September 2013
Back in the day, corporate boards of directors were perfectly happy to let management and the IR department worry about investor relations. That hands-off attitude is less common today, during what has been described as the golden age of activist investing.
"Boards now have a greater requirement to understand what's in the minds of investors," said Douglas Fox, CFA, vice president-investor relations and treasurer, Zebra Technologies Corporation (NASDAQ: ZBRA). "I had no interaction with the board when I joined Zebra in 1998. Now, our board expects regular communication on investor relations."
Fox began a formal board communication program in the mid-2000s with an eight- to 10-page report after the conclusion of each quarter. This is not an off-the-shelf report from a vendor. Fox uses his skills as a former sell-side analyst to summarize market developments, the performance of Zebra's stock versus peers, short interest and insider trading activity. The report also lists IR activities for the quarter (investor conferences, small group and one-on-one meetings) and plans for upcoming investor contacts.
To supplement these quarterly IR reports, Fox sends a letter to Zebra's seven-person board after each earnings call to summarize investor sentiment based on questions asked during and after the call. The CFO (his boss) and CEO see the report at the same time as the other board members. There have been few if any surprises during Zebra's quarterly investor calls, due in part to several rehearsals beforehand. Fox holds a five- to 10-minute debrief immediately after the call with all participants, as well.
Although Fox does not make solo in-person presentations to the board, he has regular contact with the Audit Committee in his role as the company's treasurer. If an IR issue arises, he communicates with the board in writing and participates in relevant presentations. Feedback generally takes the form of notes from board members.
"Zebra is a smaller company with a relatively flat organizational chart, so I naturally have an opportunity to communicate more with the board than if I worked for a Fortune 100 company," Fox said. "Even if your board or management is not initially receptive to IR communication, I recommend trying a written report for a few quarters to show the value-added insights you can provide. It can lead to greater access – and it can make your boss look better, too."