Louise Slater M:Communications Tel: +44 (0) Institute for the Development of Financial Markets (IRFR) Annual Russian IR Forum: 26 September 2008 “Positioning the IRO for success”

2 Importance of the IRO role – Key objectives – Strategic positioning Defining the IRO role – Management’s responsibilities – IRO’s responsibilities Positioning the IRO for success

3 Importance of the IRO role Key IRO objectives Optimise understanding and rating of your stock in any given market conditions – thereby minimising the cost of capital Support the share price Maximise management’s degree of business freedom to pursue its strategy Promote an orderly and liquid market

4 Importance of the IRO role Strategic Positioning Know objectives, set additional goals and work to achieve them… The IRO role within the organisational structure should be carefully considered… Investor Relations is a strategic function of senior management therefore… Responsibility of BOTH management and the IRO to position the role for success!

5 Defining the IRO role … Management’s responsibilities “Benchmark, position and support”

6 Defining the IRO role Organisational positioning Clearly define the reporting structure to eliminate conflicts: – IRO reports to the CFO - IR seen as a financial role requiring communications expertise (often the most logical arrangement given the questions analysts ask) – IRO reports to the CEO – IR integrated with communications and marketing and reports to the CEO – IRO reports to a different senior executive – usually in smaller companies

7 Defining the IRO role Convergence: IR/Financial PR Co-operation between IR and Corporate Communications on financial media relations Increasing tendency for IRO to speak to journalists Dotted line reporting between Corporate Communications, CFO and IRO CEO CFO Head of IR IRO Head, Corporate Communications Financial media spokespeople

8 Defining the IRO role Selecting your IRO IR requires a multi-disciplinary approach - successful IROs come from a wide variety of backgrounds Consider that the nature of the IRO will determine the level of authority and support required Be aware of current remuneration ranges and trends – aim to recruit and retain a quality IRO!

9 Defining the IRO role Accommodate access Promote ‘open door’ access to management – builds IRO’s credibility with analysts and investors Physical proximity of IR to management aids ‘ready access’

10 Defining the IRO role Benchmarking: global averages Size of IR team: Micro-caps: 2.2 employees, mega-caps: 6.3 (EEMEA: 3.2) Reporting: 50-55% of IROs report to the CFO, 30% to the CEO IRO communication: with CEOs - 48% daily/weekly basis, with CFOs - 75% daily/weekly basis (EEMEA: 40% counsel CFO weekly, 28% daily) (W. Europe: 52% counsel CFO daily) Budgets: annual IR budget: $742,900 IR and PR: 70% have separate IR and PR depts (EEMEA: 80%) Source: “Global Trends in Investor Relations 2007” (The Bank of New York Mellon)

11 Defining the IRO role … IRO’s responsibilities “Promote IR and aim to achieve credibility.”

12 Defining the IRO role Promote the role of IR Continually educate management about the role and value of IR Aim to earn the commitment of the CEO and the senior management team Understand your corporate culture and structure Promote informal access to management to complement formal ‘open door’ policy

13 Defining the IRO role Enhance through planning Create an IR plan which reflects structure and objectives of team Should fit company’s market cap, sector, business model and the investment characteristics of its share Should be sensitive to the company’s current stage in its life-cycle

14 Defining the IRO role Promote integrated communication All communication originating from a company affects corporate value – creation/destruction Unified messages increase investor confidence - build a good relationship with communications colleagues before a crisis or big event occurs

15 Defining the IRO role Co-ordinate internally Work with colleagues to ensure ‘one-voice’ policy through: – Limited group of agreed spokespeople – Formal agreement on ‘material information’ – Queries from analysts and investors referred to IR – Regular meetings between the IR and PR department – Ensuring all messages at divisional level echo IR and Senior Management messaging Best practice: adopt a disclosure committee approach

16 Defining the IRO role Maximise the efforts of the IR team Negotiate the position of IR within the organisational structure Define components of budget and maximise fully Delegate to expert colleagues Share internal resources Outsource to agencies: as well as Shareholder ID which has an external focus use outsourcing for internal health checks! Benchmark, conduct perception studies and improve communication skills through expert coaching to achieve BEST PRACTICE

17 Defining the IRO role Achieve personal credibility Position yourself in a strategic role Attend board meetings! Be visible and knowledgeable about your company Expand skills: finance, regulation, corporate governance Project an executive presence! Identify and attempt to meet award winning IROs Achieving credibility creates platform for future access to resources and further success!

18 Bree Schuette Simon M:Communications Tel: +44 (0) Mob: Louise Slater M:Communications Tel: +44 (0) Mob: +44 (0)