Exactly how much is corporate access costing us? Are we spending too much time and money? In the second of our three-part series about the return on investment (NYSE:ROI) for corporate access efforts, we focus onthe equation's denominator: the investments affiliated with corporate access. While the cost of corporate access is different for every company and can be tough to quantify, it must be acknowledged. We break it down into three main areas:
1. Executive Time:The biggest cost of corporate access is executive time, in the form of preparation, travel, and actual meetings.With the median total compensation for S&P 500 CEOs ringing in at $10.8 million,and $3.4 million forCFOs, it's clear that an executive's time doesn't come cheap. Wherever possible, sharing the burden is highly advisable and increasingly popular: industry stats show that more IROs are taking meetings solo.Nonetheless, when considering each investor meeting with your CEO likely costs >$5K, not including preparation costs - it is clear that each meeting matters.
2. Cost of Travel: According to a study by BNY Mellon, 24% of IR budgets in 2015 werededicated to travel costs. Not a negligible expense by any means. In fact, the portion of the IR budget allocated to travel has increased significantly, up from 13% in 2013. To help ease the strain, savvy companies are turning to technology-conference calls and webinars cut down on airfare and hotel charges. The average non-deal roadshow (NDR) costs a company ~$5,000 in out of pocket expense for travel, logistics and materials.
3. General IR Expenses:It takes a team to properly support corporate targeting and access. As reported by BNY Mellon, the average North American IR program annual budget totaled $658,000 in 2015. IR teams are growing in size, up from 1.15 employees in 2008 to 2.11 in 2016, according to NIRI, and the number is even higher if administrative staff are included. To supplement their resources while still running a lean team, IR departments can look for outside support in the form of consultants, agencies, and technology tools.
Once you have a grasp of the costs and returns attributed to your corporate access efforts, you can begin analyzing how to improve ROI. Ournext post in this serieswill discuss best practices for optimizing ROI.