Is there value to be gained from combining the corporate secretary and IR functions?
These days, many of us are getting used to taking on a few extra responsibilities around the office. But at some Canadian companies, corporate secretaries are taking on a whole extra job title: investor relations officer (IRO).
Lori Beak just recently added the title of vice president, investor relations to her corporate secretary role at Dundee, and says she is ‘finding it very challenging.’ The company used to have a dedicated VP of investor relations, she says, but is attempting ‘to run leaner’ in light of market conditions. To get more insight into this new arena, she joined the Canadian Investor Relations Institute (CIRI).
But like many, mostly small, Canadian companies, Dundee did have a significant overlap between the IR and corporate secretary responsibilities. While IROs deal with analyst calls and assess stock trading patterns, corporate secretaries focus on regulatory issues and facilitate communication between executives and the board. Yet there are many points at which they come together, especially in the goal of making communications with shareholders as effective as possible.
Approaching the colliding roles from the opposite side as Beak, Patrick Myles, vice president, investor relations and corporate secretary for DALSA Corporation, began as an IRO and later became corporate secretary as well. ‘When we need extra bandwidth, there’s external legal counsel and people within the company we can also draw upon,’ he says. ‘There’s an A-team but there’s also kind of a virtual team you can put together.’ He likes this interplay, finding benefit in the hands-on knowledge of the CFO and CEO, which he believes is integral to the team’s ability to address issues. Myles also reveals that tying the corporate secretary role to another position is nothing new at DALSA: ‘It’s certainly a great resource for me that the CEO was the corporate secretary for a number of years.’
Small companies, big trend
Myles thinks the IR role combines well with others since it is so multifaceted and brings together several fields. ‘The interesting part about investor relations is that you have such a wide variety of skill sets and experience levels,’ he says. ‘You’ve got one executive who’s responsible for communications with the outside world, whether it’s PR or advertising; [IROs are] also involved in communicating with the investment community.
‘Where I think it makes sense that these things converge between investor relations roles and corporate secretary roles comes down to the involvement with the board. There’s a certain overlap in responsibilities and oversight in terms of how the board functions, what their requirements are, access to information [and] regulatory filings.’
The increased emphasis on having the board communicate with shareholders further dissolves the line between corporate secretary and IRO, given the awareness of the importance of regulatory issues to all communications. ‘I find it very difficult to decouple [the roles],’ says Myles. ‘I’m not sure if [combining them] is something every company can get value from. It makes a lot of sense in some companies and it made a lot of sense at ours. … We’re a 1,000-person company, about $200 million in revenues. … So when it comes to regulatory issues … it makes sense to have one person overseeing that.’ That means being deeply involved with the board, explains Myles, who writes the MD&A and conducts board surveys.
Combining roles is more common at smaller companies like DALSA, where it is possible to balance responsibilities. Myles acknowledges that it can be difficult for larger companies, noting that, ‘In some cases the IRO doesn’t get involved at all in the regulatory issues.’ Roy Shanks, president of proxy solicitor Georgeson in Canada, is conflicted on the subject. ‘They’re such dissimilar functions,’ he says, ‘but at the same time there’s good reason to have one person wearing the same hat.’ Although it’s difficult to know how many larger companies are merging secretarial and IR functions into one position since CIRI members don’t necessarily update their titles, Yvette Lokker, director, communications and professional development, CIRI, says, ‘I would definitely say it’s a growing trend, but to what degree, I don’t know.’
Spending 25 percent of his time on corporate secretarial tasks, Myles doesn’t see much of a downside in taking on two fields. ‘Everything’s so interrelated,’ he contends. ‘For example, in 2008 we had quite a bit of turnover on our board mostly as the result of an activist shareholder. … In a situation like that there are a number of things to be considered and acted upon. They all interrelate: There’s communication with the board, with investors and with legal counsel. All these things need to be considered more holistically rather than just as an isolated legal board matter.’
This expansive view is both necessary and essential to the functioning of a small company. But even small companies are vulnerable to strained resources. And that’s where the difficulty comes in. ‘For me it’s the timing of a lot of the principal responsibilities,’ says Beak. ‘I’m the compliance officer, I’m on the disclosure committee, and we don’t have in-house counsel so I also have corporate legal responsibilities and securities responsibilities. So this time of year I’m working on the annual report, the information circular and the materials for the annual meeting and the proxy statement.’ Combining these responsibilities entails dealing with cumbersome secretarial issues like new compensation disclosure requirements in the midst of IR tasks such as ‘analyst calls, press releases, quarterly and annual results,’ explains Beak.
The benefit of combining roles is also its weak point. For Beak, the ‘overlap of core responsibilities’ makes certain times of year – ‘especially for the first quarter’ – very busy. Because this is a fresh position, she is in the process of strategizing how to divide her time. ‘What’s going to make a big difference are the unforeseeable events,’ she say, ‘like if we decide to do an equity offering and we schedule a roadshow. It is going to be challenging to balance it all.’
Myles’ comments reflect Beak’s concerns: ‘The only time [being both IRO and corporate secretary is difficult] is when you’re in a crunch period, whether it’s board-related or investor-related and you need to prioritize your time.’ When proxy materials are being mailed out, and annual meetings are approaching, both the IR and corporate secretary sides are under pressure.
More responsibility, more unity
Yet Myles remains very positive about his new title. ‘There’s a lot of opportunity in the investor relations role where IROs can add a lot of value to the companies they work for,’ he says, encouraging professionals to seek out new ways to contribute. Additionally, the combination of roles could help get the message across to boards that complying with regulations is good for business. And they’ve likely never been more receptive to that message than they are now.
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