16 top trends in investor relations.

• Author: Pincus, Theodore H.

For one, anticipate sharp increases in top management time devoted to personal indocrination of investment professionals nationwide and overseas.

There is a clear and positive trend for CEOs of public companies to respond to growing investor demands for the personal marketing of their own message, with a 100% rise in time and travel cost commitment seen over the next two years. While this will mean that 11,000 actively traded public companies will spend a record $8 billion on investor communications this year, up from $7.5 billion last year, the increasing investment of top management time and expense will more than offset further major cutbacks in budgets for corporate investor relations staffs and annual report production costs.

There are 16 specific changes and trends that I believe will have a heavy impact in the 1990s on the style and intensity with which U.S. public companies communicate with shareholders and the investing public. Here are the highlights of these trends.

1. Aggressive investor relations efforts will be more vital than ever in the economic survival of Wall Street wallflowers. Despite the obvious buoyancy of the stock market, at least a third of America's public companies were never invited to the party, and today sell at price/earnings and price/book ratios far below the well publicized market averages -- support levels that will strangle any hope for deleveraged business expansion unless they proactively work to alter Street perception.

2. Highly followed high p/e companies face a period of unprecedented stock vulnerability and volatility. With p/e multiples near record highs, a stubborn recession, and juicy temptations for massive profit-taking by investors, high-flying companies face an exceptional challenge to not only maintain strong shareholder loyalty and understanding but to find a second wave of followers to wait in the wings for stock price weakness.

3. There will be an accentuation of the two-tier marketplace. Increasingly, the haves and have-not companies in terms of a Wall Street following will see a widening disparity, due in part to a continued decline in the number of sell-side analysts and their attention span. For every company today enjoying a 25x p/e multiple, there is a company languishing at 6x or10x and selling below book.

4. There will be a stronger trend for investors to try to tie management compensation to stock performance. A growing number of shareholder associations, newsletters, and national...