Investor RelationsOfficers

The 2014/15survey ofIR leaders in the Fortune 500.

www.kornferryinstitute.com

1

For the fourth time, Korn Ferry’s Corporate Affairs Center of Expertise and Financial Officers Practice has collaborated with the National Investor Relations Institute (NIRI) to survey those leading investor relations about how this crucial function is evolving.

The results—showing that more than 90% of respondents report directly to the chief financial officer or CEO—mirror what Korn Ferry partners hear anecdotally from investor relations officers (IROs) every day. Today’s IRO has a key seat at the executive table in two capacities. First, as a safeguard of the company’s financial reputation (with shareholders and other stakeholders). Second, as the advisor to the CEO and CFO for external financial communications. To provide a clearer picture of the requirements and rewards among the top IROs, Korn Ferry and NIRI collected responses from over 50 IROs in Fortune 500 companies. The majority (78%) came from mid- or large-cap companies, 88% were NYSE-listed, and 71% were covered by 15 or more sell-side analysts. A heavy concentration of respondents came to the function from backgrounds in the corporate finance (25%) and accounting (18%) industries. Their responses covered information from the calendar year 2013.

Although the IR function has, on occasion, been viewed as a communications role, that has changed. A communications background and training may be the price of entry, but the evidence in reporting lines clearly shows that the function is a key part of the financial officer’s cabinet. Financial acumen and technical fundamentals—whether from early CPA training, MBA or CFA credentials—are now normative. This is reflected in the increase in percentage of former sell-side/buy-side analysts holding these roles.

Introduction

More investor relations officers show finance expertise:

A 22% are former analysts.

A 20% have a CPA.

A 16% have or are pursuing a CFA.

Background and education. Serving as an IRO in today’s Fortune 500 increasingly means being steeped in finance. More than 50% of IROs have an MBA, and 82% have completed CFA continuing education course work. The most common precursor to the IRO role is another corporate finance position (38%), and other aspects of IROs’ backgrounds show a significant sector of the field has a background in corporate finance, accounting, or investment banking.

Profile of the Fortune 500 IRO.

2

Experience in IR. More than half of the Fortune 500 IROs in our latest survey have been in the role for 11 or more years. (Totals do not add up to 100% because of rounding.)

Former sell-side/buy-side analysts.

Former PR or communications role.

2 years or less

3 or 4 years

5 or 6 years

7 to 10 years

11 to 15 years

16 to 20 years

21 or more years

8% 6%

27%

16%

18%

12%

12%

0 5 10 15 20 25

22%

15%

12%

8%

0 5 10 15 20 25

20%

21%

0 5 10 15 20 25

16%

11%

0 5 10 15 20 25

2014

2012

2014

2012

2014

2012

2014

2012

0 5 10 15 20 25

22%

15%

12%

8%

0 5 10 15 20 25

20%

21%

0 5 10 15 20 25

16%

11%

0 5 10 15 20 25

2014

2012

2014

2012

2014

2012

2014

2012

Have CPA designation. Have or are getting CFA designation.

3INVESTOR RELATIONS OFFICER SURVEY

Job title. The vast majority of IROs carry vice president or executive vice president titles (83), while an additional 16% are directors.

Men

Women

Gender

41%59%

In how many industries have you worked?

1

2

3

4 or more35%

25%

22%

18%

40 to 49

50 to 59

30 to 39

60 to 69

49%37%

8 6

Age

Demographics. Most Fortune 500 IROs are in their mid 40s to 50s. And the gender gap appears to be closing: 41% of IROs are women, up from 34% two years earlier.

Career path. Most Fortune 500 IROs have worked in at least one other industry before taking their current job.

Vice president

Senior/executive vice president

Director

Senior director

Other

67%16%

10%

6% 1%

4

Our data also indicates that although IROs arrive with experience outside investor relations, the function itself is less frequently used as a rotational role in the Fortune 500. In 2014, the top IRO role was considered a rotational position by only 10% of our respondents.

At the same time, only 49% define themselves as “career” IROs and are committed to a future in investor relations, down from 61% in 2008.

Among those who see the role as transitional, 32% expect to become chief strategy officer next, 28% look to a CFO position, and 16% look to advance to chief communications officer.

Scope of responsibilities. The IR role sometimes overlaps with other corporate roles, such as competitive intelligence, corporate development, and strategic planning. Although 69% of the IROs in our survey said that their purview is limited to investor relations, others have their hand in adjacent aspects of communications or finance.

Other

Investment banking

Securities analyst or retail broker

Corporate finance

Communications/PR

Accounting

0% 5% 10% 15% 20% 25%

18%

4%

22%

25%

12%

18%

Experience outside investor relations.

5INVESTOR RELATIONS OFFICER SURVEY

Financial analysis

External communications

Competitive intelligence

Financial media relations

Corp. social responsibility/sustainability

Corp. development

Strategic planning

Internal communications

Community relations

Treasury

Other

31% 31% 25% 19% 19% 19% 19% 13% 13% 6% 19%

0% 5% 10% 15% 20% 25% 30% 35%

Scope of responsibilities beyond IR.

Reporting relationships. Of IROs surveyed, 91% report directly to the CEO or the CFO. For comparison, in 2012 82% directly reported to the CEO or CFO, consistent with the increased strategic importance of investor relations.

Chief financial o�cer

CEO/president

Treasurer

Chief operating o�cer

Other

2%3%

87%

4%4%

Among those, the percentage who are responsible for community relations declined from 28% in 2012 to 13% in 2014. Interestingly, 30% include external communications in their responsibilities.

6

Head count. IROs’ direct reports, excluding administrative staff.

0-1

2-4

5-7

N/A

4%2%

56%38%

$100,000 to $499,999

$500,000 to $999,999

$1,000,000 to $2,499,999

$2,500,000 to $5,000,000

More than $5,000,000

0% 10% 20% 30% 40% 50%

8%

34%

46%

10%

2%

Budget. IR has not been immune to pressure to increase efficiencies across all enterprise functions. Departmental budgets were somewhat lower than they were among our survey pool in 2012: in 2012, 65% of organizations reported budgets above $1 million; in 2013, only 58% did.

7INVESTOR RELATIONS OFFICER SURVEY

Compensation and bonus. Nearly all top IROs are granted some type of equity, and equity/long-term incentive plans (LTIP) remains a key component of total compensation. More IROs receive restricted stock units (RSUs) than stock options (85% v. 48%).

Base salaries ranged from $100,000 to $366,500. The median bonus rose $2,000 from the previous survey, and the highest bonus reported jumped $20,000.

A Average base salary: $224,347A Median base salary: $230,000A Average bonus: $86,919A Median bonus: $77,000 A Average annual short term compensation: $311,266

A majority of IROs, 77%, do not have a change of control agreement, which would govern terms for deferred compensation and employment in the event a company is bought or sold. For those who do, 80% are for 12 months.

Benefits. Benefits remained mostly unaffected since our last survey in 2012, except for medical examinations; 22% today receive this benefit, down from 38%. In addition, IROs report that they receive other types of benefits beyond cash and equity compensation, including:

A 401(k)—98%A Health insurance—84%A Deferred compensation plan—67%A Medical examinations—22%A Financial/tax planning—18%A Automobile—8%A Special officer pension plan—6%A Club membership—6%

Employment agreements. The vast majority of IROs, 85%, don’t have an employment agreement. The duration of the 15 agreements survey respondents reported ranged from 12 to 18 months.

Work environment. The vast majority of IROs, 94%, report full time to their company’s office; the remainder work in a satellite or other office, or telecommute from home.

8

Bryan ProctorLeader, Global Financial Officer PracticeFinancial Officers Center of Expertise+1 312 526 0568bryan.proctor@kornferry.com

Carroll LeathermanClient PartnerFinancial Officers Center of Expertise+1 212 973 5803carroll.leatherman@kornferry.com

Financial Officers Practice

Corporate Affairs Practice

Richard S. MarshallGlobal Managing DirectorCorporate Affairs Center of Expertise+1 404 577 7542richard.marshall@kornferry.com

Megan ShattuckSenior Client PartnerCorporate Affairs Center of Expertise+1 212 984 9430megan.shattuck@kornferry.com

Key contacts.

About Korn FerryAt Korn Ferry, we design, build, attract, and ignite talent. Since our inception, clients have trusted us to help recruit world-class leadership. Today, we are a single source for leadership and talent consulting services to empower businesses and leaders to reach their goals. Our solutions range from executive recruitment and leadership development programs, to enterprise learning, succession planning and recruitment process outsourcing (RPO).

About The Korn Ferry InstituteThe Korn Ferry Institute, our research and analytics arm, was established to share intelligence and expert points of view on talent and leadership. Through studies, books and a quarterly magazine, Briefings, we aim to increase understanding of how strategic talent decisions contribute to competitive advantage, growth and success.

Visit www.kornferry.com for more information on Korn Ferry, and www.kornferryinstitute.com for articles, research and insights.

www.kornferry.com © Korn Ferry 2015. All rights reserved.

IROSL2015