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The investor relations officer: A 2010 survey of Fortune 500 companies
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The investor relations officer:A 2010 survey of Fortune 500 companies
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Introduction
The investor relations (IR) function continues to grow in
importance, responsibility and value. The dramatic and volatile
market events of the past few years have only furthered that
trend, and today’s IR officer (IRO) has become indispensable.
In April 2010, Korn/Ferry International’s Corporate Affairs
Center of Expertise and the National Investor Relations Institute
(NIRI) conducted a study of the executives who run the investor
relations function at Fortune 500 companies. This is the second
such NIRI-Korn/Ferry survey and, like the 2008 study, it
examines how IROs are compensated, where they reside
organizationally, the size and scope of their responsibility, and
evolving trends in the function. It is our hope that this survey
will continue to be conducted on a regular basis every two
years.
In conducting the survey, Korn/Ferry and NIRI spoke with 144
IROs who currently work for Fortune 500 companies. The data
reported in this survey covers the calendar year 2009.
July 2010
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Profile of the Fortune 500 investor relations officer
According to the survey data, the typical Fortune 500 IRO: • is male;
• is 40- to 49-years-old;
• has a staff of two to four, including one professional IR deputy;
• has worked in more than one industry during his or her career;
• and has been in the top position between three and four years.
Only 9 percent of IROs identify themselves as minorities. That said, in the
past two years, the percentage of female IROs has risen 5 points, which we
see as a positive development for increased diversity in the function.
Background
Historically, the investor relations function often was regarded as a
communications role, but today there is a growing emphasis on financial
acumen. Some 62 percent of IROs hold an MBA and 14 percent are former
sell-side/buy-side analysts. Further proof that the position is no longer
primarily a public relations position: the number of IROs who moved into
IR from previous roles in communications/PR is 8 percent, down from
15 percent in 2008.
IROs
Educational Background
squish 80% and rotate -20
Direct Report for IROs
IRO Career vs transitional role
2.0699 in squrae
Figure 2Educational background of IROs
15% CPA
7% MA
6% MS 4% Other
6% CFA
62% MBA
IROs
Educational Background
squish 80% and rotate -20
Direct Report for IROs
IRO Career vs transitional role
2.0699 in squrae
Figure 1IROs by gender
38% Female
62% Male
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IROs
Educational Background
squish 80% and rotate -20
Direct Report for IROs
IRO Career vs transitional role
2.0699 in squrae
Figure 4IRO: Career vs. transitional role
61% Career
18% Transitional
20% Undecided
Reporting relationships
An overwhelming majority of IROs surveyed—81 percent—report directly to
the CEO or CFO of the company, demonstrating the critical value of the role.
The latest results show a significant shift since our 2008 survey, when 72
percent reported to the CEO or CFO. The battletested IRO has become
increasingly indispensable in protecting the CEO and CFO, and in safe-
guarding the company’s most critical and intangible asset: its reputation
with shareholders and other stakeholders.
Career path
The top IRO is not considered a rotational position by 88 percent of the
respondents. Moreover, 61 percent now define themselves as “career” IROs
and are committed to a career in investor relations, as opposed to 2008,
when 49 percent defined themselves as career IROs. Some 44 percent of
respondents have been employed in investor relations between seven and
fifteen years, and another 14 percent have been in IR five to six years.
Despite this, it is still common to find the No. 2 position in IR as a
rotational post.
IROs
Educational Background
squish 80% and rotate -20
Direct Report for IROs
IRO Career vs transitional role
2.0699 in squrae
Figure 3Reporting relationships for IROs
4% Treasurer
1% Corporate Controller
1% CCO 6% MS
8% CEO
6% CfA
73% CFO
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Figure 5Responsibilities in addition to the IR function
Financialmedia
relations
GovernanceCorporatecommunications
MarketingFinancialanalysis
Publicrelations
Strategicplanning
Competitiveintelligence
Treasury ReportingCorporatesecretary
Communityand/or
employee relations
Other
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
33%
9%
23%
5%11%
23%
14%
26%
16%
9%2%
19%
35%
Scope of responsibilities
Among those surveyed, 39 percent of IROs reported having additional
responsibilities outside the area of investor relations. This percentage
declined in 2010, from 43 percent in 2008. Interestingly, we saw a sharp
decline in those IROs who said their outside responsibilities included
financial media relations and corporate communications, from 47 percent
and 36 percent respectively in 2008, to 33 percent and 23 percent
respectively in 2010.
Compensation
Between 2008 and 2010, base salaries among IROs did not increase but
remained flat, a likely result of the economic downturn. We feel that
the fact that salaries stayed steady and did not decrease in this period
of extreme market volatility is indicative of the increasing value and
importance of the function in the eyes of senior management. Bonus
targets also remained unchanged, although 63 percent of respondents
did report a reduction in actual bonus payouts for 2009.
Additional evidence of the importance of the IR function is seen in the
budgets at the companies surveyed: 61 percent of the organizations have
budgets over $1 million in 2010, the same percentage as in 2008.
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Unlike the previous recession in 2001-03 where we saw IR departments
dramatically reduced, staffing during this most recent downturn remained
flat. Some 80 percent of the organizations surveyed left the IR departments
untouched, 10 percent increased staff, and 10 percent decreased staff.
Again, we see this as evidence of the growing value of the IR function in
corporate America.
The majority of the respondents to the survey reported earning a base
salary between $226,000 and $250,000 and a bonus target between 26
percent and 50 percent, for a total compensation range of $284,760 to
$375,000.
Majority compensation package for the F500 IRO:
Figure 6Compensation implications of the recession
Base salary reduction
Bonustarget reduction
Actual bonusreduction
Equity or long-termcompensation reduction
Benefits reduction
Otherreductions
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
7% 7%
63%
22% 22%
15%
$ $ $Base Salary
Range$226,000 - $250,000
Bonus Range
26-50 percent
Total CompensationRange
$284,760 - $375,000
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Korn/Ferry’s Investor Relations Team
Richard Marshall Managing Director, Corporate Affairs Center of Expertise
New York
+1 212 973 5816
Pepper Binner Washington D.C.
+1 202 955 0935
Carroll Leatherman
New York
+1 212 973 5803
Asheley Linnenbach
San Francisco
+1 415 288 5305
Megan Shattuck
New York
+1 212 984 9430
Don Spetner Los Angeles
+1 310 843 4176
About The Korn/Ferry InstituteThe Korn/Ferry Institute generates forward-thinking research and viewpoints that illuminate how talent advances business strategy. Since its founding in 2008, the institute has published scores of articles, studies and books that explore global best practices in organizational leadership and
human capital development.
About Korn/Ferry InternationalKorn/Ferry International (NYSE:KFY), with a presence throughout the Americas, Asia Pacific, Europe, the Middle East and Africa, is a premier global provider of talent management solutions. Based in Los Angeles, the firm delivers an array of solutions that help clients to attract, develop, retain and sustain their talent.
Visit www.kornferry.com for more information on the Korn/Ferry International family of companies, and www.kornferryinstitute.com for thought leadership, intellectual property and research.
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