VICTORIA GEDDES, ECECUTIVE DIRECTOR
With reporting season behind us for another six months and post results roadshows underway or coming to a close, companies will soon be approaching one of the few windows available in the annual investor relations calendar to focus on planning and managing an investor day. These are not spontaneous events and require months to organize so learning from others who have done them before can help avoid a few pitfalls.
Why would a Company host an investor day?
Hosting an investor day can be a powerful way to raise management visibility and credibility, highlight the depth of your management team, and clarify your company’s value proposition and growth strategy.
It is however important that a company should have something new or compelling to talk about. Asking fund managers and analysts to sit through hours of content that has already been presented will not endear you to your audience. Some reasons for holding an investor day might include:
- providing an update on the business and to broadly educate the financial community about aspects of the company operations not typically covered as part of the statutory reporting calendar;
- communicating a new strategic direction or changes to the strategy;
- introducing new management and/or demonstrating the depth of management that exists below the CEO and CFO; and
- addressing any misperceptions that the company may have identified.
For small companies in particular, expense is also a consideration. This includes the amount of management time that needs to be invested into preparing for the event. If there is not enough time to plan and prepare effectively, it will be very obvious on the day, undermining the positive outcome the investor day was designed to deliver.
Finally it helps to start the planning process with some clear objectives. Why are you hosting the event at this particular time? What investor relations outcomes do you expect? What messages do you want to communicate? Who should deliver prepared remarks?
Managing the Logistics – When, Where, How Long?
When to hold an investor day is important as maximizing attendance is key. Once the months taken up by reporting season and annual meetings have been removed, together with public and school holidays, this effectively leaves March, May, June, September and November. Tuesday, Wednesday and Thursday are the preferred days – avoid Monday and Friday.
Companies should look at their own business calendar as well as industry and peer events. Check if there are broker-hosted conferences planned in these months as they will often be attended by your target audience. An alternative strategy for smaller, lesser known companies is to leverage off such events by hosting their investor day before or after the broker conference and nearby.
While content should always determine the length of the event, a half day meeting is the most commonly preferred format, starting early morning. Most fund managers find it difficult being away from the office for a full day so a half day including lunch and the opportunity to meet informally with senior management and business leaders will tick all the boxes. If travel is involved including a site visit to a facility, then the company should fill the day to ensure the investor views the time as well spent.
There is no hard and fast rule about where to hold an investor day but they are conventionally either in the company’s headquarters (or a related site) or a centrally-located city venue with conference facilities. When attendees have been surveyed about which they prefer, the majority of fund managers tend to be evenly split between onsite and CBD venues while broker analysts will usually favour meetings at the company’s head office. Regardless, the key consideration will be how to make it easy for people to attend in order to maximize participation. Consider talking to your brokers and key shareholders and ask them for their opinions about the timing or location you are considering.
Preparing Speakers for the Day
We know that one of the main reasons investors come to these events is that they get exposure to different people on the management team beyond the CEO and CFO. This provides some indication of ‘bench strength’ or the ‘quality and depth of management’ which goes to the heart of succession planning. They would therefore expect to hear from other C-suite executives, key business leaders and operational management. Depending on the structure of the business, companies might also include strategic partners, customers, and product or service specialists.
Rehearsing for the investor day is paramount. This allows speakers to practise their delivery as well as make sure they are successfully communicating the key messages you want the audience to take away from the presentations. Conducting a full run-through of all of the presentations will ensure that the timing is in synch with the schedule, and that the prepared remarks will not run too long – or too short. For this reason speaking ‘off the cuff’ should be discouraged as it can wreak havoc with the schedule and increase the risk that speakers will stray ‘off message’. A technical dry-run the day prior is also advisable to ensure screens, projectors, AV, telephone lines and webcast feeds are all operating as expected.
Key things to consider when rehearsing include:
- Ensuring that each speaker is aware of current investor perceptions and concerns. This includes some intensive Q&A practice sessions providing the opportunity to rehearse the appropriate answers to questions.
- For members of the management team who may not be as experienced with presenting to investors, it is worthwhile considering presentation training. Engaging an expert presentation coach can help build confidence and ensure a dynamic delivery.
- Presenters must also be familiar with, and understand the limitations placed on them by the disclosure provisions of ASX Listing Rules. An overview of these rules by someone experienced in investor relations should be part of the pre-event planning and rehearsal process so speakers know what they are and are not allowed to say when talking to market participants.
Finally, remember to schedule the lodgement of presentations with ASX at the start of the day and consider including a webcast of the event or dial-in details for those investors unable to attend in person. At the very least a company should consider uploading a recording or transcript of the presentation onto its website. The 4thEdition of the ASX Corporate Governance Principles and Recommendations, released in February 2019, specifically mentions investor days (Recommendation 5.3) as the type of event that companies should strive to ensure there is equality of access to information.
Our next FIRST Edition will focus specifically on what the audience wants to hear ie the content most commonly covered in an investor day and how to put together an effective presentation. 88% of surveyed professionals report they frequently refer to investor presentations as a leading source of information, so understanding best practice is critical when putting together the company’s presentations for the day.