
How has the relationship with investors changed during your career?
Due in part to technology advancements, IROs today have more time for direct engagement with the buy side, and deeper engagement around ESG topics. I’ve also seen targeting evolve from the simple question of ‘Which investors own our industry peers but don’t own us?’ to more nuanced methodologies that take multiple factors into consideration and result in targets that are a better fit within investment portfolios.
Additionally, I think IR has come into its own, from the early days of being largely viewed as a PR function to being seen as credible with the investment community, plugged into the executive team and able to help investors understand complex financial results and metrics in addition to communicating strategy.
What has been the most important advice you have been given in your career, and why? And if you could pass on one IR lesson from your career, what would it be?
One CEO early in my career had a tendency to be dismissive of investors and analysts who didn’t agree with him. This was well before Reg FD, but he simply didn’t feel they were entitled to the same level of information as those who were more positive on the stock. An experienced investor in my network said, ‘Remember what the R in IR stands for’ and provided some practical advice for bringing the CEO around. Later, at another company, that same investor commended me for the improvement in the CEO’s engagement with him and became one of the company’s longest-term shareholders.
If I could pass on one lesson it would be that when a perception gap opens up or you feel strongly that something either needs to be disclosed, or disclosed in a more transparent way, it’s important to stand your ground. It may require expenditure of some personal capital to drive home your point, but if you pick those battles wisely and defend them respectfully, executives will come to see you as a trusted adviser.
I’ve always tried to invert the IR role in my way of thinking: IR should first and foremost represent investor sentiment to management and the board and not be seen primarily as representing the company to the investment community.
As IR Magazine builds up to its 30th anniversary issue – the upcoming winter 2018 issue, which will be the 279th edition of the industry’s flagship magazine – we’ll be posting more throwbacks to old covers, revisiting some of the hot topics from the past 30 years of investor relations and hearing from some of the industry titans.