Executive Management - On The Road? Who should attend your Non-Deal Roadshow, and why.
A
great many institutional investors insist on meeting senior management before
taking a position in a company. Understandable: the CEO represents the vision,
drive and energy of the firm, among other more formal duties. He, or she can
give investors a close look at not just what the company stands for, but also
how it might approach the inevitable successes and failures inherent in the
business cycle. CEOs (and other senior executives) through their words, deeds
and body language, can give shareholders confidence, can articulate the
long-term potential of the business, and can provide a glimpse of the leadership
qualities that will bring a line of strong candidates into the succession plan
of the firm. Or not.
Not
all senior executives are blessed with the communication skills that match
their other talents of intelligence, vision, organization and determination. Dare
it be said that some CEOs can be a liability for a roadshow, when the need for
clear, comprehensive explanation can be overwhelmed by ego and a misguided view
of what shareholders are actually entitled to know.
As
with much in life, there is a neat compromise that can satisfy most of the
requirements here: educating and informing shareholders; senior personnel hearing
direct from investors.
Leave
the Executive team at home.
Just
as institutional investors like to see senior management before investing, once
they’re in, they are happy to meet with well-informed,
professional IR teams. The
fully-enabled IR officer has many advantages over his or her management: a
clear understanding of what investors need; relationships with key shareholders;
availability at all times (especially during crises when senior management will
NOT be available); access to and the time to contact the right people for the
right answers when needed.
It
might be interesting to consider why and when shareholder communications are
important and thus decide who from the company is most needed.
Times
of great success: investors will happily speak to IR – but CEOs may enjoy a
victory lap.
Times
of great trouble: investors need to speak to the CEO but he is not available
(cleaning up the great trouble).
All
the other times (meeting internal and external expectations): IR is fine.
If
you agree with these scenarios in principle, organizing roadshows and other
investor communications around CEO involvement may be an ineffective solution,
while complete enabling of the IR team offers an efficient, long-lasting,
repeatable approach to a critical function.
Simply
put, shareholder communications are much more important when the company is
struggling but that is exactly the worst time to expect full participation of
senior management to communicate the problem. CEOs should enable their IR
colleagues (including executive and Board status); IR teams should push for
greater engagement with all decisions at the company; and investors should applaud
and support these measures.
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