IR Monitor – 07 June 2023

This week’s news

Activist shareholders threaten Japan’s AGM season  

Leo Lewis for the FT unpicks the challenges posed by activists to IR departments in Japan currently. With shareholder activism on the rise in the region, Mizuho Securities and others are forecasting that this year’s AGM season will see Japanese-listed companies facing a record number of proposals from shareholders. Lewis notes that a rise in rules-based mandates on board diversity and broader ESG topics may mean that shareholder activists target chief execs failing to address governance issues. Lewis also concedes that Japan Inc. has come a long way. Back in the mid-1990s, 96% of companies held their AGMs on the same day in June. Under increasing pressure to appear shareholder-friendly, the season is now slightly more staggered, with just under 80% of companies holding meetings over the same week. Those companies with a December year end have already held their AGMs, with many facing challenges that serve as a warning to their peers yet to hold their AGMs. For example, Fujio Mitarai, CEO of Canon, garnered limited support from shareholders and saw BlackRock voting against him on a lack of board diversity. The article reports a “flurry of meetings” between investors and Japanese companies, with the latter seeking to protect CEOs from being voted out.

J&J on managing financial reputation through market turmoil 

Jessica Moore, Johnson & Johnson’s VP of IR, sat down with IR Magazine to discuss managing financial reputation under pressure. Jessica points out that J&J, as one of the first companies to report quarterly earnings generally, ends up being a “bellweather” for many peers. Jessica describes handling guidance to the investment community in the precarious market of 2020, putting their success down to “responsibility, honesty and humility”. When managing turmoil, Jessica argues that credibility is the most important factor and highlights the importance of communicating with employees about IR. She notably references a series of internal corporate videos where J&J’s CEO deep dives on subjects such as M&A and ESG. Access to management and a solid investor events programme are cornerstones of J&J’s IR strategy, with Jessica emphasising how important it is for investors to have access to senior business management, through both formal and informal events.

UK widens lead as Europe’s top draw for financial investors

Despite reports on the post-Brexit decline of the City of London, new analysis covered by Bloomberg has revealed that in 2022 the UK secured 26% of all European foreign direct investment projects in financial services. Emerging from an economically turbulent year as a top destination for FDI in financial services, Britain secured a year-on-year increase of 17% in financial services projects in 2022. This can be attributed to an increase in American investment and to the UK’s unwavering reputation amongst investors for being home to Europe’s most attractive financial services market. While Britain’s exit from the EU and the ever-evolving regulatory landscape have triggered some attacks from corporates on the strength of the UK’s business environment, the results of this survey suggest that executives across the financial services industry don’t think the UK market will be losing its charm anytime soon.

CEOs cannot shut up about AI

The advent of generative AI last November took much of the world by storm. Chat GPT, which surged in popularity surpassing one million users in less than a week, presents countless opportunities to be tried and tested, alongside a host of challenges which cannot be ignored. While the rise of AI brings with it a cloud of uncertainty, one thing seems clear: AI is all anyone can talk about – and corporate bosses hold no exception. According to the Economist, earnings calls are flooded with mentions of ChatGPT. In the latest quarterly results season, executives at a record 110 companies in the S&P 500 index have brought up AI so far in their earnings calls. Indeed, questions around how AI can and should be adopted by businesses are hanging over chief executives. With the answers as unclear today as they were seven months ago when ChatGPT first hit the ground, it may be no surprise that corporates cannot stop talking about it.

Golden shares are back, with a plan to protect corporate responsibility

Dutch confectionery company Tony’s Chocolonely has implemented ‘golden shares’ into its governance structure to shield its sustainability commitments, as reported by the Guardian. These golden shares, safeguarded by independent “mission guardians”, hold the power to veto any future changes being made by holders to the company’s ethical strategy. A company dedicated to eradicating inequality and exploitation in the chocolate industry, Tony’s move aims to grant its impact model security and permanence, even in the face of changing shareholder structure. With this new model implemented, stakeholders remain able to anonymously raise any concerns with the guardians, and the guardians themselves will have several methods besides the golden shares to hold Tony’s board to account. CEO Douglas Lamont realises that, albeit unusual, the new approach is expected to “become a model for other purpose-driven brands.”

Is IR a dreadful grind? Visa’s CFO says yes

Visa’s departing CFO, Vasant Prabhu, had an unusually frank retiring statement. Vasant was appointed to his first CFO job at a public company in 2000, so he’s been at it for 23 years and has completed almost 90 earnings calls – no mean feat. In his last earnings call with Visa, Vasant simply said: “I’m done with this”. You can’t say he’s not honest. He went on to outline that this is a new era for Visa in a post-COVID environment and that he feels this is a good time to transition out of the role.

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