IPREO’S CORPORATE ACCESS SURVEY 2018 IPREO’S 2018...

1

IPREO’S 2018CORPORATE ACCESS SURVEY

IPREO’S CORPORATE ACCESS SURVEY2018

preo is pleased to present its 2018 Corporate Access Report, which is based on a survey

of issuers conducted from December 2017 through January 2018. The survey measures

issuers’ level of engagement with investors, their choice of venues, their satisfaction with

sell-side sponsors, management participation, and other practice area developments. This report

marks the seventh year we have conducted the survey.

This year, in a departure from previous reports, we employ a five-year time series to analyze trends

for most topics (historically, we’ve relied primarily upon annual comparisons). Having analyzed

the underlying data, we believe the five-year time series yields more illuminating and reliable

observations.

Introduction

I

2

Who is Ipreo?Ipreo powers the networks that connect capital to ideas. We are a leading global provider of financial services technology,

data and analytics, supporting all participants in the capital-raising process, including banks, public and private companies,

institutional and individual investors, as well as research, asset management and wealth management firms.

The 2017-2018 sample included 363 respondents from a diverse range of industries, market caps and regions. In a departure from past practice where we have made year-over-year comparisons, for this report we generally use 2012 as our base year, for two reasons: first, to better tease out long-term trends as opposed to year-over-year variance, and second, because the survey samples in 2017 and 2012 share similar demographics.

KEY FINDINGS

3

4

LeveLs of Activity

The overall number of one-on-one meetings continues to drift downward for both U.S. and non-U.S. issuers, and across most industries (healthcare and utilities experienced modest increases).

Participation by issuers in investor conferences organized by the sell-side was also down moderately across the board. Non-U.S. large caps experienced the sharpest decline, dropping from an average of 9.9 conferences in 2012 to 6.6 conferences in 2017.

Overall non-deal roadshow activity has declined moderately over the past five years, with a bump in 2014 offset by decreased activity since. Meanwhile, international roadshows by small- and mid-cap U.S. issuers –averaging just 0.5 and 0.3 roadshows, respectively– are down by half over the five-year series.

MAnAgeMent PArticiPAtion

Senior Management participation in investor events has declined broadly and significantly across most event types over the past five years. As a result, IROs are taking on a larger role in leading investor events. Management participation by non-U.S. companies was broadly down by approximately one-third across all event types.

None of Ipreo, its affiliates, or any of their third party providers is liable for any informational errors, incompleteness, or delays, or for any actions or decisions taken by any person as a result of any information contained herein. ©2018 Ipreo. All rights reserved.

LeveLs of Activity seLL-side engAgeMent

effects of Mifid ii

5

A super-majority of respondents (71% in 2017 down from 80% in 2012) Always or Usually use banks to organize their corporate access events. Just 5.5% of companies report using

consultants or third parties to organize events Always or Usually.

Consistent with prior years, respondents are generally satisfied with the services the sell-side provides in support of corporate access events; however, satisfaction levels lack conviction: for every five respondents reporting satisfaction in various service areas, only one reports high satisfaction.

A majority of both U.S. and non-U.S. respondents either anticipate or have already experienced a fall-off in sell-side research.

Nearly half (46%) of respondents anticipate a decline in sell-side sponsored events offered to them, but only 2% have already experienced this.

Approximately half of respondents expect no change in the frequency of direct outreach from the buy side when organizing events. However, for those who do anticipate change, respondents expect

buy-side direct outreach to increase rather than decrease by a factor of 10 to 1.


Key PerforMAnce indicAtors And BenchMArKing

Meeting Non-Owners and Converting Non-Owners to Owners were the most important investor outreach success factors, with Very Important ratings of 62% and 54% (respectively).

The other factors rated Very Important by a majority of respondents were Meeting Owners (50%) and Retaining or Growing the Current Shareholder Base (52%.)

74% of respondents Frequently (30%) or Sometimes (44%) reported their investor outreach activity to the Board (with large-cap issuers reporting somewhat less frequent access).

investor dAys / cAPitAL MArKets dAys

Nearly half of all respondents reported that they host a formal Investor Day on a regular basis (at least once every two years). Large-cap issuers are twice as likely as small- and mid-cap issuers to host one annually.

Nearly two-thirds of respondents who host an Investor Day budget more than $50,000 for the event, while 16% budget more than $200,000.

6


7

EVENT ACTIVITY LEVELS

Across our global sample, this year’s overall average count of one-on-one meetings decreased to 102 meetings in 2017 compared to 116 meetings in 2012, a 12% decline. While one-on-one meeting participation was down or flat across all market-cap groups, non-U.S. large-cap issuers had the most significant decline over the past five years.

one-on-one (in Person) Meetings

“

8


Figure 1 - One-on-One Meeting Trends, Global, 2012-2017

2012 2014 2017

Large Mid Small

180

160

140

120

100

80

0

Aver

age

Annu

al N

umbe

r O

ne-o

n-O

ne M

eetin

gs

9

Drilling down to changes by market capitalization

and region, we observe generally consistent

declines, with the exception of U.S. small-cap issuers

which experienced a small uptick. Differences in the

survey population and survey design could account

for the dramatic decline for large-cap

non-U.S. issuers (for example, in 2015 we began

asking for the number of in person one-on-one

meetings, as opposed to all one-on-one meetings).

However, we judge the general decline to be

actual – independent of the survey population and

design – based on analysis of the five-year series.

During 2017, we experienced a strong uptick in corporate access outreach from both our covering sell-side firms as well as from independent access firms.

“” - North American

Large-cap Consumer Services


Figure 2 - One-on-One Meeting Trends, by Market Capitalization, 2012 vs. 2017

2012 2017

230220200180160140120100

80604020

0

121 113

93 9067 69

Large Mid Small

215

138 143134 129

81

Large Mid Small

U.S. Issuers Non- U.S. Issuers

Aver

age

Annu

al N

umbe

r O

ne-o

n-O

ne M

eetin

gs

1010

We’ve had more success finding new investors on non-deal roadshows than at conferences. We plan to emphasize that approach in the next two years.

”

“

- North American Small-cap Technology

From a sector perspective, Energy, Technology and Consumer Goods companies experienced the sharpest declines in one-on-

one participation rates, the former corresponding to steep a drop in commodity prices. Utilities and Healthcare experienced

increases.


Figure 3 - One-on-One Meeting Trends, by Industry, 2012 vs. 2017

2012 2017200

180

160

140

120

100

80

60

40

20

0

192

148 153

126 127

97

Energy Basic Materials

Technology

101

80

104 97

Consumer Goods

Healthcare Consumer Services

115106 103

94 9198

Industrials Financials Utlities

102119

Aver

age

Annu

al N

umbe

r O

ne-o

n-O

ne M

eetin

gs

Focusing on sell-side organized investor conferences, we see a steady decline in participation across most groups of companies, with the exception of non-U.S. mid-cap companies.

investor conferences

attended the most conferences while Consumer Goods companies

(5.6 conferences) attended the fewest. While several industries saw no material change in participation, no industry meaningfully increased conference participation.

Overall, while conferences continue to be a prominent access opportunity for issuers, participation is clearly trending down.

”- North American Small-cap Technology

11


While participation in conferences by non-U.S.

mid-cap issuers increased over the five-year series,

participation has actually declined since 2013, when

this cohort attended an average of 9.5 conferences.

Still, why would non-U.S. mid-cap issuers participate

in more conferences than their large-cap and small-

cap cohorts? It’s possible that as non-U.S. large-cap

issuers reduced their conference schedules, non-U.S.

mid-cap issuers stepped in to fill the void.

Not shown, Healthcare and Industrial companies

experienced the sharpest declines in conference

participation over the five-year series, each trimming

their conference schedule by approximately 30%.

Energy companies (an average of 9.9 conferences)

Figure 4 - Investor Conferences, by Market Capitalization, 2012 vs 2017

2012 201711

10

9

8

7

6

5

4

3

2

1

0

9.4

8.4 8.3

6.6 6.6

5.6

Large Mid Small

9.9

6.67.0

8.5

6.35.9

Large Mid Small

Aver

age

Annu

al N

umbe

r of

Conf

eren

ces A

tten

ded

U.S. Issuers Non- U.S. Issuers

Domestic and international roadshow participation varies significantly by market cap and region but is generally trending down, similar to conference participation. Mid-

cap U.S. issuers dropped an average of 1.4 roadshows from their calendars, while large- and small-cap U.S. issuers maintained their roadshow pace. While non-U.S. issuers

decreased the number of roadshows by approximately 25% across all market caps, they continue to schedule more active roadshow calendars than their U.S. counterparts.

roAdshows

12


Aver

age

Annu

al N

umbe

r of R

oads

how

s

Figure 5 - Roadshow Frequency, Domestic and International Combined, all

respondents, 2012 vs 2017

U.S. Issuers Non- U.S. IssuersIt’s important to target the right

potential shareholders and not

allow the sell-side to take the

company anywhere it desires.

We make an effort to control

the process.

-North American Small-cap ”“

Consumer Services

2012 2017

12.0

10.0

8.0

6.0

4.0

2.0

0.0

7.4 7.56.3

4.9 4.8 4.2

Large Mid Small

10.1

7.8

10.0

7.5 7.8

5.9

Large Mid Small

Non-U.S. companies experienced a bump in

the number of roadshows in the middle of the

five-year series that was reversed (and then

some) during the past three years (not included

in graph), notably corresponding to the

promulgation of regulation by the UK Financial

Conduct Authority (FCA) that restricted indirect

payment from portfolio managers to brokers

for corporate access in the U.K.

Turning to cross-border marketing, U.S.-based large-cap

issuers held their activity steady at just under an average

of two international non-deal roadshows (NDRs) annually,

while mid- and small-cap issuers continued their slide,

participating in an annual average of just 0.5 and 0.3

international NDRs, respectively.

Note: for many non-U.S. issuers located in relatively

small countries, the distinction between domestic and

international roadshows is moot. Necessarily, most

roadshows will be international for these companies. For

this reason, we combined domestic and international

roadshows on the previous page (Figure 5), and isolated

international road shows for U.S. issuers in this chart.

internAtionAL roAdshows

13

2012 2017

2.5

2.0

1.5

1.0

0.5

0.0

Large Mid Small All US Issuers

2.0 1.8

0.9

0.5 0.50.3

1.0 0.9

Avg.

Ann

ual R

oads

how

s

Figure 6 - International Roadshow Frequency (US Issuers Only), 2012 vs 2017

Avg.

Ann

ual R

oads

how

s

”

U.S

MAnAgeMent PArticiPAtion

14

Overall, Management* participation in investor

events has shown a steady decline over the five-year

time series, notwithstanding a partial recovery from

historic lows during 2015. Management participation

is highest at conferences and lowest at international

roadshows.

Large-cap IROs consistently participate in events on

their own at higher rates than do the IROs of mid- and

small-cap issuers. Lower Management participation

by large-cap CFOs and CEOs is likely due to more

competing demands on their time both outside

the realm of investor relations and within it: large-

cap issuers participate in more events and conduct

more one-on-one meetings than mid- and small-cap

issuers do.

*Management” refers to C-level executives who are almost always accompanied by the IRO when they attend investor events.

Figure 7 - Management Participation Rates by Meeting Type, 2017

Avg.

Ann

ual E

vent

s

Large Mid Small 100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%One-on-one

MeetingsDomestic

RoadshowInternational

Roadshow

43%

59%62%

51%

Conferences

67%73%

51%

62% 65%

43% 41%

33%

15

Drilling into the decrease in Management

participation, while the trend is significant across

all event types, Management participation in

international NDRs (across all market caps)

decreased the most, followed by participation by

large-cap executives in conferences.

The flip-side of decreased Management

participation at events is an increase in the number

of events attended by IROs on their own, arguably

attributable to increased acceptance by investors

of IRO-only presentations, and Management’s

confidence in the IRO’s ability to provide C-Suite

level representation of the company.

Last year, we wrote, “We do not see this trend

abating”. We still don’t – we expect IROs to

increasingly be the sole representative of their

companies at marketing events.

Large Mid Small

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%One-on-one

MeetingsDomestic

RoadshowInternational

Roadshow

49%

67%

76%

68%

Conferences

78%

83%

60%

74%78%

55%

64% 61%

Avg.

Man

agem

ent P

artic

ipat

ion

Rate

Figure 8 - Management Participation Rates by Meeting Type, 2012

Avg.

Man

agem

ent P

artic

ipat

ion

Rate

“Who takes you on the road?” During

2017, covering brokers maintained

their corporate access dominance

with 71% of respondents reporting

that they Always or Most of the Time

go on the road with a bank that

covers their company. However,

this percentage is down from 85% in

2014.

After covering brokers, self-directed

events are historically the most

consistently chosen option, though

the choice lags partnering with

a covering broker by a country

mile. While over half of companies

manage a corporate access event

entirely on their own at least

Sometimes, only 15% make a

habit out of it.

Always

2012

2014

2017

0% 20% 40% 60% 80% 100%

Usually Sometimes Rarely Never

Sell-side banks that provide research on your company

orgAnizer UtiLizAtion trends

Figure 9 - Sell-side banks that provide research on your company, 2012-2017

Always

2012

2014

20170% 20% 40% 60% 80% 100%


Entirely Self DirectedFigure 10- Entirely Self-Directed, 2012-2017

16


% of Respondents

Significantly less popular, only one

quarter of respondents reported

partnering with a non-covering

broker to stage an event at least

Sometimes (Figure 11), and less

than one in six reported using a

consultant or third-party corporate

access firm at least Sometimes

(Figure 12).

The connection between sell-side

coverage and the selection of an

event partner could barely be

clearer, and begs the question how

current practice might change if

banks provide research on fewer

companies in the future.

17

Always

2012

2014

2017

0% 20% 40% 60% 80% 100%


Sell-side banks that do not provide research on companyFigure 11 - Sell-side banks that do not provide research on company, 2012-2017

Figure 12 - IR Consultant / Corporate Access Service Firms, 2012-2017

Always

2012

2014

2017

0% 20% 40% 60% 80% 100%


IR Consultant / Corporate Access Service Firms

- North American Mid-cap Utility

We expect changes in the investment community to require additional outreach efforts primarily driven by our company.

”“

% of Respondents

1818

“


Suitability of Investors in Meetings continues to be the most highly valued service provided by corporate access sponsors with 85% of investors ranking this factor as

Extremely Important (43%) or Very Important (42%). Regional or local expertise came in a distant second, with 64% rating the factor Extremely Important or Very Important

(but with just 19% rating it Extremely Important). For the other success factors, the combined Extremely Important or Very Important rating hovered around 55%. There

has been no material change in these rankings over the five-year time series.

(across all market caps) decreased the most, followed by participation by large-cap executives in conferences.

sPonsor sUccess fActors

Extremely Important Very Important Important Slightly Important Not Important

50%

40%

30%

20%

10%

0%

Suitability of investors in

meetings

Quality of research Quality of meeting logistics

42.6%

Quality of relationship with sell-side analyst

% o

f Res

pond

ents

Quality of market intelligence and

feedback

Regional or local expertise

42%

13%

1% 1%

15%

41%

34%

3%

6%

17%

38%

33%

9%

3%

10.5%

43%

36%

8%

2%

16.3%

36% 36%

10%

2%

19.3%

44.9%

27%

1%

8%

Figure 13 - Sponsor Success Factors, 2017

% o

f Res

pond

ents

Extremely Important Very Important Important Slightly Important Not Important

50%

40%

30%

20%

10%

0%

Suitability of investors in

meetings


42.6%


% o

f Res

pond

ents


feedback

Regional or local expertise

42%

13%

1% 1%

15%

41%

34%

3%

6%

17%

38%

33%

9%

3%

10.5%

43%

36%

8%

2%

16.3%

36% 36%

10%

2%

19.3%

44.9%

27%

1%

8%

43%

11%

16%

19%

45%

SatiSfaction LeveLS by Service category

sAtisfAction LeveLs

Consistent with prior years, respondents are generally satisfied with the services the sell-side provides in support of corporate access events; however, satisfaction levels

lack conviction with about one respondent reporting high satisfaction in any service category for every four respondents reporting they were Somewhat Satisfied. Quality of

Relationships with Analysts and Quality of Meeting Logistics again ranked first and second among satisfaction factors, with 86% and 82%, respectively, reporting they were

Very or Somewhat Satisfied (and roughly one in three “satisfied” respondents reporting they were Very Satisfied.)

Market Intelligence and Feedback, meanwhile, continues to be a laggard with less than half of respondents reporting they were Very or Somewhat Satisfied, and only one in ten

“satisfied” respondents reporting high satisfaction.

19


Figure 14 - Satisfaction Levels by Service Category, 2017

% o

f Res

pond

ents

Very Satisfied Somewhat Satisfied Neither Satisfied or Dissatisfied Somewhat Dissatisfied Very Dissatisfied 70%

60%

50%

40%

30%

20%

10%

0%

Suitability of investors in meetings

Quality of relationship with the sell-side analyst


Quality of market intelligence and feedback

13%

63%

16%

7%

1%

15%

2%

33%

50%

19%

8%

1%

12%

60%

20%

3%0%

22%

55%

34%

21%

3%

8%

34%

0%

Respondents’ half-hearted satisfaction with corporate access

service has remained largely unchanged over the past five years. The sell side continues to perform well

in providing personal service – analyst relations and concierge (logistics.) However, areas more strongly associated with analysis – suitability of investors, research, and market

intelligence – lag, and are somewhat disconnected from the preferences of respondents. Notably, while 85% of respondents rate Suitability of Investors in Meetings as an

Extremely or Very Important criterion in selecting a corporate access provider (Figure 14 previous page), just 13% are Very Satisfied with service in this area.

There’s been a loss of quality sell side analysts from the industry - we saw 4 out of 12 of our sector analysts leave the industry last year.

”“ - APAC Mid-cap

Industrials

20


Figure 15 - Trends in Satisfaction by Service Category, 2015 vs. 2017 The relationship between issuers and the

sell-side is symbiotic – issuers rely on the

sell side to broker access to investors and

to assist with the overall management

of events. The sell side, in turn, relies on

corporate access to generate trading fees

from investors. While the data show that

issuers strongly prefer to partner with the

sell side for their events, the data also

reveal clear opportunities for corporate

access providers to enhance the service

they provide issuers during this period of

regulatory uncertainty.

% o

f Res

pond

ents

who

are

Ver

y or

So

mew

hat S

atis

fied

14%

%

Suitability of investors in meetings


Quality of research

Quality of meeting logistics


feedback

40%

35%

30%

25%

20%

15%

10%

5%

0%

2012 2017

13%

32% 33%

16%

12%

25%22%

4%

8%

Figure 16 - Desire for more intelligence before and after meetings

MArKet inteLLigence And Meeting feedBAcK

Market Intelligence and Meeting Feedback has

consistently rated lowest among satisfaction levels

by service categories, with just half of respondents

reporting they are at least somewhat satisfied. To help

address this area of perennial discontent, we asked

respondents for the specific types of intelligence

and feedback they desire before and after marketing

events. A sizeable majority of respondents desire

both more intelligence in advance of an event, and

better feedback after an event. For respondents only

desiring one or the other, respondents favor feedback

after an event over intelligence ahead of an event by

three to one.

Figure 17 -Importance of intelligence and feedback

21

80%

60%

40%

20%

0%Yes, after meeting NoYes, before and

after meetingsYes, before meetings

13% 21% 20%

7%

67%58%

8% 6%

All US Non Us

In order to zero in on what precisely companies

are looking for, we asked respondents to assign a

level of importance to specific types of intelligence

ahead of an event and feedback after an event.

The summary below only includes replies from

respondents who reported a desire for more

intelligence or feedback. While the undifferentiated

and very high levels of importance assigned to these

areas may indicate a desire for intelligence and

feedback of any type, the table to the left indicates

at least a handful of areas for corporate access

providers to target.

2012 2017

100

80

60

40

20

0Company

strategy and direction

Communication and

presentation

Diligence process and

next steps

44

Why this particular investor

now?

Intelligence on

investment strategy

Agenda/topics of interest

99

28

99

27

94

20

93

16

93

18

90%

%

%

% %

%

%

%

%

%

%

%

Extremely Important At least Important

Companystrategy and

direction

Communicationand presentation

Diligenceprocess and

next steps

Why thisparticular

investor now?

Intelligenceon investment

strategy

Agenda/topics of interest

100%

80%

60%

40%

20%

0%

Non-U.S.U.S.

% o

f Res

pond

ents

% o

f Res

pond

ents

22

EFFECTS OF MIFID II

Our survey asked respondents to report the effects they anticipate or may already be experiencing.

Because we received most survey responses before MiFID II went into force, we do not regard the results reported below as having the final say. Many

respondents commented that it is too early to judge how MiFID II will affect them – if at all.

On January 3, 2018, the Markets in Financial Instruments Directive, MiFID II (“MiFID”) went into effect. While MiFID only has jurisdiction over European entities (and global entities doing business with European entities) by changing the way institutions pay for broker services in Europe – requiring brokers to itemize their fees for research, corporate access, and trading and execution – the regulation has the potential to disrupt the current equilibrium between supply and demand for these services, not only in Europe but globally.

seLL-side coverAge

One of the main discussions around MiFID II is how asset managers will choose to pay for sell-side research, which can no longer be bundled with trading fees in Europe. While U.S. institutions are not subject to MiFID II jurisdiction, several large global asset managers have adopted one payment protocol for all of their regional entities, and most of these managers are electing to absorb the cost of research rather than charge their clients piecemeal.

The media consensus is that direct payment coupled with investors absorbing the cost will reduce the demand for, and hence the quantity of, research. Here we turn to the

experience and expectations of the IRO community during 2017. Note that we received responses to the survey from early December 2017 through mid-January 2018 – with

the majority received prior to MiFID II officially going into effect on January 3, 2018.

Across our global sample, 40% of respondents anticipate a fall-off in sell-side research following the legislation, while 11% have already experienced a decline. Large-cap

issuers anticipate or have already experienced the largest decline in coverage, with 64% of respondents anticipating or experiencing a decline, compared to 53% for mid-cap

issuers and 43% for small-cap issuers.

I believe a positive outcome is that the research will have to improve and become more valuable in order for the buy side to warrant paying for it out of their P&L.

”“ - North American

Large-cap Technology

23

Anecdotally, based on survey comments, large-cap issuers are generally unconcerned with the decline in coverage. Meanwhile,

IROs of thinly covered small-caps anticipate less of a drop-off, presumably because they have more time to invest in individual

analysts, who in turn are each more likely to offer incremental value to the buy side.ps) decreased the most, followed by participation by large-cap executives in conferences.

24


Post MIFID II, I am not sure how we will select appropriate sell-side sponsors who have access to the investors we would like to target.

”

“

- North American Mid-cap Healthcare

Figure 18 - MiFID II Effect on Sell-side Coverage

% o

f Res

pond

ents

60%

50%

40%

30%

20%

10%

0%We do not anticipate any

fall-off in sell-side coverageWe anticipate a fall-off

in sell-side coverage, but have not experienced yet

We have experienced a fall-off in sell-side

coverage

Sell-side coverage has increased

Large Mid Small

32%

42%

47%

34%

54%

40%

10%10%13%

9%4% 5%

25

events

46% of all respondents anticipate a decline in the number of opportunities to participate in sell-side sponsored events, but only 2% have

already experienced a decline. Notably, the results do not vary significantly by region – while Europe has “already” experienced a decline

with six times the frequency as North America (6% to 1%,) the total of “anticipate a decline” and “have already experienced a decline” is

comparable between North America (47%) and Europe (44%).

Figure 19 - Effect on the Availability of Corporate Access Events

Large-cap Mid-cap Small-cap60%

50%

40%

30%

20%

10%

0%Availability of corporate

access events has increased

47% 51% 52% 52%

43% 42%

0% 3% 2% 1% 3% 4%

“I get a sense that

U.S. sell-side firms all

think the other guy

is going to be more

impacted than they

are. We have over 20

analysts that cover

our stock and not one

has mentioned to us

how MiFID will change

the way they conduct

business.

”

“

- North American Mid-cap Energy

We note anecdotally that in the months since we launched the survey that two large global sell-side firms have stopped hosting NDRs for U.S.

companies in Europe, and several U.S. IROs have reported to us that their sell-side hosts have labored to find quality investors to participate in

European NDRs. More change is likely on the way.

Large-cap Mid-cap Small-cap

Large-cap companies are more

pessimistic about future opportunities

to participate in sell-side sponsored

events, with 52% anticipating a decline

compared to 43% for mid caps and 42%

for small caps. This result runs contrary

to the logic that assumes hosting events

for smaller companies will be less

profitable for the sell side, thereby putting

pressure on sell-side sponsorship.

One interpretation of the results is that

large-cap companies – generally with

more global ownership – have been

more focused on the implications of

MiFID II than their counterparts at smaller

companies.

% o

f Res

pond

ents

direct contAct with the BUy side

When the sell side begins charging investors to attend conferences and to participate in roadshows, will investors absorb the cost or

will they begin to reach out directly to issuers to avoid the fees? We asked investors to contribute their experience.

While overall just under half of respondents (46%) anticipate or have already experienced an increase in direct outreach from the buy

side, the results vary dramatically by region with 67% of European respondents anticipating (49%) or already experiencing (18%) more

direct engagement, compared to 47% of U.S. respondents anticipating (38%) or already experiencing (9%) more direct engagement.

We note anecdotally that the European experience may be a bellwether – in the months since we launched the survey, we have

received numerous reports from clients and other sources that several global institutions are asking issuers to arrange meetings

directly with them, both in MiFID jurisdictions and globally. The post-MiFID II landscape is clearly in a high state of flux. This year we

captured the baseline – stay tuned.

26

North American Europe Asia60%

50%

40%

30%

20%

10%

0%Anticipate decrease

but have not yet experienced

Anticipate increasebut have not yet

experienced

Expect no change Anticipate decrease and have already

experienced

Anticipate increaseand have already

experienced

2% 2% 0 %

38%

49%

36%

50% 54%

29%

1% 2% 4%

9%

18%

7%

Figure 20 - MiFID II Effect on Direct Contact with the Buy Side

More funds are contacting us directly, especially foreign ones. They request that we meet them on the side when they know we’re attending a sell-side conference in a foreign city, as well as request for conference calls directly, without going through the sell side.”

”

“

- North American Large-cap Technology

North American Europe Asia60%

50%

40%

30%

20%

10%

0%Anticipate decrease

but have not yet experienced

Anticipate increasebut have not yet

experienced

Expect no change Anticipate decrease and have already

experienced

Anticipate increaseand have already

experienced

2% 2% 0 %

38%

49%

36%

50% 54%

29%

1% 2% 4%

9%

18%

7% % o

f Res

pond

ents

KEY PERFORMANCE INDICATORS, BENCHMARKING AND REPORTING

27

”- North American Large-cap Technology

We asked respondents to assess the importance of measuring several key performance indicators:

We are always interested in understanding the individual and collective impact of our efforts and the market dynamics that ultimately drive movements in our stock.”

”

“

- North American Large-cap Consumer Services

For years, IROs have described the level and type of engagements they have with the buy side by contributing their

experiences to our Corporate Access Survey. This year, for the first time, we asked them what they are trying to

accomplish, or more specifically, what outcomes they measure.

?

28

OVERALL NUMBER OF MEETINGS WITH INVESTORS

NUMBER OF MEETINGS WITH OWNERS WITHOUT REGARD TO SUBSEQUENT BUYING/SELLING

NUMBER OF MEETINGS WITH OWNERS RESULTING IN MAINTENANCE OR GROWTH OF THE HOLDING

NUMBER OF MEETINGS WITH TARGETS WITHOUT REGARD TO SUBSEQUENT INITIATION OF A POSITION

NUMBER OF CONFERENCES AND ROADSHOWS

TRENDS IN SHAREHOLDER DEMOGRAPHICS(STYLE, CONCENTRATION, TURNOVER, UNDER- OR OVERWEIGHTINGS)

NUMBER OF MEETINGS WITH TARGETS RESULTING IN NEW OWNERSHIP

29

Key PerforMAnce indicAtors And not-so-Key PerforMAnce indicAtors

Overall, Meeting Targets and Converting Targets to Owners were the most important investor outreach success factors, with overall Very Important

ratings of 62% and 54% (respectively). The other factors rated Very Important by a majority of respondents were Meeting Owners (50%) and Retaining

or Growing Current Shareholders (52%).

Given the similar ratings assigned to the importance of meeting investors and subsequent actions by these investors, the implication is that IROs

are not interested in ‘meeting for meeting’s sake’. In order for a meeting to be deemed a success, an IRO must see that the investor took subsequent

action. Indeed, mere levels of activity are generally not reported as Very Important, according to respondents:

Rounding out our review of not-key-performance indicators, 31% or respondents rated Trends in Shareholder Demographics as Very Important.

- North American Large-cap Consumer Services

Just 43% rate the number of meetings as Very Important Only 34% rate the number of conferences and NDRs as Important

Figure 21 - Key Performance Indicators Deemed Very Important

60

50

40

30

20

10

0

North America

Europe

# of meetings

with targets

Retention/ growth by holders

Initiation by targets

# of meetings

with owners

# of meetings (overall)

# of conferences/ roadshows

Trends in shareholder

demographics

59% 59%55%

31%

54%

43%

50%47%

43% 42%

36%31% 34% 31%

% o

f Res

pond

ents

differences in eMPhAsis By region And MArKet cAP

Respondents’ emphasis on current shareholders increases with the increase in market capitalization – 60%

of large-cap issuers rank Retention and Growth by Owners as Very Important, compared to just 44% of small-

cap issuers. While very few issuers rate Growth and Retention by Owners as Not Important, nearly three times

as many small-cap issuers feel this way (11%) versus large-cap issuers (4%). Understandably, large-cap

issuers with larger shareholder bases spend more time cultivating them, and measuring their effectiveness

engaging them.

focuS on ownerS

We emphasize spending time with existing investors. Going forward we will be setting very select targets to meet with as well. We will be looking at changes in ownership: who listens on our earnings calls, who requests meetings.

”

“

- North American Large-cap Financials

Figure 22 - Benchmarking - Retention / Growth by Holders


30

60

50

40

30

20

10

0Large Mid Small North America Europe Asia

38%

57%

50%

31%

50% 50%

Very Important Slightly Important Not Important

43%

51%

44% 44%

0%

19%

5%

37%

60%

4%7%

11%% o

f Res

pond

ents

- North American Large-cap Financials

31

North American issuers are

significantly more focused on

whether a target purchases shares

than their counterparts in other

regions. 60% of North American

issuers rate Initiation by Targets

as Very Important, compared to

just 39% of European and Asian

issuers. Differences by market cap

were immaterial.

focuS on targetS

We routinely evaluate targeted investors and changes in share ownership in our stock as well as the sector in order to determine our NDR schedule. ”“

- North American Mid-cap Utility

Figure 23 - Benchmarking - Initiation by Targets

Very Important Slightly Important Not Important Not imporant Very Important Slighly important

70

60

50

40

30

20

10

0North AmericaEuropeAsia

60%

LargeMid

7%

33%

14%

39%

47%

0%

39%

61%

35%

56%

9%7%

53%

40%

8%

52%

40%

Small

70

60

50

40

30

20

10

0North America Europe Asia Large Mid Small

33%

60%

7%

47%

39%

14%

61%

39%

0%

52%53%

40% 40%35%

56%

9% 7% 8%%

of R

espo

nden

ts

BenchMArKing

32

Benchmarking success factors against peers

and/or the overall market is a current practice

or a future aspiration (we did not make the

distinction in the survey) with more legs in

North America (74%) than other regions (56% in

Europe and 50% in Asia). Overall, seven in ten

IROs currently benchmark, or have aspirations

to benchmark, key performance indicators

against peers or the overall market.

We also see a variation by sector with the

Consumer Services sector (80%) putting the

greatest emphasis on their performance

versus the peer group. The Consumer Goods

sector (54%) placed the least emphasis on

this measure. Differences by market cap were

negligible.

Figure 24 - benchmarking IR success factors against peers

80

70

60

50

40

30

20

10

0

North Americ

a

Europe

Asia

Consumer S

ervices

Basic M

aterials

Utilitie

s

Industrials

Technology

Energy

Financials

Healthcare

Consumer G

oods

80%77% 76%

73%69%

68% 68%60%

54%

74%

56%50%

% o

f Res

pond

ents

33

rePorting

Overall 88% of respondents Frequently (60%) or Sometimes (28%) report their performance on success factors to the C-Suite, while 74% Frequently (30%) or Sometimes (44%)

report their performance to the Board.

While Asian respondents report having somewhat less access to the C-Suite than their North American and European counterparts, IROs globally have significant access to

Management and Directors across all market caps.

Large Mid Small

50

40

30

20

10

0Frequently Sometimes Rarely

23%

Never

33% 35%

45% 43% 44%

18%13% 13% 14% 11%

8%

North America Europe Asia

80

60

40

20

0Frequently Sometimes Rarely

61%

Never

56% 56%

30% 27%19%

6% 7%15%

3%11% 11%

Figure 25 - Benchmarking - Report to Board Figure 26 - Benchmarking - Report to C-Suite


% o

f Res

pond

ents

INVESTOR DAYS

34

“

This year, for the first time, we asked questions concerning Investor Days. Arguably a topic we could have addressed in

previous years, and certainly a corporate access event, Investors Days are a subject of increasing discussion as IROs consider

supplementing sell-side sponsored engagement with company-hosted initiatives.

Given the significant amount of time senior executives dedicate to preparing for an Investor Day, the considerable budget

companies allocate for the event, and the potential for MiFID II disruption of sell-side corporate access, we present below the

results of a handful of questions that provide context for IROs to evaluate their investor day planning.

35


freqUency

Nearly half of all respondents host an Investor Day on a regular basis (at least every other year). Large-cap issuers are nearly

twice as likely to host an Investor Day on at least an annual basis than are mid- and small-cap issuers.

Investor Days are more commonly

hosted by European companies than

by North American and Asian

companies. 75% of European

respondents host an Investor Day,

while just half of North American

companies and 38% of Asian

companies do so.

Investor Days are important, but committing to an annual investor day can turn into a negative. It is important to be able to provide material, new information at an analyst day, otherwise it loses its effect.

”

“

- North American Small-cap Energy

Figure 27 - Investor Day - Frequency

Large Mid Small

50

40

30

20

10

0Two times per

yearAnnually Every two years,

or so

4%

When the needs arises

5% 3%

39%

21%17%

39% 37% 36%

0% 0% 0%

19%

38%44%

We do not host an investor day

Large Mid Small

50

40

30

20

10

0Two times per

yearAnnually Every two years,

or so

4%

When the needs arises

5% 3%

39%

21%17%

39% 37% 36%

0% 0% 0%

19%

38%44%

We do not host an investor day

% o

f Res

pond

ents

We do not host an Investor Day

BUdget

Most public companies that host an Investor Day allocate a specific budget to the event, and several large-cap companies have Investor Day budgets exceeding $200K. At the other end of the spectrum, some (mostly small- and mid-cap companies) report that they do not allocate budget specifically for this event.

36

Figure 28 - Investor Day - Budget

“Large Mid Small

50

40

30

20

10

0

33%

6% 6%

21%

12%9%

28%

44% 46%

18%

38% 40%

Large Mid Small

50

40

30

20

10

0

33%

6% 6%

21%

12%9%

28%

44% 46%

18%

38% 40%

(Note: The chart above only includes companies that host an Investor Day and have allocated budget for

the exercise. This chart shows detail by market cap, while text nearby provides aggregates by region)

In North America, 35% of companies budgeted more

than $100k for their Investor Day, 42% budgeted

between $50k and $100k, and 23% budgeted less

than $50k.

In Asia, 14% of issuers budgeted more than $100k

for their Investor Day, while nearly six in ten (57%)

budgeted less than $50k.

In Europe, two-thirds of issuers budgeted less than

$50k for the occasion, likely due to their tendency to

host the event at a company location (along with a

much higher frequency of hosting an Investor Day).


$200,000+ $100,000 - $200,000 $50,000 - $100,000 Less than $50,000

% o

f Res

pond

ents

The choice of location varies significantly by region. European and Asian companies tend to host Investor Days at either company

headquarters (HQ) or other corporate locations, while North American companies are much more likely to host their events at an offsite

location such as a hotel in a major investment center or stock exchange.

37


We anticipate increased attendance at our next Investor Day as the need for information after MiFID II is higher.

”

“

- European Mid-cap Industrial

LocAtion

(Note: graph above shows detail by market cap, while text below provides aggregates by region)

Offsite location (e.g. stock exchange or hotel) Company headquarters Company location, not headquarters

70

60

50

40

30

20

10

0North America Europe Asia

64%

16%20% 23%

41%36% 36%

29%36%

Figure 29 - Investor Day – Location In North America, 64% hosted their

Investor Day either offsite or at a stock

exchange. North American companies

hosted their event at company

headquarters only 16% of the time and

at non-HQ company locations 20% of

the time.

In Europe and Asia, company locations

were chosen 77% and 65% of the time,

respectively. In Europe, companies

hosted their Investor Day at company

HQ 41% or the time and at non-HQ

company locations 36% of the time. In

Asia, the breakdown was 36% company

HQ and 29% non-HQ company location.

% o

f Res

pond

ents

SURVEY SCOPE

38

The 2017-2018 sample included 363 respondents from a diverse range of industries, market caps and regions. In a departure from past practice where we have made

year-over-year comparisons, for this report we generally use 2012 as our base year, for two reasons: first, to better tease out long-term trends as opposed to year-over-

year variance, and second, because the survey samples in 2017 and 2012 share similar demographics.

39


Our survey is not scientific – we did not observe the data we share in this report in a controlled environment. Statements and conclusions in this report rely

upon the data we have collected. We believe the sample sizes are sufficient to render reliable conclusions, and we also have the benefit of being able to present

analysis that fits the scope and pattern of data that we have collected over seven iterations of this survey. Our goal is not to grab headlines, rather we endeavor to

credibly identify trends, and confirm them in subsequent years.

Large Mid Small US Non US

38%

62%

28% 35%

37%

Figure 30 - Respondent Demographics by Market Capitalization, 2017-2018 Figure 31 - Respondent Demographics by Region, 2017-2018

Our Team

LEAD AUTHOR:

Brendan Fitzpatrick, CFA, Director Analytical Services

SURVEY DATA ENGINEER:

Alexander Yokum, Senior Analyst, Global Markets Intelligence

EDITORS:

Brian Matt, CFA, Director, Global Head of Strategy & Innovation

Mike Miller, CFA, Director, IR Advisory

CONTRIBUTING AUTHORS:

Jamie Carfora, Lead Analyst, Global Markets Intelligence

Tyler Porter, Senior Analyst, Global Markets Intelligence

40


IPREO’S CORPORATE ACCESS SURVEY 2018 IPREO’S 2018...

Documents

Transcript of IPREO’S CORPORATE ACCESS SURVEY 2018 IPREO’S 2018...