IR Monitor – 29th June 2022

This week’s news

The social CEO goes mainstream

This week, FTI launched a new piece of research: ‘Leading from the Front: The Social CEO Goes Mainstream’ . The report look at social media engagement by CEOs in the FTSE 100, CAC 40 and DAX 40, and demonstrates that using social media in a professional capacity has become the norm in CEO communications across Europe. In fact, for the first time, over half of all CEOs (52%) across the UK, France and Germany are actively engaging with corporate stakeholders on social channels; moreover, that trend is even more pronounced amongst new CEOs – 85% of newly appointed CEOs in 2021 are actively engaging on at least one social media platform. It’s perhaps no surprise that so many CEOs are turning to social media, when 85% of global business leaders state their belief that stakeholder relationships are improved with an active leader on social media. Regarding investors in particular, 79% of business leaders believe their relationships with this audience are improved.

US companies face battle to fend off vilification over ‘excess’ profits 

The big US company often makes easy prey for politicians and it seems that their wrath has now turned towards O&G companies. Last week, Chevron’s CEO Mike Wirth penned a letter to Joe Biden arguing that ‘political rhetoric’ would not alleviate high petrol prices. What is more worrying is that this rhetoric no longer seems to be isolated to politics, the FT argues. A third of Americans now believe  profit hungry companies are the leading cause of inflation according to a recent survey. Damningly, fewer than one in 10 Americans believes that companies are not responsible for inflation. Big oil is not winning the rhetorical battle and with three quarters of US voters, Democrats and Republicans, signalling their support for some form of legislation to tackle energy price gouging, the industry will have to contend with the politicisation of profit.

Morningstar figures reveal drop in recently ESG rebranded funds flows

Investment Week has revealed that funds which have recently been rebranded -to a name more aligned with ESG at the beginning of the year – have seen a pronounced decrease in flows. Many investment firms have adopted the tactic as a means to inject life into their funds; five UK domiciled funds were rebranded in January, alone, with words such as ‘sustainable’ added to their names. It seems that companies will need to do more than change the name on the tin and add fancy imagery to woo investors. Indeed, research from Morningstar for Investment Week shows that, between February – May 2022, flows in these funds have all fallen compared to the previous four months with the worst affected fund dropping 166% as its flows went from net positive to net negative. The main caveat is that in the period under inspection (February – May 2022) there was an overall drop in UK fund flows. Many experts point to increasing investor suspicion of ESG branded funds and confusion around ESG reporting as the main reasons behind this renewed sense of unease.

Ex-SEC members call for mandatory human capital reporting

IR Magazine reports on the call of 10 academics, working as part of a working group on accounting disclosure, for mandatory reporting on human capital. The group, which includes former SEC commissioners and a former general counsel at the regulator, submitted a petition arguing that ‘despite the value generated by employees, US accounting principles provide virtually no information on [company] labour.’ The group argues that labour needs to be treated in much the same way as R&D and that more needs to be done to enable investors to be able to distinguish between labour costs and investment in the workforce. According to the group, ‘this would allow investors better insight as to what portion of labour costs should be capitalized in their own models – and incentivize management to consider employees as a source of value creation.’

No 10 planning to tear up restrictions on city bosses’ pay

The Independent has revealed that Downing Street has consulted ministers regarding the possibility of easing restrictions on City bosses’ pay in a bid to highlight the benefits of Brexit. In a letter to Chancellor Rishi Sunak, Steve Barclay (the PM’s chief of staff) wrote that one key tenet of the plan includes, ‘removing restrictions on director (and specifically NED [non-executive director]) remuneration as suggested by the LSE to improve London’s attractiveness for listings.’ However, with the recent increase in banker bonuses to levels last seen during the 2008 financial crisis, while wages in the same period increased by just 4.2%, these plans may spark controversy.

And finally… The perils of even numbers

Lastly, we take a look at when balance is not always a good thing. Aerojet has faced months of contention stemming from a dispute between two, 4-member factions of the defense contractor’s board of directors. The row over the proposed purchase of Aerojet by Lockheed Martin Corp. for $4.4 billion in cash, has led to months of heated arguments between Aerojet’s exec chairman Warren Lichtenstein and CEO Eileen Drake – leading both factions to seek legal counsel. Although the situation is not unprecedented, as The Deal notes, in such situations the company itself must maintain a neutral position and resources should not be used in favour of either faction. Pity the IRO.

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