IR Monitor – 27 March 2024

In this week’s newsletter:

In this week’s newsletter:

• Can AI make CEOs more relatable? Digital tools can inform and enrich speeches but few would use their content verbatim, warns the FT
• Over-regulation has destroyed the London stock market, claims the Daily Telegraph. In rooting out ‘wrongdoers’, the FCA has repeatedly thrown the baby out with the bathwater
• Women in IR: why cracks in the IR glass ceiling are disappearing. IR Magazine research finds fewer women in senior roles
• How to think about dividend cuts: some ideas from the Investors’ Chronicle
• Glass Lewis on proxy season in the UK and Ireland

This week’s news

Can AI make CEOs more relatable?

The attempts (and at times struggles) to make a CEO sound relatable and emotionally connected to a room full of analysts and investors are almost too well known to IR professionals. The FT proposes a solution which, to no one’s surprise, comes down to AI. We operate in a world of constant communications, and language tools can be a great solution, churning out thousands of words in a matter of seconds. However, communication is about human connection and when you delegate an element of that to a computer, it’s no longer human-to-human connection. Maybe we are further than we think from a world where AI financial models analyse AI-written investor presentations.

Has over-regulation destroyed the London stock market?

Rupert Lowe, Reform UK’s business spokesperson, has a bone to pick with the FCA. He believes the regulator is to blame for the continued trend of UK-listed growth companies being acquired by better-funded foreign competitors, the most recent example being the acquisition of West-Sussex-based Spirent Communications by tech multinational VIAVI Solutions. Lowe proposes a set of solutions to what he sees as a “heavily overregulated industry.” First order of business: The FSMA, together with any lingering elements of MIFID II, needs to be abolished and the City needs to start again with a simpler (and shorter) playbook. Lowe proposes to focus regulation only on the areas deemed really necessary and investor education on the risk involved in stock market investing.

Women in IR: why cracks in the IR glass ceiling are disappearing

The results of IR Magazine’s latest Salary & Careers Report  are in latest Salary & Careers Report  are in and it is apparent the progress made in the IR profession is now backtracking. Two years ago, women held 41 percent of senior IR positions but today that figure has dropped to 37 percent. Worse still, the proportion of women leading IR programmes in North America is actually lower than when IR Magazine first reported on the ‘IR glass ceiling’ back in 2017. In two years, there have been drops of 9 percentage points and 10 percentage points in the number of women holding the most senior IR positions across Europe and Asia respectively. The trend is not specific to any industry and partly comes down to an increasingly large contingent of sell-side analysts – who are usually men – deciding to change careers and take on an IR role, which is to the detriment of in-house communications and finance executives. The article also points to an interesting trend: women IROs are far more likely to have their eye on a C-suite or Board position.

How to think about dividend cuts

Dividend cuts are a common occurrence come results season. But what do they mean? Investors’ Chronicle asks. Dividend cuts are rarely a good sign, and generally serve as a signal of cash scarcity. As Warren Buffet himself said, it ‘is never good when a company cuts its dividend dramatically.’ The next question posed in this article is perhaps more interesting: do dividend cuts present an attractive investment opportunity? As counterintuitive as it might sound, the answer is not that clear cut. According to the article, McKinsey & Co believes no company would actively choose to cut dividends so a dividend cut creates the perception of “weaker earnings and lower cash flows ahead” and therefore could lead to an “investor blowback.” As such, CFOs should be alert to the risk a dividend cut may foster even when there is a compelling case to deploy capital elsewhere.

Glass Lewis on the proxy season in the UK and Ireland

Glass Lewis  has released its Proxy Season Preview for 2024, offering an overview of local governance trends and regulatory updates, alongside some intriguing AGMS to keep an eye out this year. A highlight of the report is the overview of the impact of new diversity reporting regulation, which includes all main market companies will have to ‘comply or explain’ its Board diversity targets. 2024 will be the first year in which all main market companies will have to ‘comply or explain’ with regards to board diversity targets. The report also includes a section on remuneration issues. The backdrop of the cost-of-living crisis will draw increased scrutiny to companies’ remuneration policies, and the recent removal of the ‘bonus cap’ will bring attention to the banking sector, in particular.

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