SEC Rule May Boost Cooperation Between PR and Investor Relations


Jeff Corbin, CEO of KCSA Strategic Communications, was recently meeting with a prospective client when he started talking about the relationship between PR and IR (Investor Relations). The prospect, a C-level executive from a publicly traded technology company, told Corbin that he prefers to keep the two disciplines in silos because PR “doesn’t have an understanding” of financials, according to Corbin, who is author of “Investor Relations: The Art of Communicating Value” (Thomson Reuters/Aspatore).

Corbin has seen this before, where prospects insist on keeping PR and IR separate. But he is not deterred. “Once we get to work with [a company] it will realize that it makes a whole lot of sense to wed investor relations with publicrelations,” says Corbin. He said 60% of his clients are publicly traded companies.

“Through communications, companies can add color to demonstrate why the company’s value should be higher than it is,” Corbin adds. And they can also show investors “that the company is growing at a higher rate than its competitors, and therefore be attributed a higher valuation.”

Although they have similar goals (generating revenue and boosting earnings), PR and IR execs traditionally have had a tenuous relationship. But that may be changing, albeit slowly.

“The world of finance is much more complicated,” says Mary Beth Kissane, principal, investor relations & corporate transactions practice leader at Walek & Associates, who also is a board member of the National Investor Relations Institute (NIRI) and teaches NIRI’s “Regulations 101” course. But IR increasingly needs PR reps “to synthesize what’s important and put that information into understandable language.”

THE ‘REESE’S’ MODEL

Kissane adds that the inherent friction between PR and IR should be used as a conduit for more effective corporate communications. “You need to get some chocolate on your peanut butter and peanut butter on your chocolate,” Kissane says.
 
Both sides “need to decide what’s the best way to tell your story, but keep in mind that you are publicly traded company and can use all of these (digital) toys,” she adds. “I don’t know anyone who wouldn’t.”

IR executives, of course, are steeped in the company’s spreadsheet. They track the stock price, cultivate relationships with financial analysts and write numbers-laden reports.

In contrast, PR pros deal with media reps, try and contain crises and tell stories. Ever the twain shall meet? Maybe. Don’t laugh.

Through a new regulation, the Securities and Exchange Commission (SEC) may help to ameliorate the relationship between IR execs and communicators.

The regulation, which was introduced in early April, says that social media can be used in investor relations communications.

LIGHT A FIRE

Corbin is betting that the new regulation will go a long way toward bridging some of the gaps between IR and PR. Soon after the regulation was announced Corbin formed an IR consulting group designed to help public companies develop policies to ensure compliance with Regulation Fair Disclosure (Reg FD).

“IR tends to be reluctant to embrace new things,” Corbin says. “But the new SEC rule [regarding social channels] may light a fire under IR. PR already has social media up and running and can teach IR some things about how to use Twitter, or how to use a blog, and to deliver messages in a different way.”

Al Maag, chief communications officer of Avnet, said there are three rules of thumb in trying to coordinate PR and IR:

1. Develop a messaging strategy with your top executives and the IR team each quarter.

2. Train all your company spokespeople in mediia relations, emphasizing “Reg FD” (fair disclosure) rules.

3. Help tell interesting stories, with points that show why investors should take a look at your company. Above all, don’t be afraid to try a new medium (social media) or something a bit different to share your values and culture.

IR execs “cater to buy-side and sell-side analysts and fund managers, acting as your company’s main face to the people who influence or make large stock purchases,” Maag says. “They’re conducting a type of PR, though they probably view it much differently and they pitch to a limited audience. As a PR pro, it’s your job to support and educate the IR team on the value of a broader PR program. But always know the buck stops with them.”

Indeed, the IR-PR nexus should not be underestimated: Maag says that 7% of a company’s stock price is attributable to brand reputation.

THE GREATER GOOD

Perhaps the half the battle in bridging their differences is for PR and IR execs to appreciate what the other side can offer for the greater good.

“Avoid territorialism and not sharing information on a regular basis,” says Nick Sweers, VP of global communications at Motorola Solutions.

He adds, “If IR and PR work together to develop and share clear, concise, consistent and accurate information, then the financial message of the company will benefit from the same approach.” PRN

CONTACT:

Jeff Corbin, jcorbin@kcsa.com; Mary Beth Kissane, mbkissane@walek.com; Al Maag, al.maag@Avnet.com; Nick Sweers, nicholas.sweers@motorolasolutions.com.

Best Practices for Melding Social Media and IR Communications

While social media may be considered daunting to some, it need not be intimidating. It is important to note that at the end of the day the overarching principle to consider is compliance with Regulation Fair Disclosure (Reg FD). Whether or not companies embrace social media, they still need to disclose material news so everyone receives notice of the news at the same time.

Assuming companies are comfortable with Reg FD and what it stands for, and are ready to hop on the social media bandwagon, below are five tips to consider when getting started:

1. Establish a policy that guides the company and its employees on who can and cannot communicate on the company’s behalf; on the tone and messaging of social media usage; and on the timing of social-media engagement.

2. Conduct a social-media audit to identify which channels can best reach a company’s investor base.

3. Once the channels are determined, create IR-specific handles and pages to disseminate material news.

4. Specify these disclosure channels in an upcoming Form 10-K (or amend an existing Form 10-K) to indicate that these social channels and other disclosure methods (e.g. traditional newswire services, filing of Form 8-Ks, posting to corporate website, etc.) will be used going forward in a company’s communications.

5. Begin to disseminate all material news as specified in the Form 10-K, and continue to adhere to this process until the company decides to change its dissemination procedures it in a subsequent Form 10-K.

Social media is a means to an end; the end being fair and equal disclosure of material information so that all investors are on the same playing field.

Jeff Corbin is CEO of KCSA Strategic Communications




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