April 22, 2009
Here is my response to
Although it may surprise
Professor Rosenthal, we did not say that IR had no role.
What we said, exactly,
was "donít make the mistake of automatically assuming that your investor
relations unit is best placed to make those choices. IR is often best
acclimated to dealing with analysts who want to know, for trading purposes,
what will happen in the next quarter. The result is that a company can be
surprised come the annual general meeting, when a corporate governance issue
surfaces that never cropped up in the quarterly analyst calls. That helps
nobody. Many companies understand this; itís one reason they assign the
corporate secretary responsibility for the proxy. You could make the
corporate secretary responsible for staffing the communications plan as
well. Or you could restructure your IR department to communicate with the
governance professionals, not just the analysts, at investment houses."
In other words, don't
In fact, we agree with
Professor Rosenthal that IR should have a role. Indeed, I have a very
proactive IR firm as a client, and, both through it and individually, have
advised IR at Fortune 500 companies regarding corporate governance issues.
Unfortunately, some IR departments just don't think beyond stock price
movements. Thankfully, due to Professor Rosenthal and others, they are
becoming less prevalent. But they are not extinct. Our point was to say
"don't assume." Make an evaluation if your IR program is sending the right
SOP message to the right audience. If it is, fine. If it's not, either make
them evolve to be able to deal with these issues or supplement them.
Clearly, Say on Pay and
most corporate governance issues are nuanced. I apologize if the nuance did
not come across in our column.
Best regards to the
Forum, and thanks for all the good work,
Sinclair Capital LLC
New York, NY