Robert G. Berick
April 4, 2011
The Fifth (Analyst) Call
There's a bit of a
debate brewing over the pros/cons of hosting a "fifth
analyst call" to discuss upcoming proxy proposals with investors. Have
you heard about it? The underlying premise is that a fifth call (the other
four being quarterly earnings calls) would help companies create a direct
line of communications and their investors during the proxy season, by-pass
or minimize the influence of proxy advisory firms and improve the clarity of
the proxy disclosures, among other things. Wachtell Lipton's
David Katz wrote a particularly
interesting piece on the subject, and others are starting to weigh in...
mostly in favor of the concept.
At first, I was
wildly in favor of the idea, assuming you could properly address the
various legal issues and considerations. And, while I still like the idea, I
can't help to see the growing groundswell of support for the fifth call as a
(not-so) subtle condemnation on the effectiveness of today's IR programs the
more I let the concept marinade in my mind.
at the goals of the fifth call (e.g., create a direct line, minimize outside
influence, etc.) and tell me how they differ than the goals of an ongoing IR
program? That's right - they don't.
So, when I start
to connect the dots, here's the picture I begin to see:
- Something must be wrong with a
healthy number of IR programs if the fifth call seem like such a vital
(I suspect the problem is
that too many treat IR strictly as a compliance function.)
- In too many instances, IR has
deferred all-things proxy season to the Corporate Secretary for too long.
(Another example of an
ill-conceived IR program.)
- Likewise, too many companies
still see the proxy season as a 45-day(ish) project rather than an ongoing
(If the annual meeting is
the first time you've discussed such critical issues with your shareholders,
it's likely too late.)
So... with this picture in mind,
I have to ask:
How can a single,
60-to-90 minute call possibly eradicate the damage done over the trailing 12
months by a poorly constructed IR program?
Don't get me
wrong - I do like the idea (a lot) but it has to be part of a programmatic
approach to IR.
There are no "easy" buttons when it comes to sound corporate governance and
investor relations. If anything, I'm rooting for the fifth call
concept... particularly if it can serve as a wake-up call to companies on
how to focus their IR efforts.
Senior Managing Director
Dix & Eaton
Public Square, Suite 1400
Cleveland, OH 44114