Capital Markets & Investor Relations

IR Monitor – Monday 7th December

Investor Relations News

This week we begin by analysing the digital age, and how this has led to the adaptation of investor relations, before discussing the fine line between hitting financial targets and maintaining employee wellbeing. We then look at the calls from Nasdaq for greater board diversity in listed companies. Next, we discuss the effects Covid-19 has had on activism before turning to explore how we can get the public back into UK markets. Finally, we look at Hershey’s failure to pay a cocoa surcharge and the implications for sustainable investing.

This week’s news

Webinar: Adapting Investor Relations in the age of acceleration

Last week Investis Digital hosted their Adapting IR in the Age of Acceleration virtual event. The webinar focused on how the use of digital has changed the way companies communicate and the way presentations have adapted to the uncertainties surrounding the coronavirus pandemic. According to Simon Gittings, Creative Director, companies should focus on having a clear sense of direction. With less than 50% of FTSE companies defining their purpose on their websites, more needs to be done. Matt Johnson, IR Director for Vodafone Group, highlighted the significance of digital and the influential role it now plays in IR. He noted that whether the changes have been pandemic led or we have seen a societal shift from millennials to ‘zoom-era’ graduates, digital narratives play a significant role in how we should view IR.

UK bosses pushed to prioritise financial targets above employee wellbeing  

A study released by the Chartered Institute of Personnel and Development and the High Pay Centre has found that executive bonuses incentivise financial targets more than the wellbeing, training and engagement of staff. The Times has highlighted key findings from the report and noted that leading UK bosses have 41 times more incentive to hit financial targets than to prioritise the interest of workers. Bosses have argued that good treatment of staff can translate into positive financial results in the long term. In mitigation, the study also claimed that the absence of “people factors” in bonus calculations is down to the difficulty in measuring them.

Listed companies face calls for mandatory board diversity 

Last week Nasdaq filed a proposal pushing companies listed on the U.S. stock exchange to increase diversity in their boardrooms, AP News reported. The proposal comes as Nasdaq hopes to see boardrooms better reflect the diverse US population. The proposal filed on Tuesday with the Securities and Exchange Commission, if approved, would require all companies on the exchange to disclose the breakdowns of their boards. Companies unwilling to provide information regarding the race, gender and sexual orientation of their board could potentially be kicked off the exchange. ZeroHedge criticised the proposal, on grounds of practicality, noting that 75% of Nasdaq companies do not meet the new requirements and flagging, in the meantime, that there is still no requirement for board members to know how to read financial statements.

Activist investors go back on attack  

Activism dropped drastically during the Covid crisis but The Telegraph has reported that activity is ramping up once again. PrimeStone Capital jump-started activity with its attack on LivaNova and St James’s Place in October and as of November 17th UK companies facing activist demands hit a three year high according to Activist Insight. Plunging share prices have given disruptive investors the chance to seize opportunities that otherwise would not have presented themselves. Although the current environment is one which may allow activism to flourish, it may also be some time before results can be fully realised as those who bought stakes at the height of the pandemic are likely to sit on investments for up to six months before issuing demands.

Webinar: Getting the public back into UK public markets 

In a webinar hosted by the LSE’s Marcus Stuttard, a panel of experts (including Lord Myners, Merryn Somerset Webb, Richard Wilson of Interactive Investor and Mike Coombes of PrimaryBid) discussed the current state of the UK public market and the role retail investors play in it. It covered a variety of factors influencing retail participation within the UK which is below historical norms and currently stands at 13%. It concluded  that companies are placing more emphasis on retail investors and putting in more effort. However, in order to attract more retail participation, funds must be more accountable to individual investors, with rules and regulations changed in order to level the playing field. There is momentum in the market, but there is still a lot to be done.

And finally … how sustainable is chocolate? 

Hershey’s has come under fire for trying to dodge payments on a cocoa surcharge in Ghana and the Ivory Coast. Reuters reports that despite boasting 100% sustainable chocolate, the American company has avoided payments designed to alleviate farmer poverty which has resulted in both countries shutting off Hershey’s access to cocoa. Despite the situation, Hershey’s stock has risen since the news broke. This flies in the face of the conventional wisdom that investors always place a premium on sustainable business and risks undermining the incentive for companies to play fair.

Conferences

December 8: Wells Fargo Securities’ Midstream and Utility Symposium (Virtual)
December 10:  Barclays Global Technology, Media & Telecom Conference (Virtual)

Contact Us

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