The Merging of IR and Treasury

Apr 23, 2015 | Treasury & Risk

Successfully managing investor relations requires a solid understanding of treasury. Increasingly, companies are combining the functions under one VP-level executive.

By Smooch Repovich Reynolds

As Wall Street demands deeper knowledge about corporate financials and critical metrics, the person who serves as steward of a company’s relationship with analysts and investors had better be astute at understanding the organization’s cash position and risk guardrails.

When the steward is the investor relations officer (IRO), his or her primary responsibility is to frame the brand and story of the company. The role has historically focused more on communication skills than on accounting capabilities or experience providing strategic input. But as the chief intermediary between the company and the investment community, the IRO needs a firm grasp of all things treasury, from cash and investment management to capital structure optimization, credit, and risk management.

In the 2011 IR Magazine article “Rethinking the Investor Relations Director,” author Ian Roundell, head of investor relations at Credit Suisse, argues that the head of a company’s investor relations function should spend time understanding the financial markets, to better understand how investors view the company. Essentially, Roundell suggests, the IR director needs to develop his or her financial acumen in order to serve as the company’s lead share-price strategist.

Some executives are heeding this call to action. We have witnessed an organic merging of the IRO and treasurer roles over the past few years; instead of searching for a new treasurer and an IRO, companies are increasingly combining those roles in one position. They are recognizing that 1+1 can equal 3—that combining investor relations and treasury responsibilities into one role strengthens that individual’s ability to more appropriately position the company with the financial markets.

Strange Bedfellows? Not Necessarily.

Although merging the roles may at first seem incongruous, many IR and treasury duties have begun to overlap in recent years, as the corporate treasurer has become less transactional and more strategic. “Historically, folks who were in IR probably had less of a financial background and more of a communications background,” says Marty Ketelaar, vice president, treasurer and investor relations, at window and door components manufacturer Quanex Building Products. “That’s changed dramatically in the past seven to 10 years.”

Ketelaar is a certified public accountant who attended an investor relations executive education program at the Michigan School of Business in 2004. He was hired as vice president of investor relations at Quanex in 2012 and moved into his current hybrid role about one year later. “There seems to be a lot of natural overlap,” Ketelaar says. “The great aspect about IR is that I have not only the ability, but the right and obligation as the representative of the shareholder base, to be involved with all aspects of the business so that I have the ability to accurately answer any question an investor wants to ask me.”

Colleen Ostrowski agrees. She was named one of the Treasury & Risk “30 Under 40” in 2012, when she held the combined position of treasurer and vice president of investor relations for ITT Corp. The previous year, as treasurer of ITT, she had played a key role in the spinoff of two major business units. Among other responsibilities in the divestiture, she served in a lead role communicating with rating agencies and investors. Her success led management to add IR leadership to her responsibilities.

“It helps me to be a better treasurer,” she told Treasury & Risk in 2012, “because it helps me get closer to the business. Because I understand the businesses so well, I am able to help promote the right treasury policies and practices. And then also being close to the feedback from the investor community helps me with the capital allocation process. It’s a win-win.”

The Evolution of the Role

Selective Insurance Group, Inc., a holding company for 10 property and casualty insurance companies, was one of the early pioneers of combining IR and treasury. After being hired to do performance research and analysis 17 years ago, Jennifer DiBerardino was asked to lead the company’s new treasury group. She had a background on Wall Street, and as she built the company’s treasury function, she noticed that Selective Insurance Group didn’t have anyone focusing on IR.

“It became a natural evolution that I take on IR as well,” says DiBerardino, who is now the company’s senior vice president of investor relations and treasurer. “There’s a lot of synergy between the two roles.” Recently, she’s noticed other organizations embracing the trend. “It seems more prevalent in the last five years,” she says. “They’re combining the role or, similar to the way [I transitioned into it], you hire somebody in treasury or IR, and the person is able to do both.”

According to data from the National Investor Relations Institute, nearly 90 hybrid IR/treasury positions currently exist in more than 20 industries, with the industrials/manufacturing and technology industries employing the largest share. Figure 1 shows a breakdown by industry based on DHR International's internal data.


Several factors seem to be driving the trend. One is that regulatory compliance has created the need for additional information analysis and increased external communication at many companies. The global recession, likewise, increased the demand that companies disclose more detailed information about liquidity and cash management practices, more frequently, to both internal and external parties.

At the same time, corporate treasury has been evolving. As processes have become centralized and automated, the treasury team has assumed more and more analytical work, and the treasurer has become increasingly strategic. The “2014 AFP Strategic Role of Treasury” survey found that 84 percent of corporate finance professionals believe their treasury function has become more strategic over the past five years. A quarter of respondents said their treasury function has a lead role in mergers and acquisitions (M&A), and 28 percent are active in the company’s business continuity planning.

Even more noteworthy, 28 percent of respondents said their treasury team has taken a lead role in investor relations. “There are a lot of similarities between the roles,” DiBerardino says. “You need to understand how everything works and the financial aspect of the company. It just all seems to make sense [to be housed in one department], which is why it’s happening more and more.”

The Logic of the Merger

Although IR has traditionally dealt with Wall Street from the equity standpoint, and treasury has worked with the Street from the debt side of the house, the conversations have often overlapped. “The information you’re conveying to debt investors, and certainly the strategy, are the same story you’d tell an equity investor,” Ketelaar says. “Some of the metrics may be a little bit different, but you’re analyzing and providing a lot of the same financial information.”

For example, “when doing financing, you may have to deal with rating agencies who are trying to put a rating on the company’s debt,” Ketelaar says. “That’s very similar to having a conversation with an analyst. You just need to provide [the rating agencies] with a bit more detail than you would typically provide to Wall Street, such as your five-year strategic plan.”

DiBerardino often uses some of the same content in presentations to obtain appropriate ratings as those designed to secure debt. “Sometimes you have to make adjustments for things, but the company story shouldn't be that different,” she says. “The rating agencies shouldn't hear anything different than anyone else is hearing. I’ve actually gotten a lot of kudos from rating agencies because we’ve provided detailed information and are being pretty transparent.”

Another benefit is that wedding the IR director’s communication skills with finance and treasury acumen can improve a company’s brand positioning within the financial markets. For companies with debt on their balance sheet, dealing with an IR professional who is also heavily involved in, or even supervising, the company’s treasury department may help soothe equity holders’ risk concerns.

“In a highly leveraged or even just a leveraged company, it’s a piece of the puzzle that gives the IR person a lot more credibility,” says Melissa Plaisance, senior vice president, finance and investor relations, at Fortune 50 food and drug retailer Safeway Inc. Plaisance, who began her career in lending, was originally hired as Safeway’s director of investor relations. After internal changes occurred on the company’s banking side, the treasurer began reporting to Plaisance. Her position eventually evolved to include additional responsibilities, and she now oversees treasury, IR, and strategic development. Both the company treasurer and vice president of investor relations report to her.

“My role expanded into what I’ll label strategic development, getting involved in M&A—whether to buy or sell companies, acquire or invest—partially because of my financial experience from my banking days,” Plaisance says. “But I also know how to write and talk about the company.”

Merging IR and treasury can also improve a company’s ability to retain key investor relations managers. Fifteen years ago, investor relations officers usually moved from one company to another, focusing solely on IR responsibilities. Offering a career path that allows a qualified IRO to also assume responsibility for the treasury function provides greater latitude and choices, and means a company can retain talent better in that area. In fact, among investor relations officers who view their job as a stepping stone to another corporate position, 59 percent want to move on to be either a finance chief or another unspecified finance role, according to a 2014 National Investor Relations Institute.

Likewise, for corporate treasury professionals, investor relations experience can be excellent preparation for an executive-level finance position. “I see more treasury professionals moving into CFO roles,” DiBerardino predicts. “If you have an IR perspective, that’s a big boost because you spend a lot of time in front of Wall Street. That’s a really important aspect for a publicly traded company.”

The Crystal Ball Says…

In the near future, IR professionals who want to continue to advance in the organization are going to need to be well-versed both in the workings of the financial markets and in currency issues, challenges around cash repatriation, and other key concerns of a global treasury function. And treasurers who are looking to expand their strategic responsibilities should begin to see investor relations as an area that could benefit from their expertise.

Thus, we expect the combined IR/treasury role to become more common over the next five to seven years. It’s possible other responsibilities will be merged into the combined role as well. Ketelaar sees organizations that currently have an individual or team in charge of corporate strategy potentially merging those responsibilities into the IR/treasury role—or, at the very least, increasing the amount of IR/treasury input into major planning.

“That’s a lot on one individual’s plate, so I don't know if, longer-term, a company would be willing to combine all three roles,” he says. ”But I think the IR professional and treasury professional should—and most do—have some role in the corporate strategy.”

However the role transforms, if the number of joint IR and treasury positions increases, opportunities will expand for professionals in both functions. Companies and job seekers alike have a lot to gain from the trend. As Ostrowski put it, it’s a win-win.

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