IR Monitor – 12th April 2023

This week’s news

Wolfspeed sweeps midcap category at Institutional Investor Awards

At the recent All-America Awards Dinner, hosted by Institutional Investor Research, FTI client Wolfspeed swept the midcap awards with seven wins overall including Best IR Programme, Best CFO, and Best CEO. The company maintains an active engagement policy with all of its stakeholders and was also host to President Biden last week when he visited one of its flagship facilities.

The changing landscape of retail IR

Your FTI correspondents joined an IR Society webinar last week on the changing landscape of retail investing. This has risen in prominence significantly in recent years, largely enabled by developments in technology that offer greater access to information at a lower cost, alongside an increasing demand from the market following the proliferation of new brokerage accounts opened during the pandemic. But how can companies best engage this broad incredibly broad cohort of investors? Some have suggested that companies must prioritise a consistent brand, alongside memorable and simplified content, including explainer content, to ensure the right messages reach retail investors. AI is also expected to supercharge this trend, and companies are encouraged to leverage technology wherever they can. In short, companies cannot ignore that today, retail investors represent a much more significant pool of capital today vs pre-pandemic and should do what they can to ensure that they are engaging effectively.

ISS criticised in Sweden over recent attack on the dual-class share system 

Jacob Wallenberg, a successful Swedish industrialist, has publicly criticised proxy adviser Institutional Shareholder Services (ISS) for its latest proposal to tackle unequal voting rights. From February 2024, ISS has committed to recommend voting against directors at businesses with different classes of shares over concerns about unequal rights. This is in line with a recent survey where 75% of investors wanted the proxy adviser to consider issuing “adverse voting recommendations” over unequal voting rights and other poor governance structures. Almost three quarters of the market capitalisation of the Stockholm stock exchange comes from companies with dual-class shares, which gives higher voting rights to holding companies such as Investor AB, the Wallenberg investment vehicle. Wallenberg, whose investment vehicle owns stakes in companies such as Ericsson, Nasdaq, Electrolux and Saab, said shareholders had agreed to the current system, that it was not the place of a third party to change this and that ISS was misusing a tool to “make noise”, which could potentially hamper the recruitment of board members in Sweden.

How to manage bearish analysts 

IR Magazine hosted a recent debate on how companies should manage bearish analysts. One participant suggested that companies should engage and provide additional information and data to help them understand the company’s strategy & operations, and address any concerns or issues they might have. It was argued that filling the credibility gap when there are concerns over management and business strategy is a critical part of an IRO’s role. Others argued that IROs shouldn’t waste too much breath on bearish analysts and should instead prove them wrong by putting up great numbers – better to focus on supportive analysts and maximise engagement with them. Understanding why an analyst may have a negative view should always be the first step for IROs before getting on the phone, countered another of the speakers. Ultimately, the debate emphasised the importance of proactivity, transparency and active communication with the sell-side in order to manage bearish analysts and their impact on a company’s share price. The debate concluded with a clear winner: a poll of the audience found that 71% agreed that IR teams should allocate more time to engage and convert analysts who have a sell rating on their stock.

FTI’s takeaways from the Bank of America IR Conference 

Your FTI correspondents joined the BoA IR Conference held recently in New York City. There were some especially useful takeaways from the IR Process panel which covered. among other topics, the merits of virtual vs physical meetings, the format of earnings calls, investor marketing and investor perception audits. On the latter, whilst an audit’s findings may not always produce surprises, it was deemed useful to have a third party reinforce IR feedback to the management and to the board. 2-3 years is considered the proper cycle for a perception audit, whilst any more frequently than that was said to potentially spook the buy-side. If you are interested in having FTI carry out a perception audit for your company, please contact us at the email address below.

And finally…No place for GIFs in IR

The Financial Conduct Authority (FCA) has expressed concerns about the use of multimedia content in regulatory news announcements by Primary Information Providers (PIP). The FCA has cautioned that such content should comply with relevant regulations such as the UK Market Abuse Regulation (MAR) and Disclosure Guidance and Transparency Rules (DTRs). The FCA believes that including multimedia content in regulatory announcements could potentially breach regulatory requirements and create risks to market users, including a reduction in clarity and a potential breach of the prohibition on combining inside information with marketing activities. The FCA expects PIPs to comply with their obligation to disseminate regulated information in unedited full text in an industry-standard format. PIPs were also urged to consider the risks associated with disseminating regulated information in a non-compliant format and take steps to mitigate these risks. The FCA said it would continue to monitor the multimedia trend, particularly the inclusion of embedded video content.

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].