Meeting Notes

November 2006 Cincinnati Tri-State NIRI Chapter Minutes

P&G Shares Secrets of IR Success with NIRI Chapter

The Cincinnati Tri-state NIRI Chapter's November 2006 meeting drew 30 people to the worldwide headquarters of mega-cap Procter & Gamble. The topic: P&G's award-winning investor relations program. The company's IR director, John Chevalier, took guests through a detailed presentation that examined the various success factors of the program: Where to play, how to play and how to win.

First, however, P&G treated visitors to a lively walk down the company's well-documented memory lane. A tour of the company's archives – an on-site museum chock full of product samples, early advertising posters, historic documents and branding artifacts – turned up everything from the company's first (hand-written) annual report to an Emmy Award to the very first box of Tide to samples of John Wayne's hair.

After the tour, the group headed to the company's IR meeting room. The investor relations department designed the room both as a practical meeting space and as a handy showcase for the company's many products. As Chevalier explained, when investors are gathered in the room for presentations, company officers discussing business divisions or products can easily point to items around the room or remove items from displays as needed.

After a catered dinner, Chevalier and his team discussed the history of investor relations at P&G, how it became a proactive program 11 years ago, and how heavy support from top management allows the team to achieve its objectives.

Slides took the group through those objectives – to achieve fair valuation of P&G stock at all times with lower volatility than peers, and to provide management with investor perspective to enhance strategy development – as well as through goals, strategies and tactics.

Chevalier noted several times the importance of communicating a consistent message, staying in touch with the external message and keeping management in touch with the message. He and his associate, Mark Wilkins, discussed the company's approach to earnings guidance in detail, running through the tools P&G uses to measure fair valuation, develop its profit forecast, cross-check it and create good, believable guidance. Using information available to investors, the IR team strives to put itself in analysts' shoes. It combines that information with data available only to the company and thinks about how analysts might interpret that information. The company's guidance should fall within an accepted range (plus or minus 10 percent) of what analysts expect. Good guidance, Wilkins said, helps determine what the market valuation will be.

P&G also benchmarks volatility both within its competitive group and within its fundamental peer group – other mega-caps that are competing for investment dollars.

Chevalier said the company is a heavy user of technology to help manage data flow, organization, tracking and targeting. Thomson Financial is P&G's partner.

Chevalier closed by discussing the multiple “soft” factors that enable P&G's IR team to be successful. Those factors include:

  • Having IR managers that come from the business
  • Conveying a consistent message track aligned with the company's various businesses, functions and senior management
  • Becoming a trusted and accurate source of industry data
  • Promptly returning investor phone calls – usually within 24 hours
  • Giving investors broad access to management, with IR officers present
  • Having written and published “rules of engagement” for both officers and investors
  • Taking the high road on competitive issues or questions

The next Cincinnati Tri-state NIRI Chapter meeting will be Dec. 6 at the Grand Finale restaurant in Glendale. This is primarily a holiday networking event, although local members and leadership will also discuss their recent experiences at NIRI national conferences. Register by Nov. 29 by contacting Janelle Jessie at jmjessie@ashland.com or at 859.815.3056.