IR Monitor – 24 April 2024

In this week’s newsletter:

In this week’s newsletter:

• Using perception studies to enhance your IR strategy: a NIRI webinar 
• Green-eyed CEOs should beware the lure of higher pay: higher remuneration can prompt tunnel vision and outright misbehaviour, in the opinion of the Financial Times
• What is weighing on CEOs’ minds this earnings season? asks the Economist. Shareholder letters are proving to be bleakly prophetic
• ESG is ‘dying’ – but that might be a good thing, says former BlackRock green chief
• What Tottenham Hotspur need to learn about good Investor Relations
• And finally … how Sweden’s stock market became the envy of Europe

This week’s news

Using perception studies to enhance your IR strategy – NIRI webinar

FTI Consulting’s Rose Zu, an investor relations expert in our Washington team, has been hearing more about the role of perception studies in shaping IR strategies, from understanding market expectations to aligning corporate strategy. NIRI panellists highlighted the importance of having a clear goal from perception study projects and management teams who are willing to hear constructive feedback. Timing is also central: the key is for the cadence of studies to be informative, whilst ensuring that volume is managed. For truly unfiltered feedback – which is where the real value emerges – it is useful to leverage third parties and keep interview transcripts on hand, to get the full benefit of the research. If you would like to contact FTI about a perception study please contact us at the address below.

Green-eyed CEOs should beware the lure of higher pay – Financial Times

Writing for the FT’s Lex column, Brooke Masters appreciates that chief executives of the UK’s biggest companies must envy their US counterparts’ pay. According to data from Deloitte, American CEOs make consistently more than their British peers, even when relative company size is accounted for. The highest paid executives in the US all made more than $40m last year. UK shareholders have recently protested against pay packets one-quarter of that amount. Masters acknowledges the legitimate argument that top talent must be remunerated competitively to be retained – turnover is common and costly in Britain. An increasing number of FTSE 100 companies are seeking substantial increases, but she advises to proceed with caution. More pay demands better clarity (and scrutiny) around deferred bonuses, clawbacks, and “malus” clauses to ensure the money realistically reflects performance. That’s hard to prove if growth in the UK continues to lag that of the US. “Rewarding mediocrity” won’t please many investors. 

What is weighing on CEOs’ minds this earnings season?– the Economist

In last week’s Economist, Schumpeter ponders the fine art of the shareholder letter. Some may dismiss these missives as self-publicity. They can materially move the markets – Amazon’s stock market value reached $2trn the day its letter went out. But Schumpeter relishes the window into CEO’s minds. This year’s dispatches suggest the chief executives of some of the largest S&P 500 companies are susceptible to the same macroeconomic anxieties as the rest of us. After Q1’s hopes of lower interest rates and inflation dampened, recent letters from J.P. Morgan Chase’s Jamie Dimon and Amazon’s Andy Jassy hit a “bleakly powerful” note.  Without macro tailwinds, companies are under pressure from investors to drive up earnings. Moreover, without certainty around inflation, rates, or the situation in the Middle East, there is little certainty at all. 

ESG is ‘dying’… but that may be a good thing – Tariq Fancy

City AM’s Charlie Conchie has sat down with Tariq Fancy, BlackRock’s former sustainable investing chief. He came to the role in 2018 from a career in distressed investing – an area, he says, which leaves one “allergic to bullshit”. He left BlackRock in 2019 “disillusioned and downbeat” (Conchie’s words, not Fancy’s). BlackRock, an early advocate of ESG investing, has noticeably cooled off on it. Fancy thinks it was a Larry Fink PR strategy all along, producing few material gains for investors, the environment, or greater good. Fancy was among the first high-profile financiers to challenge Fink in 2021, at the height of the ESG hype. Last year, global sustainable funds saw net outflows of $2.5bn. Fancy suggests regulation is the way forward in a post-ESG world. ESG might be dying, but in the meantime BlackRock still has $802bn sustainable assets under management. 

What Tottenham Hotspur need to learn about good investor relations

Tottenham Hotspur is seeking to achieve a “significant increase” in its equity base, as the club seeks to compete with a cohort of wealthy rivals. A dedicated Spurs fan, IR Magazine’s Laurie Havelock notes that whilst the club’s financial stewardship has been relatively successful under chairman Daniel Levy, engagement with public investors will pose a difficult set of challenges for both him & ENIC Group, the investment vehicle through which the club is run. Spurs posted increased revenues for the year ending June 2023, but the threat of IR failure in football is a serious one – as other Premier League clubs can attest. Levy will need to prioritise transparency and ensure good governance practices as it engages with shareholders, or this weekend’s North London derby will be just one of Spurs’ worries. 

And… How Sweden’s stock market became the envy of Europe

The relative dearth of IPOs in London and throughout Europe has been well reported. As countries look for new ways to revive their capital markets, the FT believes many are turning to Sweden, whose IPO market is the deepest on the continent. The Scandinavian country has seen 501 companies list over the past 10 years – more than the combined total of France, Germany, the Netherlands, and Spain – with the size of its stock exchange particularly impressive when compared to the relative size of the country. Carnegie Group, a Nordic bank, have attributed this success to Sweden’s positive investment culture and strong equity sentiment. Swedish households hold a high proportion of their investments in listed companies, and their financial literacy is greater than that of their counterparts elsewhere. Rules and products allowing people to invest into public equities are well-established, suggesting that the promotion of a positive investment ecosystem, at every level, is crucial for healthy capital markets. 

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