1.4 IR Strategy

1.4.1 Corporate Strategy

The IR strategy is initially derived from the corporate strategy. Important elements here include:

Growth Strategy

  • Growth ambitions
  • Financing of growth beyond the net inflows from the operating activity
  • Probability of capital increases or M&A transactions with treasury shares as an element of the purchase price
  • Geographic expansion – can exert an influence on future investor base

Investor-Oriented Financial Management

  • Securities policy (registered vs. bearer shares; various classes of shares)
  • Issuance policy
  • Dividend policy
  • Stock market policy

Corporate Governance

  •  Independence of board or directors
  • Management and corporate culture
  • Management compensation concept

Communications Strategy

  • Relevance of the (IR) branding for the company’s success
  • Degree of transparency

What IR objectives are pursued beyond the fulfillment of the statutory requirements and how this is supposed to be achieved are defined in the IR strategy. The starting point for this is a clear analysis, see the presentation below.

Issues for Analysis in Investor Relations

Stock Market Analysis

  • Daily trends in the share price and market sales of company’s own securities
  • IR activities of comparable companies
  • Trends on equity and other capital markets (including dividend yields, PER, PCFR and PBR in the peer group)
  • Economic, political and legal, and social environment
  • Investment potential of the different financial centers and investor types

Investor Analysis

  • Breadth and identity of the shareholder base (total number, name, address, commitment, investment volume of the shareholders)
  • Structure of the shareholder base by investor type (individual/institutional investors), size classes, home base (region, international), ESG strategies etc.
  • Commitment period of the investors; changes in commitment among investors
  • Daily identification of buyers and sellers of major volumes as well as determination of the reasons for the investment decision
  • Identification of potential institutional investors that are involved in shares in the same industry and/or country of origin
  • Investment behavior, investment loyalty, investment objectives, risk attitude, shareholder activism of current and potential investors (investor groups)
  • Information requirements, interests and expectations of the individual and institutional investors with regard to the company’s IR work

Multiplier Analysis

  • Identification of the key multipliers that the company regularly pursues with company studies and press reports
  • Information requirements, interests and expectations of the multipliers with regard to the company’s IR work

Company Analysis

  • Opportunity/threat and strengths/weaknesses profile of the company taking the existing and planned strategies into explicit consideration
  • Financial and strategic (forward-looking) company valuation (DCF method); assessment of the suitability of the market valuation

Analysis grid, Source: Drilli

Principles of Communication Policy

Principle of Target Group Orientation

  • Employment of the communication instruments tailored to the target groups
  • Precise tailoring of the contents of the communications to the information requirements of the individual target groups

Principal of Equal Treatment

  • Essentially the same information in response to the same questions  as well as simultaneous provision of new, price -sensitive information to the target groups (insider problem)
  • No deliberate preferential treatment of or discrimination against specific target groups or individual members of the financial community

Principle of Materiality

  • Clear, comprehensible, and compact presentation of material new information
  • No presentation of details that are not important for the respective target group

Principle of Continuity

  • Regular communication with the financial community
  • Communicators in the company that do not change and are available at any time

Principle of Non-communication Periods

  • Refraining from IR activities during a “quiet period”
  • Withholding critical information that is not yet publicly known until the stipulated publication date (e.g. planned M&A transaction)

Principle of «Corporate Communications»

  • Consistency of the contents of the financial communications with the other corporate communications to ensure coherent overall corporate communications
  • External consistency of the contents of the financial communications with the other corporate communications to ensure a uniform appearance

IR principles, Source: Drillii

For the principle of non-communication periods, refer to the regulatory requirements and in particular the ad hoc communication (see ➔ Chapter 8.6).

i & ii  

Drill, Michael: Investor Relations. Funktion, Instrumentarium und Management der Beziehungspflege zwischen schweizerischen Publi­ kums­Aktiengesellschaften und ihren Investoren, Haupt, Bern, 1995

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