IR Monitor – 17th May 2021

This week’s news

The ongoing debate regarding executive pay continues 

A clash of opinions on the ever-pressing topic of executive pay this week. FTI’s Peter Reilly told the Financial Times that Covid-19 has heightened the focus on how effectively businesses are balancing stakeholder interests, with investors challenging all companies to go even further in demonstrating their efforts to incorporate stakeholder considerations in board decision-making. This sense of restraint should extend to executive pay which, the Financial Times notes, is down more than a fifth since the start of the pandemic. On the contrary, wrote Ben Marlow in the Telegraph, AstraZeneca’s CEO Pascal Soriot deserves to be awarded a higher bonus this year, perhaps alongside a medal and a statue. Marlow has maintained that shareholders protesting over Soriot’s bonus are misguided and short-sighted given AstraZeneca’s extraordinary achievements this year.

SoftBank’s interest in The Hut Group shows the value of a golden share

The golden share has always been controversial in relations between companies and investors. Taking the example of The Hut Group (THG), the Evening Standard has examined the significance of this mechanism which allows THG founder Matt Moulding to block company takeovers for three years. The piece notes that the Government is looking to change the City’s rules so that founders like Moulding aren’t punished for wanting share structures allowing them to shape their businesses in the formative years on the public markets.  The golden share caused much angst among City investors ahead of the Hut Group IPO and continues to do so now. It means that THG can’t be included in the FTSE 100 and so misses out on inclusion in many people’s tracker funds. Japanese giant SoftBank recently bought a slice of THG’s nascent warehouse business, Ingenuity, with some suggesting that SoftBank would have bought a controlling stake were it not for the golden share. However, the deal with Softbank values the warehouse business at the same price as the entire company at the time of the IPO which suggests there is value in the golden share.

Square Mile’s largest employers embrace hybrid working 

Following the drop in Covid-19 cases and a rise in the number of successful vaccinations, offices in London are beginning to see a return of their staff. Despite this upswing in employees commuting into the office, the majority of the largest employers in the City of London have committed to adopting a hybrid approach to working. City A.M. has taken a look at the square mile’s 10 largest employers, ranked by occupation of floor space, to better understand how the City will look as Covid-19 restrictions are eased further. 7 of these 10 organisations will be well known to the IR community as significant institutional investors and regular roadshow destinations in normal times: Goldman Sachs, UBS, JP Morgan Chase, M&G, Deutsche Bank, Schroders and Bank of New York Mellon.

Virtual investor conferences set to stay, with Hybrid format on the horizon 

According to research conducted by OpenExchange, three out of four investor conferences during the second half of 2021 will be entirely virtual. IR Magazine has taken a deep dive into the world of corporate access desks to explore whether virtual formats should remain in the short term. Speaking with professionals in the industry, IR Magazine found that several remained sceptical over the nature of hybrid conferences. With some attendees still preferring to attend events virtually, others have questioned the need to spend time committing to the in-person event. Major banks have suggested that ‘the hybrid format – where organizers open events to both virtual and in-person attendees – will become the new normal for the foreseeable future as we emerge from the impacts of the pandemic’. Despite scepticism over hybrid conferences, nearly 70 percent of investor events will be either hybrid or virtual in 2022, and 58 percent of events may have a virtual component in 2023.

MiFID II has created market of ‘rich pickings’ for small caps 

Investment Week has interviewed the Co-manager of Chelverton’s £43m European Select Fund. The fund, co-managed by Dale Robertson, intends to capitalise on “mispricing” caused by the introduction of MiFID II, by focusing on small-cap companies. Mr Robertson explained how the reduced research conducted into companies at the smaller end of the market cap spectrum has created a world of “rich pickings” for investors willing to investigate. According to his team’s research, a significant part of the European universe had been ‘under researched’. Investing in the small caps has given his team, and many others like it, greater flexibility in this particular area of the market.

And finally … Just Eat boss delivers an angry tirade on Twitter 

Some confusion last week as the boss of FTSE 100 food delivery group Just Eat aimed an astonishing rant at analysts, reported The Times. In a novel approach to investor relations, Jitse Groen claimed that some analysts “can’t even do basic maths” and tweeted his amazement at “how bad these analysts have become”. The outburst seemed slightly uncalled for given that it followed an upgrade by analysts at Exane of Just Eat’s shares from “underperform” to “neutral”. One market watcher called on Groen to focus on growing his business and follow the example of Gates, Bezos and Jobs, who never deigned to bother about short-sellers or analysts as long as profits were up.

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