Capital Markets & Investor Relations

IR Monitor – Monday 5th October

Investor Relations News

In this week’s edition, we start by looking at the surprising benefits of virtual shareholder engagement. Next, we discuss workplace activism, and one Silicon Valley CEO’s controversial approach to political discussions in the office. Then, we see shareholders’ delight at Ferguson’s resumption of dividend payments in what has been an otherwise difficult year for many income investors. After that, we explore investors’ attitudes to FTSE 100 bosses’ pay. We then ask how much of corporate Britain is for sale, and what that tells us about perceptions of British business. Finally, we consider how Covid and remote working has affected workwear, and whether the flexible wardrobe is here to stay.

This week’s news

Shareholding from home

The Covid-19 pandemic has created a raft of problems for companies and their shareholders. Social distancing measures and home working guidelines have brought about a virtual revolution in the workplace, with varying degrees of success. One area of surprising triumph, reported IR Magazine, has been the Virtual Shareholder Meeting (VSM), which has seen the average attendance of shareholder meetings more than double over the last year. Convenience, flexibility, and increased engagement are cited as the three key virtues of the VSM. Some investors have raised concerns over the mass migration to the VSM, but with Bill Gates among its many champions, perhaps this Covid-induced change is here to stay.

Activism at work… or not 

Brian Armstrong, CEO of cryptocurrency exchange Coinbase, ruffled feathers in Silicon Valley by discouraging employees from engaging in activist causes at work and suggesting they might want “refuge from the division that is increasingly present in the world.” The New York Times reported that Armstrong’s call for political passivity in the workplace was met with mixed reviews. Investor Paul Graham predicted that other successful companies would soon follow Coinbase’s lead, while Jessica Alter of Tech for Campaigns suggested that attitudes like Armstrong’s typify all that is unpopular about Silicon Valley. Nonetheless, Armstrong insisted that a laser-sharp focus on profits would generate more resources, enabling Coinbase to have a greater global impact. He conceded that he anticipated resignations.

Ferguson turns the taps back on

The Financial Times reported that plumbing specialists Ferguson will be restoring dividend payments this year, and investors have responded well. Indeed, Ferguson’s shares rose 6% after the announcement. Similarly, after Hunting Properties announced their own intention to reinstate dividends, the firm’s shares shot up a whole 20%. One can hardly blame investors for lapping up dividend payments. So far this calendar year, UK groups have announced they will cut dividends for 2019 and 2020 by £42 billion. Since June, however, AJ Bell claims that the dividends which companies plan to maintain or restore have exceeded cuts. A total of 51 FTSE 100, FTSE 250, FTSE SmallCap and AIM companies from a wide variety of sectors have reinstated dividends this year, including names such as Admiral, Bodycote, Fisher, Kainos, Learning Technologies, Mondi, Rotork, Smiths, Smurfit Kappa and Spectris.

Two-thirds of investors believe FTSE bosses are overpaid

According to a recent survey by interactive investor, 68% of investors believe that FTSE 100 CEOs are overpaid. Investment Week’s article on the survey said that less than a fifth of investors believe blue chip bosses should be paid according to share price performance alone. Unfortunately for Tesco CEO Dave Lewis, 51% of respondents felt his £29 million remuneration over six years was too generous.  62% believe Tesco’s incoming CEO Ken Murphy’s compensation should be tied to the achievement of “aggressive sustainability targets.” Lee Wild, head of equity strategy at interactive investor, suggested that “introducing a link between executive salaries and better green credentials might sharpen the mind at boardroom level.”

Corporate Britain for sale

Uneasy times for Investor Relations Officers in the UK. In the Evening Standard this week, Simon English raised the question: “How much of corporate Britain is for sale?” With William Hill looking set to follow Arm Holdings into the hands of American owners, it seems a pertinent time for such an inquiry. The article suggested that foreign investors seem more optimistic than the domestic stock market about UK companies’ chances of weathering this period of uncertainty, leading to their desire to buy British. The article also argued that some of these deals are partly property plays, indicating that foreign private equity bidders value UK offices, shops, and town centres more highly than Brits do. With a possible bid for BT in the works, buying Britain by the pound has never looked easier.

And Finally … 

As companies embark on yet more virtual roadshows, an unexpected question arises: what to wear? The Financial Times reported this week on how the work-from-home-back-to-the-office-and-back-home-again guidance has affected the wardrobe. Many workers relished the opportunity to dust off their dresses and suits when returning to the office after lockdown, but the about-turn in Government guidance has plunged our professional fashion standards back into chaos. While Gerald Onuorah, technology manager at Bain & Company, has remained committed to his shirt, braces and tie, Laura Vandendorpe – also at Bain – has been content in hoodies and less make-up. Confusion about appropriate working attire shows no sign of abating.

Conferences

October 6-7: Credit Suisse European Communications Infrastructure Conference (Virtual)

October 6-8: Stifel / LSE ‘Best of the British’ Discovery Conference (Virtual)

Contact us

To be added to the distribution list for the IR Monitor, or for further information on the dedicated investor relations team at FTI, please contact [email protected]

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