IR Monitor – 15 May 2024

In this week’s newsletter:

• Cybersecurity for IR Professionals: FTI’s Rose Zu and Matthew Saidel share best practices and considerations for IROs on cyber disclosures, planning and response
• The London Stock Exchange hosted its flagship IR Masterclass 2024 last week
• Behind the headlines of Disney’s activist fight, increased engagement from institutional shareholders is a profound shift suggests IR Magazine. Heads of Investor Relations are now the conductors of their companies’ reputation in a world of crisis
• London stock market collapse massively overstated, says Hunt. According to the Chancellor, the UK could have its own ‘Magnificent Seven’ within a decade
• Like most corporate diversity initiatives, the Garrick ‘revolution’ preserved the status quo while creating an illusion of change argues Oliver Shah in the Sunday Times
• And finally … Bosses’ mental health referrals triple near results deadlines. Maintaining reputations with a complex network of investors is a particular pressure

This week’s news

FTI’s cybersecurity primer for IR 

FTI’s Rose Zu and Matthew Saidel have recently shared best practice considerations for IROs on cybersecurity disclosures, planning and response. New SEC requirements for US public companies to disclose their cybersecurity risk mitigation and governance measures, as well as material cybersecurity incidents, are putting IR professionals on the front lines of cybersecurity reporting. Rose and Matthew argue that IROs have valuable perspective to offer when it comes to planning and response, in terms of industry best practice intelligence, gathering feedback from investors, and managing relationships with the buy side. They can also leverage their communications skills to advise colleagues on managing stakeholder expectations, and communicating when resolutions have an extended timeline. There is also much for IROs to learn according to the paper: for example, when thinking about reporting, IROs may be familiar with the “reasonable investor” test of materiality under U.S.’ securities law, but they may need to learn how to apply it for cybersecurity, where incidents are measured in terms of risk to data and operations. 

LSE’s flagship IR Masterclass 2024 

LSEG’s Issuer Services held an IR masterclass on 8 May, which covered a comprehensive range of topics, providing attendees with a deep dive into key areas of interest for IR professionals. The masterclass discussed the global competition for capital, investor targeting and the role of market intelligence & investor engagement. Questions around the role of AI, and whether it could take on some of the responsibilities of an IRO in the future, were high on the agenda whilst the future of sustainability reporting remained central too. The London Stock Exchange also launched its third Investor Relations Report on the day, which revealed very interesting snapshots into the industry, with IR professionals believing that the field is now more important than ever, that AI and social media are becoming increasingly challenging – but need to be invested in – and that direct interactions with investors are more important than ever. 

After the Disney fight – a profound shift in investor engagement

IR Magazine has discussed the impact that IROs have on their company’s reputation, especially during times of crisis. Taking the example of the recent Disney/Trian saga, where Disney won by spending $40m & ultimately seeing its 12 nominees successfully re-elected, the article highlights a change in the way companies interact with institutional investors. The latter are said to have increased engagement with corporates around AGMs, in an attempt to exert maximum influence on governance, and in turn issuers have had to spend more time engaging to maintain their reputation. AGMs are no longer seen as rubber-stamping chambers, and this is largely due to pressures on active asset managers to demonstrate the effectiveness of their fiduciary duties (since 2008) and investment management practices – particularly against cost effective passive funds. In that context, and as corporates are faced with the proliferation of multiple crises, IROs now have to ensure they look after and continuously build trust with new investors. By straddling two disciplines, IR and shareholder engagement, they have assumed a new critical position to their leaders and boards of directors.  

London stock market collapse massively overstated – Hunt

Given the recent panic over the dire state of the UK stock market, Jeremy Hunt sought to reassure sceptics at the Wall Street Journal CEO Council Summit. The UK Chancellor argued that London’s stock market demise was ‘massively overstated’, & that the relevant challenges are being addressed. The Telegraph notes that Hunt’s statement came amid frustration at the mounting number of companies leaving UK public equity markets, which coincides with a dearth of new listings. However, the Chancellor said that the overhaul of the UK’s listing regime will help to encourage UK IPOs and stave off competition from New York. Furthermore, Jeremy Hunt promised that the UK would close the valuation gap between UK vs US stocks, arguing that the US’ ‘Magnificent Seven’ (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) have driven the rally on Wall Street stocks, but that the UK, as a key European technology hub, would soon provide an answer. 

Did the Garrick ‘revolution’ change the status quo? The Sunday Times

Oliver Shah from The Sunday Times takes a closer look at the recent push for the Garrick Club, one of London’s most famous private members’ clubs, to accept female members. Whilst the move looks like a step in the right direction for equality, it simply means, as Shah puts it, that ‘posh women will soon be able to join posh men as members of a dusty den where old bores lumber through the gloaming, braying at each other.’ Though the Garrick will be a more diverse place, it will continue to do what it has always done: ‘providing an oasis in central London for a certain class of person.’ Shah compares this issue with the selection of company boards, which, he argues, are often concerned with projecting an image of diversity, rather than actually accommodating diversity of thoughts and social background. 

And finally… Bosses’ mental health referrals triple near results deadlines 

Maintaining reputations with a complex network of investors is a particular pressure for business leaders, according to The Times and Paracelsus Recovery, an addiction and psychological treatment centre for wealthy individuals. There is indeed a roughly 200% rise in mental health referrals for CEOs in the run up to financial results filings. A representative from the clinic highlighted that c-suite executives are highly success-driven, and often have a difficult time adapting to failure. Combined with the desire to appear calm and collected, this can take a huge toll on individuals’ self-esteem and emotional stability, especially around a poor set of results. According to the clinic’s data, mental health crises are also subject to a seasonality effect as they tend to hit in springtime before building towards the autumn.

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