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New Trends inInvestor Relations

National Investor Relations Institute (NIRI)U.S.A.

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National Investor Relations Institute (USA)

NIRI was chartered in 1969 as a professional association of corporate officers and IR consultants responsible for communication between corporate management, the investing public and the financial community.

Located near Washington, DC, NIRI is the largest professional IR association in the world with more than 4,000 members representing 2,000 publicly held companies and $5.4 trillion in stock market capitalization.

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Our Mission

NIRI is dedicated to advancing the practice of investor relations and the professional competency and stature of its members.(Adopted 1992)

Members must sign NIRI Code of EthicsMembership can be terminated

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NIRI Board of DirectorsChair: Bina Thompson

Vice President, Investor Relations

Colgate-Palmolive Company

Don De Laria

Vice President, Investor Relations

Regal Entertainment Group

Jenny Kobin

Vice President, Investor Relations &

Corporate Commun.

Inspire Pharmaceuticals

Elizabeth Saunders

Co-Founding Partner

Ashton Partners

K. Blair Christie

Senior Vice President, Corporate

Communications & Investor

Relations

Cisco Systems, Inc.

Carol DiRaimo

Vice President of Investor Relations

and Corporate Communications

Jack in the Box, Inc.

Catherine Mathis

Senior Vice President, Corporate

Communications

The New York Times Company

Douglas Wilburne, CFA

Vice President, Investor Relations

Textron, Inc.

Derek Cole

Vice President, Investor Relations & Corporate Communications

ARCA biopharma, Inc.

Jeff Galow

Vice President, Investor Relations

Quanex Corporation

Nicole McIntosh

Director of Investor Relations

Waddell & Reed Financial

Bradley Wilks

Chicago CEO and Managing Director

Sard Verbinnen & Co.

Sally Curley

Senior Vice President, Investor Relations

Cardinal Health, Inc.

Barbara Gasper

Group Executive, Investor Relations

MasterCard Incorporated

David Prichard

Vice President, Investor Relations & Corporate Communications

Corn Products International

Mona Zeehandelaar

Principal Investor Relations

Towers Perrin

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NIRI Members • A “typical” NIRI member

– Background in Finance or Communications– Has 10 or more years of IR Experience– Titles

• 33% Vice President/Assistant VP • 27% Director• 13% Manager

– Their Company• U.S.$500 million to U.S.$5 billion in market capitalization • Staff of 2 – 3 in IR department

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NIRI’s Focus: Global IR

1. Information

2. Education

3. Advocacy

4. Community/Networking

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NIRI’s Focus: 1. Information Body of Knowledge www.niri.org

Weekly: IR Weekly e-newsletter Monthly: IR Update magazine Regularly: IR Practice Research Regularly: Executive Alerts Regularly: IR Advisor NIRI Ethics Council

Confidential advice

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NIRI’s Focus: 2. Education

12+ Instructor led courses yearly 20+ Online webinars annually 3 day Annual Conference University Relationships

U. of Michigan, U.Cal. Irvine

NIRI Standards of Practice NIRI Bookstore

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NIRI’s Focus: 3. Advocacy International Organization of Securities

Commissions (IOSCO) Washington, U.S.A.

Securities and Exchange Commission U.S. Congress

Peer Organizations Global IR Societies GIRN (Global IR Network) CFA Institute

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NIRI’s Focus: 3. Advocacy

Raising IR profile and status IR as a profession Gaining influence

In the C-Suite (CEO, CFO, COO)

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NIRI Chapters

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NIRI’s Focus: 4. Community/Networking

Online Membership List Company, industry, location

Social Media – NIRI groups on LinkedIn Face Book Twitter

Topical & Issue Communities Emerging Issues Committee

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Our World is Changing: Financial Market Trends

Exchanges/Bourses Sell-Side: Investment Banking Buy-Side: Institutional Investors Regulations Financial Communications Economic Slowdown

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Exchanges/Bourses Trends Global For-Profit Exchanges

NASDAQ-OMXNYSE-Euronext

Horizontal ExpansionEquities, options, futures

Vertical ExpansionComplete IR services

WebsitesSurveillanceAnd much more

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Exchanges/Bourses (continued)

Lost Linkage between Listing & Trading

Wholesale vs. Retail Separation

Darkpools/Alternative Trading Systems

Fairness (Best Price)

Transparency (Who is trading your stock)

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Sell-side: Investment Banking Where is the added value?

Information readily available Fair disclosure and data services providers

Cost Cutting Research limited

Lost Commissions (Dark pool competition) Direct Market Access, program trading Sell-side elimination/consolidation

Lehman Brothers Merrill Lynch Bear Sterns

IROs must prioritize, job more difficult

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Evolving Buy-Side

Hedge Funds Long-term trend: hedge funds growing

Institutional investing going away Research is from within Some short term, others long-term More cooperation with other funds & firms

Pension fund may own a hedge fund More Communication with IR departments

Hedge funds no longer feared, are accepted But, no increase in transparency

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Evolving Buy Side (continued)

Sovereign Funds Growing! Expect an increase…

Funding from Economies in Asia Oil & gas

Relatively unaffected by market Long term, passive investors Investment in projects in own countries Many are following code of conduct

International Monetary System

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Evolving Buy Side (continued)

Passive Index Funds Versus active mutual fundsCopy index performanceAttractive to U.S. investorsDifficult for IR

Beyond reach of communicationsCan influence stock price

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Evolving Buy Side (continued)

Private Equity Rapid growth before downturn

Availability of capital

Cyclical businessQuiet, but lurkingStay prepared for takeoversSpin off companies as IPO

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Regulatory/Governmental Trends

Abusive short selling is everywhereGovernance & Activism

BoardShareholders“Say on Pay” – in U.K.

Corporate Social Responsibility“Green” movement

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Regulatory/Governmental Trends (cont’d)

Transparency & ConsistencyXBRL Extensible Business Reporting Language

U.S. Top 500 countries in 2009, more in 2010 and 2011

IFRS International Financial Reporting Standards

Global regulation convergenceBriteline test Meaningful principles

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Communication Trends

Growing importance of webMigration from static to usable data

Web is first point for informationContactFinancials

Communications hub/social mediaCorporate blogsInvestor forumsTwitter, FaceBook, LinkedIn, Ning

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Our World is Changing: Economic Trends 2009, 2010

• Layoffs

• Commodity price fluctuations

• Global downturn

• Strength of U.S. dollar

• Less capital for growth and borrowing

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Global Trends in IR: NIRI and Bank of NY Mellon Survey

• Key findings • 90% of all respondents have increased or maintained the same

level of communications with analysts and investors

• Financial companies led all sectors with regard to increasing their communications (67%) and were the most likely to have changed their outlook horizons (65%).

• T he most frequent shift in IR messaging• Credit concerns (66%)

• Outlook horizon (50%)

• Cost-cutting (50%).

• Growth of potential investor opportunities in 2009 seen in the U.S. (69%), the U.K. (51%) and Continental Europe (51%)

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Effect of volatility of the financial markets on IR department’s communications activities with analysts and investors?

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Have any recent analyst questions prompted you to shift your IR communications messaging in any of the following areas?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Emerging market demand

Country risk

Consumer demand

Currency risk

Rising cost inputs

Cost-cutting

Outlook horizon

Credit concerns

Yes No

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Coping with Financial Crisis: NIRI Member Survey

• Key findings – Increased phone calls from the buy-side– International Road shows have decreased– Interaction with C-Suite (CEO, CFO) has

increased– Change in earnings guidance – some have

limited or eliminated guidance– Less effect on IR for large companies

• Members are making due with less!

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Investor Relations

• How does IR evolve to meet the changing world?

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Evolving IR to meet anevolving world

1. IR foundationConsistencyCredibilityTransparencyResponsiveness

2. Focus on Buy-side 1st then Sell-Side3. Be aware of market participants

Traders (short term) Hedgers (medium term) Investors (long term)

4. Use corporate market access to your advantageNot just for brokers Dark Pool offeringsStand-alone web offerings

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Evolving IR to meet anevolving world

5. Balancing outward communicationwith intelligence gathering

What are investors thinkingIs activism coming

6. Know company intimately Income statementBalance sheet (especially now)Debt structuresGovernance

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Evolving IR to meet an evolving world

7. Reach out and understand all investors/users

Traditional institutions

Hedge funds

Passive investors (index funds)

8. Champion financial communication mediumsTraditional print

Website information

Social networking

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Evolving IR to meet an evolving world9. IR in turbulent times

Do not hide or cancel meetingsCommunicate company’s value & growth story

If stock price declines from market pressures rather than specific events, push value

Monitor stock performance relative to peersContinue to use IR best practicesCircle around to potential investors you’ve contacted in

the past couple of years – things have changed and they may be interested

Make sure employees are communicating and know the company message, as they are some of your best spokespersons

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Evolving IR to meet evolving world

10. IR is the gatekeeperProper disclosureProper transparency

In a manner that is:ConsistentCredibleResponsive