Capital Markets & Investor Relations

IR Weekly – Monday 22nd June

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Welcome to FTI Consulting’s IR Weekly newsletter.

This week we open with an invitation to a webinar on Tuesday 23rd June on activism and Covid-19, co-hosted by Jefferies and FTI. Following that is an article discussing Corporate America and the difficult questions that recent events bring to the fore: to what extent can global brands have local norms? We highlight a piece from the FT on the impact of the Covid-19 crisis on company capital allocation decisions, and note ‘second wave’ warnings will likely feature across corporate earnings in the second half of the year. Finally, we highlight possible press backlash over reversal of executive pay cuts.

This week’s news

COVID-19 and Activism: Webinar

Tomorrow, Jefferies and FTI will be hosting a virtual event on Activism ‘COVID-19 and Activism: Here comes the next wave’. The panel discussion will host experienced activists from Trian Partners and Impactive Capital and examine what next for activism in Europe, what COVID-19 means and where corporates are most vulnerable. If you are interested in joining, event and registration details can be found online now.

Corporate America scrutinised over consistency of ESG policies

Following the killing of George Floyd in Minnesota on 25th May, companies across the United States have been speaking out against systemic inequality and the injustice of racism. The Hill reported that Consumer giants such as Nike and Vans have taken to social media, urging their followers to “create change” and proactively practice anti-racism, whilst Google and Apple have pledged large donation sums to organisations including The NAAACP. However, when thousands of peaceful protestors took to the streets in Hong Kong in a stand against the Chinese government, Apple and Google removed all protest-related apps from the app-store which allowed protestors to find safe places away from police fire, and Nike dropped all NBA merchandise from their stores in China when a tweet by Houston Rockets General Manager Daryl Morey was shared in support of the protestors. US corporations will increasingly experience close scrutiny as open-eyed consumers “demand that the brands they buy lead with democratic values and uphold fundamental human rights”.

Challenges for Capital Allocation

An op-ed in the Financial Times explored the tough decisions around capital allocation that companies will be forced to make over the coming weeks and months. The piece, penned by Centerview Partners co-founder Blair Effron, highlights the delicate balance that must be struck between providing both social and financial returns. Executives may rightly be focusing their attention on returning balance sheets to acceptable levels and rethinking attitudes towards share buybacks versus dividends, but Effron notes that companies will be expected to prioritise stakeholder needs alongside shareholder value. In essence, he concludes, companies in the post-lockdown landscape will have to do more with less.

Second Wave Warnings

The New York Times’ Dealbook email this week featured commentary on the number of companies including warnings of a second wave of Covid-19 cases in their regulatory filings. A number of American businesses including Cosco and Macy’s have explicitly warned of future spikes in cases and the impact of another lockdown, whilst others have even accounted for the “threat or perception” of a second wave. With so many companies caught out by the first wave, the piece suggests that businesses will be desperate to anticipate signs of a second coming.

CEO Pay – Back to Reality?

The Financial Times’ editorial team published a critique of the reversal of executive salary cuts, arguing that the move is at best premature and at worst tone deaf. The article proposed that companies must meet certain criteria before returning executives to normal pay, including withdrawing from government support schemes, returning staff to full pay and reconsidering existing executive renumeration structures. Kate Burgess reiterated the criticisms in an FT Lombard column, warning that companies reinstating executive full pay such as Foxtons and Burberry must tread carefully after signalling distress at the peak of the crisis. With the UK predicted to suffer a prolonged recession, both articles echoed the question of many high-profile investor groups: have business leaders really ‘shared the pain’ at all?

And finally… Are PwC’s WC policies a privacy concern?

Big Four accountancy firm PwC has developed a facial recognition tool which monitors employees’ absences from computer screens, which include bathroom breaks. Financial News explained that the creation of the technology has sparked concerns over privacy, heightened by the fact that thousands of City workers are now working from home amidst the Covid-19 crisis. Data collected via an employee’s webcam will record breaks in screen-time and subsequently necessitate a written explanation for absences “ranging from a few seconds to 10 minutes or more”, explains George Stylianides, a partner in PwC’s financial services group. The tool is designed to help firms maintain the level of strict surveillance observed on office trading floors, yet banks and asset managers are increasingly experiencing a rise in “misconduct” amongst remote-working staff, as the coronavirus pandemic reveals blind-spots in many monitoring systems.

Upcoming conferences

European Automotive Conference, JP Morgan (virtual), (23 June)

Consumer Conference, Jefferies (virtual), (23-24 June)

Contact Us

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

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