IR Monitor – 17th November 2021

This week’s news

Pay-outs on-track to pip pre-pandemic levels

Global dividends are set to exceed pre-pandemic levels by the end of 2021. After many companies were forced to cut or suspend dividends payments during the pandemic, to preserve cash, the rise in dividend pay-outs is perceived as beneficial for investors. The mining sector has fuelled most of this dividend rebound, as soaring commodity prices have helped mining companies deliver record profits. Regulatory changes in the banking sector have also contributed to the global boom. Some US businesses have even started annual dividend resets. The Financial Times has suggested that while the restoration of banking dividends is expected to continue, mining dividends could decline in 2022. Overall, however, the increase in shareholder pay-outs is a positive indication of recovery after the pandemic.

Annual board evaluations ditched for agile ‘real time’ model

23% of Fortune 100 firms no longer treat board evaluations as an annual affair, according to EY in IR Magazine. Instead, evaluation is becoming a ‘real time’ process, which allows companies to address issues with more timeliness and agility. Ongoing evaluations are giving firms more opportunities to talk openly about the actions they have taken as a result of evaluation. This is in response to increasing investor interests in the results of a board’s evaluation process. Investors are demanding increased diversity, board refreshment and continuous professional development at board level. Changing the nature of board evaluations allows firms to more regularly incorporate investor feedback, contributing to a more agile, dynamic and resilient evaluation and implementation process as a result.

Don’t fix it if it ain’t broken? An update to pre-exemption

The Financial Times has highlighted the government’s capital raising review, which was launched last month and will look, among other things, at whether there were any lessons learned from the relaxation of pre-emption during the pandemic. While long-standing supporters, such as Mark Austin of Freshfield, have claimed that the principle of “pre-emption” is a “longstanding and sacrosanct feature of the London market and is not up for debate,” he did add that the review seeks to explore ways to make raising money faster and cheaper. The COVID pandemic has highlighted the importance of quick access to capital in a crisis, and this review aims to understand how we can protect that economic agility.

This isn’t just an RNS

According to Roxhill, the old M&S “flattered to deceive, offered promises on the future that were never delivered, while CEOs papered over cracks, took their bonuses and left the real work to the next guy.” However, last week’s RNS shows extraordinary change. The first words from current CEO Steve Rowe acknowledged historical overstatements. Avoiding the usual hyperbole, the retail supergiant has instead added suitable caveats to their expectations today rather than promising the world. That, says Roxhill, makes for a great RNS; if Next offers the gold-standard in how to do releases to the stock market, M&S is not far behind.

Passive funds bleed more than £700m during worst month on record 

A year and a half into the pandemic, CEOs are debating the extent to which they should embrace flexible and hybrid working arrangements. Many want to appeal to the employees who want more autonomy over where they work but are hesitant to give up too much control. The New York Times has examined “WFH” from a variety of perspectives, covering what workers want, the benefits of returning to the office, and the benefits of working remotely. Many people believe that a hybrid future is unavoidable, and this article considers how we can best move forward. However, Sundar Pichai (CEO of Google) has cautionary words for anyone who works in Investor Relations: “We are working on borrowed time, in terms of working on memories of the relationships you have and the connections you have”

And finally… Tweet-stakes

Elon Musk remains a case study in how not to approach IR. Three years ago, Musk created a scene by tweeting financially sensitive information, causing the SEC to impose a fine, strip Musk of the Tesla chairmanship for three years and require company lawyers to preapprove financially sensitive tweets. Last week, Musk asked his 63 million Twitter followers if he should sell 10% of the 170 million Tesla shares he owns. He linked this to a Democratic congressional proposal to tax billionaires for unrealized stock gains under certain conditions. (Musk, whose stake in the $1.2 trillion company is valued at $208 billion, is opposed to the idea.) The Tesla board appears to have had enough of these antics but, despite several high-profile changes, it also appears unable to restrain him for an extended period of time.

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