COVIDIEN PLC US TOP 100
Large cap
Listing information NYSE Healthcare
CEO José Alme1 da
CFO Cha rles Dockendorf f
Head of IR Coleman Lannum
IRteam Tod d C arpenter, Ann Broughton
IR team size
Three
IR awards
Gra nd pr1x f or bes t overa ll invest or relati ons program - large cap
Bes t 1nve stor rela t10ns off1 cer - large cap Bes t IR by a C EO or c hairman - larg e cap Bes t 1nvestment c ommun1 ty meetmgs
Bes t 1nve stor rela t10ns dur1ng a corporale transac t10n
Bes t 1 n sector- healthcare
Contact information www.cov1 d1 en.com
cole.lannumlclcov1 d1 en.com l +1 508 452 4343
Rank 2013: 1
'C ovi d1en i s always on the roa d getting in front of people, w1 th the C EO a nd CFO ever -present, a nd i t hos t s the most frequent and best - presen t ed mvestor days. The head of IR has a buy- s1de background, wh1ch 1 s use f ul' - buy s1 de
'Cov1 d1 en cons1s tently commun1 cates w1th the Stree t , whether the news 1 s pos1 t1 ve or negative' - sell s1 de
'There are very few surpri ses wi th Cov1di en, as i t rea ehes out t o us a nd makes sure we are well prepared , and t ha t reduces uncertam ty. The IR t eam g1 ves ou t a very clear message' - sell s1de
Equal treatmentt's another year a t the t op o f t he pile f or medica l equi pmen t supp lier Covidi en, as 2014 marks t he
US Top
H e a dds t ha t t he rot a tlona l program 1s somet h1ng that i s supported a t the execut1 ve level a t Covid1en, and
that t he IR pos1 t ion 1 s treated as a 'cheri shed role ' in any
company's f ourth year in pole posi t1 on 1 n the
100. Of the ni ne awards 1t i s nomi nat e d f or th1s year, Cov1dien walks away with six - double l ast year's t a lly
- 1ncluding t he covet ed grand prix for best overa ll
1nvest or rel a tlons at a large- cap company.
lt's also t he f ourth year 1 n a row that Cole Lannum, the company's hea d o f 1 nvest or rel a ti ons of e1 gh t years, has been named as t he best IR prof ess1 ona l at a l arge cap. His close-kn 1t, t hree- person team 1 ncludes an admi n1strative assist ant and a rot a ti ng seni or di rect or
o f I R. 'l expect to have h 1 m around f or another si x to
12 mon ths before ll ose h 1 m t o b 1 gger and bett er thi ngs 1n t he organiza t1on,' muses Lannum.
young execut1ve's f orma t1ve years. 'it's unusua l1n a lot of d 1 fferent ways f or an up- and- comi ng career-minded person to come and learn I R for two or threeyears,
and t o get unprecedent ed exposure t o t he seni or
managemen t t eam and t he board,' he expla 1 ns.
The s upport from above, Lannum con tinues, is keenly felt 1 n IR : Covid1en's C FO, Charles Oockendorff ,
is nomina ted f or t he award f or best IR by a CFO , and the fwm's CEO José Al me1da w1ns t h1s year's award for best CEO f or I R among large-cap US compan1es. 'They get i t when 1t comes to underst and1 ng t he 1 mportance of t he investmen t community as a constituency, and t he1r roles
IR MAGAZINE I NVESTOR PERCEPTION STU OY - US 2014 Il
US TOP 100
l 561 Covidien
l 454 lntel
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Grand pnx for best overall rnvestor relatrons program - large cap
long -t erm projects. Sen r or management r s mr ndf ul of what 1nvest ors think about t he company and wa nt to happen, Lannum notes, and I R is used to info rm
hrgh-levelportfo lio and st rate gy meetings as a matter o f
necess1ty. 'The flrp -s i de 1 s that th1 s allows me t o speak as someone wrth authorrty when answerr ng rnvest ors' questi ons,· Lannum con tinues. 'Knowledge o f a long term proJect, f or example, a llows me to shape my answers a b 1t more appropria tely and respond we ll.'
Fo r Lan num, 2013 proved to be a yea r f o r cons is
tency, not only when 1t came t o ma1nta1ning h1s f1rm's hrgh IR standards, but also for shap 1ng the way in whr c h he and his tea m int era e t w1th each 1nvest or: We thin k of the ent1re investment co mmun1ty, agnostr cally,' Lannum expands. Whe ther l've got someone l've never heard
f rom before w ho runs $10 mn of asset s, or Fidelity or
Cap1ta lResearch or the Governmen t of Si ngapore or a ret a rlrnvest or before me , we try t o t reat them allrn exactly the sa me way. lf you' re 1nterested 1 n a p ieee
of 1nformat ion on what we have, l d on't think it's my
jo b t o t ry to JU dge what kind of 1nvesto ryou are.·
As a result, Covr dien's team members do n't spend an undue amount of trme o n sharehold er target1ng but t ry t o mainta1n a mutua lapprec i atr on fo r each other's
- and co nstituents'- ti me. The reality 1 s, Lannum a dds,
1n communicat1ng with 1t, ' expl ain s Lannum.
Equally imp o rt ant , however, 1 s the understanding tha t IR r s Lannum's ultimate responsr b ility, and though Dockendorff and A lmeida are involved, neither 1 s a
m r cro -manager: 'They let me handle I R andare available
when needed, but they stay out o f myway an d let me deal with the day-t o -day function1ng of things,· Lannum says. 'l thr nk the rel a ti on shrp works out rea llywe ll because of that c omb inatr on.·
The oth er s ide of th1 s relat1 onship means I R has become st ra t e gica l ly f ar more important a t Covidr en, where 1t has become 'entwi ned ' wit h the company's wider strat egy, bus1ness development and other
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m I R MAGAZINE INVESTOR PERCEPT I O N STUOY- US 2014
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US TOP 100Covidien
Co!Qman Lannum
thatiR is a U/7 job. 'Panicularly when portfolio managers or analysts are trying to make a decision and need a few facts to help them, if l'm the only one in the way of them coming t o a conclusion then they're going
t o appreciate a quick and accurate response,' he explains. 'lf l'm on the phone at 8.00 pm on a Sunday night, it's because an event has happened, something is going on and my constituent s need answers.'
This involves a busy travelprogram, during which
Lannum est imat es his team panicipates in 40-45 IR events annually. 'lf you exclude earnings and holidays, it works out at about one invest or event a week, fNery week, over the past five years,' he calculates. These ext end from multiple investor days and events at Covidien·s plants and organizations around theworld
t o non-dealroadshows and investor conferences.
'lt's really across the board,' Lannum summarizes.
Covidien·s shareholder base requires this kind of attention, however. Lannum describes his company's holding as 'widely institutional' among a fairly smallpool of investors. Over the last few years, 'we·ve seen an uptick in western European ownership,' he notes. As an lrish public limit ed company - officially based in Dublin
- Covidien enjoys many European investment firms holding a st ake in the business, while US-only funds can also benefit from its NYSE listing. 'We didn't design the company to appealt o so many different organizations,'
jokes Lannum. 'lt's just a fringe benefit of the way wùe structured.' Because of this, Covidien's management
holds four to five board meetings in Dublin annually, and can jump across to mainland Europe fora few roadshows atthe same time.
One fNentthat dominated Covidien's 2013 was completing the spin-off of its dedicated pharmaceuticals business, Mallinckrodt, into a listed entity in its own
right. After months of pianning, the business was finally spun off and trading opened on July 1, 2013. Even
though Mallinckrodt was wellknown in the specialist
pharmaceuticalindustry, Lannum describ es the process as one of investor education. To that end, bolstered with a new IRO hired just forthetask, the spun-off business' relatively new CEO and CFOwere broughtto a number
of meet-and-greet event s and generally made available to inquisitive investors.
'We had t o make sure they had a platform early,
while they were stili part of Covidien, so they could settheir own communication objectives ortheir own meetings,' Lannum explains. Severalquaners before the spin-off itself - in late 2012 and early 2013 - Mallinckrodt's lR contingent was meeting invest ors on
non-dealroadshows and at sell-side conferences, while
the firm's CEO was meeting with investors one-to-one
IR MAGAZINE INVE5TOR PERCEPTION 5TUDV- U5 2014 111
US TOP 100
and answering t he1r questlons. Lannum, meanwhile, wa ited in the wings as an observer, both t o help and
t o f ulf1 l ld1sclosure requirement s.
New 1nvesto rs were a lso g1ven an extens1ve
s harehol der deck co mpi led f rom bot h co mpan1es, produced t o be above and bey ond SEC requwements, and bursting w1th a comple te history of both companies and a comprehensive v1ew of the numbers involved.
'We put o u r heads together and tho ught abo ut what we
wo uld nee d to make an appropnate va luation dec1s1on
1f we had never heard of the company before,' Lannum
recalls. The eff o rt was apprec1a t e d by 1nvestors, and named by so many as a modelf or I R undertaken duri ng a corporate transac ti o n tha t Covid1en p1cked up another l R Magaz1ne Award f or the way it commu nica ted w1th invest ors during t he sp1n-off.
In light of s uch a busy 2013, what are Lannum's
plans f or 2014? 'Noth1ng really earth-sha king,' he replies. 'l th1nk 1t's go1ng t o be much the sa me as w ha t you've seen 1n the past . We may be t weaking some of the event s we do, but fundamentally we're go1ng to
rema1n focused on wha t people are really int erested In.·
THE VIEW FROM THE TOP
lnterviewwith José Almeida, chairman of the board, president and CEO at Covidien
What did you feelwas the most important thing to communicate to investors in 2013?
The spin-off of our Mallinckrodt business was a big event for us this year and IR communications were critical. Additionally, i t has been important for us to communicate about our agility in responding to the changing healthcare landscape. Ongoing shifts in healthcare are putting pressure on the entire industry and it is important for investors to understand how
our strategy positions us to grow and drive shareholder
value in the face of these changes. We are also seeing success in our investments in emerging markets where we are growing above the market in key areas, including more than 25 percent growth last year in Brazil, Russia, India and China.
Finally, our commitment to return on invested
capitaiand capitai deployment has been a major focus area. We remain committed to using our strong cash flow to fund business expansion, while returning at least 50 percent of our free cash flow to shareholders through dividends and share repurchases. We returned more than 130 percent of our free cash flow to shareholders last year.
What do you enjoy most about your role in IR?
llike hearing from the very smart people who follow our company. l am always learning and our investment community helps teach me many things about our business from an outsider's point of view.
Why is IR treated with such importance at Covidien? All of our constituencies are important and that certainly includes investors. We believe differentiated IR can add value over time: from day one when we
Il IR MAGAZINE INVESTOR PERCEPTI ON STUDY- US 2014
spun off as an independent company in 2007, we have viewed IR as a differentiator and have focused on i t.
l believe a superior investor relations function enables our seni or team to spend more time on running the company. One of the advantages of having a highly effective IR team is that l trust it to do much
of the day-to-day communication, so neither l nor one
of my senior operating managers is required to be present for every single meeting.
How would you describe the IR philosophy at Covidien in three words?
Transparent, credible and responsive.
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Best l R by a CEO or cha1 rman - large ca
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