Typically, someone from the general counsel/corporate secretary team is always involved in an engagement. From there, you look at the agenda for the engagement to see what the issues are – and you bring the right people. You don’t want people on the call on your side who will have no role. Having a dozen people on the call is overkill and won’t feel right to the investor. That’s not how this is supposed to work.
You have the specialists on the call. So if the investor has expressed any interest in executive compensation issues, you usually have the head of HR – or the person in HR who leads on executive comp – on the call. Or maybe you have made new commitments this year around diversity, and so you’ll have your chief diversity officer join to walk the investor through your overall program. You also might have made commitments on climate, so you would have your sustainability staffers on the call.
For some issues, it’s appropriate to have a director on the engagement. Some investors like that. Some don’t. So always ask the investor if they want a director on the call rather than presume they would. Of course, you need to be sure any director tabbed can speak about the issues at hand. For example, that the compensation committee chair can adequately speak to the comp programs and the rationale for decisions made about comp. A director who is not prepared – or not able to communicate well – can do much more harm than good.
Often, it will be the head of a board committee – or the lead director – that should be on the call. It will depend on the issues on the agenda. Preparing your director for the call is key. Remind them of the key issues. Remind them to be courteous and curious. Remind them of Reg FD. (Note that the Corp Fin staff has issued Reg FD CDI – Question 101.11 – which clarifies that directors are not prohibited from speaking privately with shareholders. This CDI should give directors comfort that private meetings are not problematic in and of themselves.)
Being “camera ready” isn’t perhaps as important as some think when it comes to directors on calls. They should be prepared, but they should be themselves. That’s who they are – and they are likely to perform better on the call if they don’t have the pressure of being someone they aren’t.
Authored by
Broc Romanek