Financial Communications

IR Monitor – 21st December 2021

Investor Relations News

We start off this last week of 2021 with news that the SEC is looking into new rules on insider trading and share buybacks. Next, we look at how shareholders can make a difference when funds fail to deliver on expectations. Then, we look at how large scale investor events are evolving as well as key trends that have emerged over the past year that will undoubtedly continue in 2022. We also take a look at how JPMorgan CEO, Jamie Dimon’s relationship with Zoom has been tested to its limits following the bank’s recent decision to move its annual healthcare conference online. And finally, we explore some surprise difficulties faced by one of the earliest winners of the pandemic, Peleton, which has subsequently struggled to retain its early 2020 gains.

This week’s news

SEC rule changes 

Barrons has reported that the Securities and Exchange Commission is looking to introduce new rules on insider trading and share buybacks which will create new challenges for investor relations. Regarding insider trading, the SEC wants to introduce a new rule which would see corporate insiders wait 120 days before executing a trade after creating or modifying a plan to purchase or sell shares. On share buybacks, the SEC wants to bring in a proposal which would require that companies provide information on share repurchases precisely one business day after a trade is executed. This, it is hoped, will enable investors to discern whether there is any connection between a company’s stock buyback program and executive compensation.

Close to the edge – how shareholders can make a difference 

Investors Chronicle has investigated the breakdown of Edge Performance VCT’s relationship with its shareholders after several funds failed to deliver on their expectations. Despite several interventions, including the merger of all of the separate funds into a single class called ‘planned exit’ ‘I’ shares, performance failed to improve. This prompted the removal of the fund’s directors by shareholders in 2019 only to see them subsequently reappointed by the board. Action group, backed by the shareholder organisation ShareSoc, alleges that the “I class is the worst-performing VCT class in recent history and its shareholders have lost over half their money since its inception”. The action group, which represents over 10% of Edge’s shareholders, have requested an EGM and is asking shareholders to replace the company’s current directors with two of its own VCT nominees.

How large scale investor events are changing with the times 

As companies adapt to virtual formats for investor roadshows, IR Magazine has taken a look at some industry best practices that have emerged over the last year. Many companies are now making full use of TV-like productions complete with pre-recorded sets and animations in a bid to hold their audience’s attention. Larger roadshows have also turned towards creating more narrative-driven presentations which create a holistic story in lieu of discrete, unrelated segments. The jury is still out as to whether shows should be pre-recorded or live with some adopting a hybrid approach involving a mostly pre-recorded presentation followed by a live Q&A. With the introduction of these new formats, there has been a flurry of practice sessions for C-suite members covering everything from camera positions to how to read from an auto-cue. IR Magazine predicts a split in the next year between in person and virtual events with very few hybrid events owing to low turnout.

Crowdsourcing activism 

DealBook has reported on a new app, Iconik, which is set to shake up the world of investing. The app, which offers commission-free trading similar to other platforms Robinhood, will also encourage users to collaborate in a bid to influence change in companies by collectively voting their shares. The app could change the traditional power dynamic and see smaller shareholders create their own campaigns and mobilise small shareholders to pledge their votes to be cast collectively at a company’s shareholder meeting. This move would see them vie for power (over matters such as director nominations, environmental practices and executive pay) with larger institutional investors. The app is set to launch with two active campaigns: one sponsored by Sleeping Giants, which is calling for Facebook to shut down hate speech on its platform, the other targeted at JPMorgan with environmental activists calling for the bank to stop lending to fossil fuel companies. The IR Monitor is sure that investor relations officers everywhere will be eagerly awaiting the arrival of Iconik.

Dimon’s Disdain of Zoom Tested as His Health Conference Goes Virtual 

The return of IR to normality has not been easy; indeed, it has been harder for some than for others. Jamie Dimon’s difficult relationship with the world of virtual working has been well-documented by Bloomberg and many others. The JPMorgan CEO was one of the first to call for an end to working from home, arguing that bankers could not satisfactorily nurture relationships on Zoom. However, he was recently forced to concede defeat and move the bank’s well-known health conference online. His hand was forced by companies rather than investors, in this case, after attendees such as Moderna Inc. and Amgen Inc. announced that they would not be flying employees in for the event in San Francisco. Their reservations were echoed by Alynlam Pharmaceuticals CEO John Maragnore who tweeted his support for a virtual conference “to avoid a super-spreader event and a PR disaster for our industry.”

And finally … Who would have thought that Mr Big would become an Investor Relations liability

Peleton was one of the pandemic’s early winners, gaining five times its value in 2020. However, since then the company has struggled to maintain its early gains. DealBook has taken a look at one of the more unusual challenges it has faced. The company’s stock took a recent tumble following a cameo appearance by one of its bicycles in HBO’s Sex and the City reboot. It was later revealed that the cameo, in which Mr Big died after stepping off his Peleton bike, had actually been signed off by the company’s management (who were, in their defence, unaware of how the bike would be portrayed). Mr Big is a fictitious character, of course, but analysts have suggested that the incident shows the very real trouble which Peloton is having keeping on top of its image.

And that’s a wrap! The IR Monitor will return on the 12th of January 2022. Until then, we hope that you have enjoyed our commentary in 2021 and, from everyone at FTI Consulting, a Happy New Year.

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The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.

©2021 FTI Consulting, Inc. All rights reserved. www.fticonsulting.com

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