NIRI ANALYTICS. NIRI IR Counselor Profession and Compensation Research Report

Transcription

1 NIRI IR Counselor Profession and Compensation Research Report

2 Executive Summary IR consultant average base salaries dipped within the last two years, decreasing by approximately 4 percent. However, the inflation adjusted decrease was closer to 6 percent. 50 percent of counselor respondents did not receive a cash bonus (excluding long-term incentive plan pay-outs). For those that did receive a cash bonus, the median amount received was $25,370. In sum, IR consultants average total 2017 compensation (base salary, cash bonus, and stock or equity bonus) was $218,038 (SD=$50,000), and the median was $197,500. Key drivers affecting the compensation of IR consultants are size of the firm, and years of investor relations experience. As organization size increases, so does the likelihood of receiving equity in addition to cash compensation. For the majority of counselors (80 percent), equity is not a typical aspect of their total compensation packages. Hourly rate of pay (which applies to independent consultancies and small agencies with up to 25 IR professionals), was $215 (SD=$91), with a median of $200. 2

3 SECTION 1 Respondent Demographics and Survey Methodology

4 POSITION TITLE CONSULTANCY SIZE Principle/Owner 35% Large agency (more than 100 IR professionals) 5% Partner/Managing Partner 22% CEO/President 14% Mid-sized agency (between IR professionals) 14% Sr./Executive VP 11% Small agency (between 5-25 IR professionals) 37% Vice President 5% Small partnership (fewer than 5 IR professionals) 16% Director 3% Associate 10% Self-employed, independent consultancy 28% HIGHEST DEGREE EARNED YEARS OF IR EXPERIENCE MBA 44% 31 years or more 12% years 36% MA/MS (Masters level) 12% years 17% years 13% BA/BS (Bachelors level) 42% 7-10 years 8% 5-6 years 5% High School Diploma/GED 2% Fewer than 5 years 9% 4

5 Purpose and Objectives This study explores the current state of the IR counselor profession. IR counselors are consultants who provide investor relations-oriented services on behalf of corporations and companies that are seeking investors, going public or looking to augment their internal capabilities in managing their investor relations program. Previous work in this area can be found on the NIRI website. The study inquired about 2017 base salary data, 2016 cash bonus and equity data, and additional aspects of a total compensation package. This report presents 2017 survey results from consultant investor relations practitioners, and trend results that include data from previous survey efforts. This report also includes: Size of consultancy Revenue outlook Methodology All NIRI IR counselor/consultant members were invited to participate in this electronic survey through direct invitations from January 6 to February 6, A total of 75 individuals participated in the survey, yielding a response rate of 28 percent. A sample of this size has a margin of error of plus or minus 9.6 percent at a 95 percent confidence level. This means that if the survey was repeated 100 times with different samples from the population, 95 out of 100 samples would yield a result within plus or minus 9.6 percent of each statistic reported in this study. For example, if an answer is offered by 50 percent of respondents, the results would range between a high of 60 percent (rounded) and a low of 40 percent for 95 out of 100 other samples from the same population. In charts and tables, numbers may not total 100 percent due to rounding. Data was post-survey weighted on a number of significant variables to ensure accurate representation of the larger IR consultant population. Demographics Client services Budget sizes by consultancy size Types of clientele 5

6 SECTION 2 Counselor IR Compensation

7 AVERAGE IR CONSULTANT BASE SALARY BY YEAR N=75. IR Consultant Base Salary IR counselor base salaries decreased from a 2015 average of $198,320, to an average (mean or M) of $189,919 (Standard Deviation (SD) = $114,735) in The chart above reveals the average base salaries of IR counselors since These averages are not adjusted for inflation. Between 2013 and 2015 average base salary increased approximately 24 percent (9 percent when adjusted for inflation), followed by an inflation adjusted decrease of approximately 6 percent between 2015 and For analysis involving time and salary, converting current or nominal dollars into constant or real dollars often paints the most accurate picture. This is done by multiplying each dollar amount by a ratio of price indexes, distributed by the Bureau of Labor Statistics. For more information on the Consumer Price Index and adjusting for inflation please visit the Bureau of Labor Statistics website. 7

8 One-half (50 percent) of counselor respondents did not receive a cash bonus (excluding long-term incentive plan pay-outs) for This data point has seen fluctuations in the last four years. While practitioners working as independent consultants or in an agency with 25 IR professionals or fewer are less likely to receive a cash bonus, they are more likely to possess an ownership stake in their firm. For those that did receive a cash bonus, the median amount received was $25,370. The vast majority of IR counselors (95 percent) did not receive an equity bonus in For those that did receive an equity bonus, the median amount was $33,703. In sum, IR consultants average total 2017 compensation (base salary, cash bonus, and stock or equity bonus) was $218,038 (SD=$50,000), and the median was $197,500. Key drivers affecting the compensation of IR consultants are size of the firm, and years of investor relations experience. MEDIAN AND CPI ADJUSTED MEDIAN BASE SALARY BY YEAR N=75. 8

9 MEDIAN BASE SALARY AND TOTAL COMPENSATION BY FIRM SIZE N=75. The median base salary and total cash compensation packages of IR counselors were positively correlated with size of IR firm. 9

10 MEDIAN BASE SALARY AND TOTAL COMPENSATION BY YEARS OF IR EXPERIENCE N=75. Median base salary and total cash compensation also had a strong positive correlation with the number of years of investor relations experience an IR consultant possesses. 10

11 While gender was a driver affecting the cash compensation of IR consultants, women out-earned men in 2017 in both base salary and total compensation. This follows similar compensation findings by gender for IR counselors in 2015, when total compensation was almost equal for men and women counselors. MEDIAN BASE SALARY AND TOTAL COMPENSATION BY GENDER N=67. 11

12 Hourly Rate of Pay and Hours Worked per Week For the second survey year, NIRI inquired on hourly rate of pay (which applied to independent consultancies and small agencies with up to 25 IR professionals). The overall hourly rate of pay was $215 (SD=$91), with a median of $200. Mean hourly rate of pay for counselors in an independent consultancy was $184 (SD=$67), and a median of $200. For those in a small partnership (less than five IR professionals), it was $288 (SD=$105), with a median of $260. Finally, for those in a small agency (between 5 and 25 IR professionals), average hourly rate of pay was $247 (SD=$148), with a median of $150. The overall mean number of hours worked per week for these same counselors was 31 (SD=19), with a median of 30. Mean number of hours worked per week for counselors in an independent consultancy was 26 (SD=16), and a median of 30. For those in a small partnership (less than five IR professionals), it was 39 (SD=21) with a median of $50. Finally, for those in a small agency (between 5 and 25 IR professionals), average number of hours worked per week was also 39 (SD=26), with a median of 50. Other Types of Compensation As organization size increases, so does the likelihood of receiving equity in addition to cash compensation. For the majority of counselors (80 percent), equity is not a typical aspect of their total compensation packages. Of those that do receive at least one additional type of equity over and above cash compensation, the largest percentage (13 percent) receive profit-sharing, 3 percent receive stock options, and 3 percent receive restricted stock/ units. For 40 percent of consultants, additional benefits over and above cash compensation were not a part of their total compensation package. As organization size increases, so does the likelihood of receiving benefits in addition to cash compensation. The most popular additional benefits are health insurance (52 percent), with other benefits significantly trailing. The second most frequently-cited benefit was a car (13 percent). Other benefits include medical exams (13 percent), a club membership (8 percent), special officer pension plans (5 percent), and a life insurance plan (2 percent). 12

13 SECTION 3 Consultant Revenue and Client Services

14 IR-RELATED REVENUE BY FIRM SIZE Firm s IR Practice-Related Revenue IR practice-related revenue of the firms represented by respondents span a broad range. Across all organization sizes, a greater percentage of IR-related revenues were in the higher ranges for 2017 than in the last six years. Still, in 2017 the largest single percentage (30 percent) reported their organization s IR practice-related revenue to be less than $300,000. By firm size, the largest percentage (55 percent) of organizations with 5 or less IR consultants reported IR practice-related revenue of less than $300,000, $2.5 million to $4.9 million for firms with between 6 and 24 IR consultants (36 percent fell in this range), and $7 million or more for those with 25 or more IR consultants (29 percent). 14

15 Consultant Services retainer-based work. Eighty-seven percent of firms with Firms with 5 or less IR professionals report either having between 6 and 24 IR professionals execute a mix of project solely project-based work or a mix of both project and and retainer-based work, with an additional 9 percent retainer-based work at about the same frequency (43 conducting only retainer-based work. For firms with 25 or percent each), while the minority (17 percent) conduct only more IR professionals, 92 percent conduct a mix, while 8 percent conduct only retainer-based work. MOST AND LEAST COMMON SERVICES OFFERED BY IR CONSULTANTS N=75. The most common services are presentation development services included speaker training (54 percent), boarddirected research (49 percent), relations with individual (89 percent), strategic positioning/messaging (83 percent), writing press releases/scripts (83 percent), crisis investors (48 percent), annual meetings (33 percent) and communications (79 percent), and roadshow conference/ IR staff recruitment (30 percent). event management (76 percent). The least common 15

16 EXPECTATION OF CHANGE TO IR-RELATED REVENUE BY YEAR NUMBER OF CLIENTS BY SIZE OF FIRM 16

17 SECTION 4 Type of Clientele, Future Aspirations and Challenges for IR Consultants

18 Type of Clientele A new question in 2017 asked the types of clientele the firm has assisted within the last 12 months. Overall, 47 percent of clients of IR services were publicly traded companies with at least one in-house IR staff person, 38 percent were publicly traded companies with no in-house IR staff person, 6 percent were private companies with no in-house IR staff, 4 percent were private companies with at least one in-house IR staff person, and 5 percent were another type of client. Some differences can be seen in client type by size of the consultancy. Large firms with 25 or more IR professionals are more likely to have publicly traded companies with at least one in-house IR staff person as their client within the last 12 months (68 percent), compared with mid-sized (34 percent) or small/independent firms (48 percent). Independent/ small IR firms and large firms are slightly more likely to have private companies on their client roster in the last 12 months than mid-sized firms. Remote Work As remote work increases among the population, a decreasing percentage of IR consultants work full-time in their company offices (47 percent in 2017, down 22 percentage points in the last 2 years). Of the remainder, 27 percent report working remotely/telework full-time (a 13 percentage point increase), and 25 percent work remotely part time (an 8 percentage point increase). Future Aspirations of IR Consultants Most (30 percent) counselor practitioners want to remain in their current role over the next five years. Another 24 percent would like to expand their agency, 21 percent would like to move into corporate IR, 7 percent want to be top management within their agency, 3 percent want to retire, and 2 percent would like to move to a more general communications role. Fifteen percent are undecided regarding their carer path within the next five years. 18

19 TYPE OF CLIENT IN THE LAST 12 MONTHS BY FIRM SIZE 19

20 BIGGEST CHALLENGE FACING YOUR CONSULTING BUSINESS WITHIN THE NEXT YEAR With just a handful of clients, our No. 1 focus is the daily work of serving their IR and PR needs. If a client merges, or a key executive leaves, our relationship can change overnight. Replacing that revenue means continually cultivating a pipeline of potential future clients, so that some are entering even as others might fade away or less IR professionals/independent consultancy. Declining number of public companies. Declining number of sell-side research analysts. -- Small firm/independent consultancy, 5 or less IR professionals. Conversion of potential clients to actual clients; competing against predatory pricing of large agency firms. -- Small firm/independent consultancy, 5 or less IR professionals. Shrinking market for IR consulting with fewer IPOs, more companies being acquired or going private, and more competition. -- Mid-sized firm, between 6 and 24 IR professionals. Increased competition among investor relations firms as they compete for business from a shrinking number of public companies. -- Mid-sized firm, between 6 and 24 IR professionals. Returning to pre-recession retainer rates due to continued tight budgets for outsourced IR. -- Mid-sized firm, between 6 and 24 IR professionals. The cheap and easy availability of good enough off-the-shelf solutions that companies buy through procurement rather than relying on highly customized, personally delivered IR services. -- Large firm, 25 or more IR professionals. Declining numbers of publicly listed companies and tepid IPOs. -- Large firm, 25 or more IR professionals. Move into more specialized IR. Less focus on outsourced IR as it s too commoditized/ not a big revenue generator. -- Large firm, 25 or more IR professionals. 20

21 NIRI is dedicated to advancing the practice of investor relations and the professional competency and stature of its members. Connect with us: National Investor Relations Institute 225 Reinekers Lane, Suite 560 Alexandria, VA All contents 2017 National Investor Relations Institute. All rights are reserved and content may not be reproduced, downloaded, disseminated, or transferred, in any form or by any means, except with the written prior agreement of NIRI.