Successful CFOs' Best Kept Secret

The merging of IR and Treasury

White Papers | April, 2015

Let’s face it, everything moves on green.

As Wall Street demands deeper knowledge about a company’s financials and critical evaluative metrics, the steward of the relationship with analysts and investors had better be extremely astute about all matters related to the cash position and risk guard rails of the company. Today that steward is the Investor Relations Officer (IRO) whose primary role is to frame the brand and story of a company and serve as the chief intermediary between his/her company and the investment community.

In recent years, companies of varying sizes have begun to recognize the importance of the concept that 1+1= 3, meaning that when the investor relations and treasury roles are merged into one combined position, there is significant leverage in the positioning of a company with the financial markets. In addition, a company derives exponential brand positioning gain as a result of having a finance executive’s acumen wedded with the IRO’s expertise.
Previously, the treasury role focused on tasks such as cash and investment management, capital structure optimization, credit, and risk management. The investor relations role, on the other hand, has historically focused more on communication skills than monetary management or strategic input.
In the last few years we have witnessed an organic migration of the IRO and Treasurer roles to become a single position. Although merging the roles may at first seem incongruous, several industry professionals have found that many of the IR and treasury duties actually overlap, providing companies that combine the positions with an added operational benefit as well.

IRO and treasury as strange bedfellows? Not necessarily

Traditionally, the corporate treasury role has involved ensuring access to capital that supports business growth strategies. Many treasurers, according to online finance publication Investopedia, were trained as accountants. Yet, despite the number-crunching nature of the role, Investopedia also notes that communication skills are an important part of the position because of external relationships with ratings agencies.

Conversely, the investor relations role—which IR magazine defines as a position “viewed primarily as one of external communication”—didn't always involve significant financial experience.

“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 & investor relations at window and door components manufacturer Quanex Building Products. “That’s changed dramatically in the past 7- 10 years.”

Ketelaar, who is a certified public accountant and also attended an investor relations executive education program at the Michigan School of Business in 2004, was hired as vice president of investor relations at Quanex in 2012. He 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.”

1 + 1 = 3: The evolution of the combined IR/treasury position

In the 2011 IR Magazine article “Rethinking the Investor Relations Director,” author Ian Roundell noted that free cash flow is one of the key factors in calculating share price. Why, then, Roundell questioned, couldn't the IRO spend more time understanding the markets and how investors view the company to help influence the organization’s market perception, essentially serving as a share price strategist?

The following year, Treasury Today magazine noted that corporate treasurers today have easier debt capital market access, allowing them to assist with strategic planning and operational process improvement. Treasury Today also predicted it would become increasingly important for treasurers to collaborate with sales and marketing, procurement and other departments.

As both publications’ crystal balls projected, a number of organizations began to merge the investor relations and treasury role into one unified position. 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.



Selective Insurance Group, Inc., a holding company for 10 property and casualty insurance companies, was one of the early pioneers. After being hired to do performance research and analysis 17 years ago, Jennifer DiBerardino, CTP, Selective Insurance Group’s senior vice president of investor relations and treasurer, was asked to lead the company’s new treasury group.

As DiBerardino, who had a Wall Street-oriented background, built the company’s treasury function, she also noticed Selective Insurance Group didn’t really have anyone focusing on IR. “It became a natural evolution that I take IR on as well,” DiBerardino says. “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 5 years,” DiBerardino 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.”

The driving force behind the trend

Several factors seem to have prompted organizations to combine the investor relations and treasury role.

The financial markets’ expansion, for example, helped create new information analysis and communication needs at many companies. Ernst & Young noted in its 2013 “All Eyes on Corporate Treasury: Our Treasury Offering” report that corporate treasury departments are increasingly being asked to show how financial resources and risks are managed, due to transparency requirements—which the assurance, tax, transaction and advisory services provider says, “have led to a global trend toward centralization of treasury activities.”

“With the global economy we live in today,” says Smooch Repovich Reynolds, DHR executive vice president, global investor relations, and communications practice group leader, “the demand for financial astuteness is critical on the part of the IRO. The economy around the world has become so interlocked that what happens in geographic regions elsewhere impacts the U.S. economy in some manner. As a result, I believe that the expectation that an IRO will have to have deep financial acumen is just the tip of the iceberg – in fact, in some instances, an economics background would also be an asset.”

The Recession, and a resulting need to convey more frequent, detailed financial information to internal and external parties, also played a part. Eighty-four percent of financial professionals say the treasury function now plays a more strategic role at their organization, according to a recent Association for Financial Professionals survey; nearly two-thirds (69 percent) feel that’s due to an increased emphasis on liquidity and cash management – key intelligence sought after by the financial markets and investors.

Logic at its Best

Although the specific catalyst for combining the roles likely differs by organization, the benefits are universal: more effective financial oversight and understanding; stronger communication capabilities and more cohesive brand equity development with the financial markets globally.

“There are a lot of similarities between the roles; you need to understand how everything works and the financial aspect of the company,” DiBerardino says. “It just all seems to make sense [to be housed in one department], which is why it’s happening more and more.”
Although IR has traditionally handled the equity side of Wall Street, and treasury worked with the debt side, much of the content is the same.

“The information you’re conveying to debt investors, and certainly the strategy, are the same story you’d tell a debt or 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.”
There are some marked differences between the two roles: How you treat public and non-public information, for example, to make sure the right audience receives the correct information.

“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 them with a bit more detail, such as your five year strategic plan, than you would typically provide to Wall Street.”

DiBerardino, for example, often uses some of the same content in agency and debt presentations.

“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.”

For companies with debt on their balance sheet, dealing with an IR professional who is also heavily involved in (and potentially supervising) the company’s treasury department may help sooth equity holders’ risk concerns.

“In a highly leveraged or even just leveraged company, it’s a piece of the puzzle that just 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, working in the banking industry, 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.”

A combined IR/treasury role can offer significant advantages; yet the position isn’t a fixture at all organizations. When it comes to merging the two functions, size often matters.

Mid-cap organizations have, to date, been more likely to join the roles than some large-cap companies, Reynolds says. “Fifteen years ago, investor relations officers went from one company to another, focusing solely on IR responsibilities,” Reynolds says. “Offering a career path that will allow an IRO to also assume responsibility for treasury provides greater latitude and choices, and means a company can retain talent better in that area.”

In fact, the majority of investor relations officers—59 percent—who view their jobs as a stepping stone to another corporate position want a either a finance chief or other unspecified finance role, according to a results from a 2014 National Investor Relations Institute.

The crystal ball says…

Reynolds predicts that the combined IR/treasury role will transform into a broader financial role in the next five to seven years, much like the financial markets have grown in recent years—requiring professionals to be well-versed in both global finance and the financial markets.

“The interlocking of diverse sets of information that affects a company from the capital markets can provide a competitive advantage if a company has the right steward in place to frame that content,” Reynolds says. “In turn, the IRO/Treasurer hybrid profile has the ability to frame that marketplace intelligence in such a way that management can make more well-informed internal decisions about myriad issues that affect how the company is going to be viewed by investors and analysts.”

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, adding more joint IR and treasury positions to the marketplace should provide expanded opportunities for industry professionals.

“I see more treasury professionals moving into CFO roles,” DiBerardino says. “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.”

Jobseekers will benefit from increased career latitude; and companies also stand to gain.

“It’s one of the different directions a person’s career can take once you start adding in treasury,” Reynolds says. “Just from a career development and employee retention standpoint, the trend gives a number of additional options in terms of career paths. I believe this is the beginning of the IRO advancing to oversee other critical functions in an organization, including the possibility of strategic planning and corporate development.”