IR Monitor – 16 July 2025

In this week’s newsletter:

• New FTI research on executive remuneration in the UK and Ireland underscores the importance of diligent stakeholder management
• Activist investors set to push for changes as dealmaking picks up. Reuters reports that more companies are hiring advisors, aiming to pre-empt campaigns
• Corporate Japan’s shareholders show more clout this AGM season: shareholders in general still support company management, reports The Japan Times, but there has been a notable break from their previously passive stance
• The Economist’s summer guide to protecting profits. In an effort to reassure investors, companies have been telegraphing measures to contain labour costs
• Passive investors tied to benchmarks are stifling progress warns Stuart Dunbar in The Times. There is evidence that companies with more “quality shareholders” on their registers perform better in the long term
• And finally .. selling new shares to pay dividends – isn’t there a word for that? Craig Coben on the curious case of Strategy

This week’s news

New FTI research on executive remuneration in the UK and Ireland

The landscape of UK remuneration governance underwent a significant shift in 2024, as the Investment Association embraced greater flexibility in executive pay structures, according to new research from FTI Consulting. However, the 2025 AGM season revealed that this newfound flexibility comes with clear boundaries, evidenced by increased shareholder opposition to remuneration proposals. The surge in significant dissent (20%+ votes against) affected both binding policy votes and advisory reports, with notable resistance to US-style practices such as performance-free share awards. Yet, several companies successfully navigated these waters by proving three critical success factors: deep understanding of stakeholder expectations, comprehensive shareholder engagement, and enhanced corporate reporting. This underscores a crucial lesson: while flexibility exists, it must be earned through diligent stakeholder management.

Activist investors to push for changes as dealmaking picks up – Reuters

Activist investor campaigns saw a notable decline in the second quarter of 2025 in the US, primarily due to uncertainties surrounding tariffs and tax policies. Reuters reports that in the first half of the year, board changes were the focus, accounting for 43% of all campaigns, but bankers now anticipate a strategic shift towards M&A and spin-offs. Companies are responding to the threat of increased activism, with boards proactively engaging advisors to assess vulnerabilities and take pre-emptive action. The traditional activist calendar, with campaigns typically launched in autumn and winter ahead of AGM season, suggests renewed activity in the coming months. 

Corporate Japan’s shareholders show more clout this AGM season

Japanese corporate governance reached a milestone in 2025, with a record seven companies seeing shareholder proposals pass at their annual general meetings – the highest number in nearly 30 years according to Mitsubishi UFJ Trust & Banking. This marks a significant departure from traditionally passive shareholder behaviour in Japan, evidenced by 30 rejected company proposals, up from six in 2024, primarily concerning board appointments. The Japan Times reports on notable cases including the complete board replacement at Tokyo Cosmos Electric and the removal of Taiyo Holdings’ CEO. This transformation has been driven by pressure from the Tokyo Stock Exchange, unwinding of traditional cross-shareholdings, and increased activist investor presence. Industry experts suggest this trend of enhanced shareholder engagement will continue, reflecting a fundamental change in Japanese corporate governance practices.

Sharpening axes: The Economist’s summer guide to protecting profits

The last six months have been considerably turbulent for big businesses and markets. Faced with President Donald Trump’s tariff and trade war which sent stock markets down and bond yields up, businesses have experienced rising costs and slowing economic growth, jeopardising bottom lines. The Economist observes that, in a bid to reassure investors, businesses are loudly turning to managing labour costs. Microsoft recently announced it would lay off 9,000 workers –  4% of the total – on top of the 6,000 let go earlier in the year. BlackRock, Citigroup, Disney and Procter & Gamble have also all carried out “simplification” or “strategic realignment” measures to reduce the size of workforces. Advances in AI further enable CEOs to reduce the size of workforces in an increasingly tough corporate environment. 

Passive investors tied to benchmarks are stifling progress – The Times

Active fund managers who take a longer term view, have the lowest turnover, infrequently replacing stocks, and the greatest disregard for benchmark indices, have been found to outperform in the long term, notes The Times. It also observes that companies with more of these ‘quality shareholders’ (who think long term, have a nuanced understanding of the company and devote resources to engagement) also perform better down the line. The shift towards frenzied, 24-hour market trading, it warns, undermines both long term business performance and social impact, not to mention the complex decision making processes that consider the long term risks and opportunities to build shareholder value over time. 

And finally… selling new shares to pay dividends. Isn’t there a word for that?

Strategy has staked its entire future on bitcoin. A former business intelligence and software provider which pivoted to focus on crypto in 2020, Strategy has raised as much money as possible to buy bitcoin. According to the Financial Times, the company has funded its bitcoin venture by issuing large amounts of common stock, convertible bonds, and three classes of perpetual preferred shares with high discretionary dividends. Strategy is now the largest corporate holder of bitcoin. However, a recent $4.2bn at-the-market offering of Stride – one of its perpetual share classes – marks a subtle shift in approach, as “payment of dividends” to holders of its other preferred shares was indicated as a possible use of the proceeds. Effectively using money from old securities to support new ones, Strategy has created a new layer of financial engineering – one that depends on a potentially shaky mix of bitcoin prices with a bull market.