IR Monitor – 19th April 2023

This week’s news

London stock market ‘not a very attractive place’ says IHG CEO

Speaking to the Financial Times, Keith Barr, Chief Executive of the InterContinental Hotels Group, has suggested that London is currently “not a very attractive place to list new companies versus other markets” as he argued for the FTSE to act to encourage more investment from pension and insurance funds in London to improve liquidity and ease rules on governance. This follows recent moves from several companies to reject the opportunity to list in London or move their listing to the US with several reasons for this including more capital available in the US. Barr did note that the UK is still a “great location to be based out of” and that management was “not currently considering” any changes but suggested that this could change However, these comments will add to the recent debate over London’s attractions as a listing centre.

New York: two tales of one city

There is further concern for the London stock markets as recent research mentioned by the Evening Standard has suggested that Britain’s top 100 companies could be worth up to £500bn more if their listing was moved to New York. This comes as more businesses are suggesting that they may move their listings away from London, with suggestions that an increased focus on ESG issues in the UK may have made investors wary while Brexit has also had an impact according to the research. According to the research, UK businesses are thought to be valued 18% less than “like-for-like” US businesses and “the average US company coming to market is valued over a 3-year period at 25x earnings”, compared with 15x in the UK. This would also explain why UK businesses are increasingly targeted by private equity investors. However, The Daily Mail’s This is Money noted that, since 2012, British businesses that have listed in the US have actually seen their value decrease by 40% on average, reminding readers that the grass is not necessarily greener in US stock markets. That said, the debate on a potential overhaul of stock exchange rules in the UK is firmly on.

Some advice for communicating your sustainability report with clarity 

As an ever-increasing number of listed companies are publishing ESG reports, and more private companies with public debt are also choosing to do so, IR Magazine has provided advice on best practice for communicating these reports. It is suggested that a summary, perhaps in the press release announcing the report, is important as stakeholders should not always be expected to read entire reports, while factsheets and presentations may be useful to complement the full report. Parts of the ESG report should be used on the ESG section of the company website or shared on social media and in digital campaigns. To give further information and enable further engagement, it may also be valuable to hold an external ESG meeting with investors and an internal ESG meeting with employees to showcase achievements, also providing an opportunity to highlight the contributions from employees. It is also important to periodically update annual sustainability reports with particular awareness of periods of the year which are busy due to financial reporting.

Rebooting annual meetings for the digital age is not that revolting

The days when AGMs used to attract hundreds of investors are long gone, writes The Times. Lack of attendance at AGMs nowadays is a symptom of the growing distance between businesses and retail shareholders, argues Archie Norman, Chairman of M&S. That is why he has decided to launch Share Your Voice, a campaign in collaboration with several groups such as the UK Shareholders’ Association and ShareSoc, to try and rebuild relationships with the investor community. Among its proposals are for shareholder communication to be available in digital format, and for digital AGMs to be recognised as valid, leaving behind the requirement for a meeting location to be stated and for two qualifying people to be present. Norman notes M&S has increased shareholder engagement thanks to digital meetings, with more than three times as many people engaging with the retailer’s digital platform compared to those attending the last in-person meeting in 2019. Its success points to a new model other companies should consider emulating, though it begs the inevitable question: could this mark the end of physical AGMs, or the start of a new beginning?

Total pay for FTSE 100 chiefs up 12%

At a time when many employees are struggling under the pressures of the cost-of-living crisis, recent data has revealed that total pay for FTSE 100 chief executives saw a median overall pay rise of 12 per cent to £4.15mn, reports the Financial Times. This was despite the median annual bonus pay-out standing at 76 per cent of the maximum award possible, lower than the 85 per cent level reached the previous year, owing to companies hitting lower targets set during the pandemic. Nevertheless, the timing of such substantial CEO salary increases against the current socio-economic backdrop has caused many to predict a more challenging AGM season this year, with shareholders particularly bent on scrutinising pay. Other areas that are expected to draw attention at upcoming annual meetings include directors’ remuneration policies, and the level of incorporation of ESG measures into incentive plans.

And finally… Twitter gets into the stock trading business – Matt Levene

Elon Musk’s latest idea may be a boon for companies looking for new sources of liquidity. Imagine you’re sat scrolling through your Twitter feed, and you come across a tweet touting a stock. Now imagine Twitter serves you with a button inviting you to “buy 100 shares of this stock”, and in one swift click you can instantly buy those shares. Well, thanks to Elon Musk, you no longer need to imagine it. As Bloomberg reports, Twitter has partnered up with eToro, a social trading company, to roll out a new feature in the app where users can view market charts, access cryptocurrencies, and buy and sell stocks. At present, it is possible to view real-time trading data using Twitter’s “cashtags” feature – now, with the eToro partnership, Twitter cashtags will be expanded to encompass an even wider range of financial instruments and asset classes. The move comes as part of Musk’s plan to transform Twitter into a “super app”, offering users banking and payment services.

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].