IR Monitor – 30 April 2025

In this week’s newsletter:

• CEOs should think twice before using AI to write messages warns the Harvard Business Review. The technology is often wrong and relies too heavily on jargon and buzzwords.  
• UK executive pay increases surpass US competitors reports the Financial Times. For years, British PLCs have paid executives smaller stock bonuses compared with the US, fomenting anxiety about the competitiveness of London-listed companies 
• The role of investor relations during a spin-off: the number of IPO spin-offs doubled in the US between 2023 and 2024, according to IR Magazine 
• London market ‘can benefit from instability in America’ suggests Zopa. An unpredictable tax and tariff regime could make companies think twice about listing in NYC, a market that has lured companies globally with the promise of higher valuations 
• Short sellers: heroes or villains? Carson Block on the shrinking world of shorting 
• And finally… ‘Take a child to work’ meets earnings season. Analyst’s kid grills Pepsi

This week’s news

CEOs should think twice before using AI to write messages – HBR

A group of researchers recently conducted a study at an American software company on on the use of AI in CEO communications. They trained a chatbot using the CEO’s Slack messages, emails, public statements and other communications, specifically designed to write like him. Employees then provided questions to be responded to by both the CEO himself and the chatbot, with the employees then asked to identify the AI-written response. They were correct 59% of the time. As well as this, employees rated answers they believed to be AI-written as less helpful, even if they actually came from the CEO himself. This was also found in a follow-up study, which asked participants (with no familiarity with the speaker) to read statements from earning calls, some of which were AI-generated, displaying the importance of what we perceive to be human communications. With over half of  CEOs now admitting to using AI in the work setting it’s one for IR teams to remain vigilant about.

UK executive pay increases surpass US competitors – Financial Times 

The gap between renumeration packages for American and British CEOs has been widely discussed, especially with increasing numbers of companies delisting from the London Stock Exchange to list in the states. However, this year pay packages of UK-based chief executives have grown faster than their American rivals. The median CEO pay reported by FTSE 100 companies this year has increased by 11%, compared to 7.5% for S&P 500 CEOs. Bonus increases have also been fast-tracked at annual meetings, as shareholders seek to compete with US companies. The Investment Association last year relaxed its executive pay guidelines, meaning companies have greater freedom to decide their renumeration package. This has meant investors are seeking more disclosure on how CEOs are paid compared to their peers, and a shift to larger pay packages which are tied to performance.  

The role of IR during a spin-off

It’s not news to anyone that an increasing number of conglomerates are choosing to simplify and streamline their operations. This includes GE, which completed a division into three separate entities last year, spanning aerospace, energy and healthcare. In fact, the number of IPO spin-offs doubled between 2023 and 2024. This has created a number of opportunities for IR. Beginning with the initial split, which often includes a degree of activist pressure, calm-headed IR management is essential. By aligning with the company’s identity, culture and business strategy and creating a compelling investment thesis, IR can help to generate interest in the new company and its stock. Through effective storytelling, IR can welcome new public companies to the market, show the value of its offering and keep investors calm through the often lengthy process. 

London market ‘can benefit from instability in America’ – Zopa

In an interview, the CEO of Zopa, Jaidev Janardana, argues that London’s political stability could make it a more attractive destination for IPOs, as the tax and tariff regime in the U.S. seems increasingly unstable. Zopa, valued at $1 billion, sees a London listing as more logical due to the business’s UK focus, but continues to be open to options. Janardana remains optimistic that market conditions will improve by late 2025 or early 2026, noting that capital market reforms could also  make London listings more appealing. He also suggested that a potential Trump tariff regime could be deflationary for the UK, easing trade costs. Ultimately, Janardana highlights that in order to rebuild investor confidence in the London market, that companies must then deliver strong post-listing performances. 

Short sellers: heroes or villains?

This week, Money Maze podcast sat down with Carson Block, founder and CEO of Muddy Waters Research. In the podcast he expands on the importance of activist short-selling to ensure markets are performing within regulation. Short-sellers are able to expose workarounds hiding fraud, misconduct and poor management that could harm investors and the market. The research done by short-sellers aims to find when companies are misguiding investors and exposes them. While this is an entirely speculative and research based process, short-sellers often face consequences for the research they publish, spanning financial, legal and reputational, especially in traditional media who often mischaracterise short-sellers and side with larger companies. Elsewhere in the short selling universe, the founder of Hindenburg Capital closed the business recently because he simply found it too intense. But short-sellers, Block clarifies, provide a crucial market function that is essential in guiding investment decisions. 

And finally… ‘Take a child to work’ meets earnings season: kid grills Pepsi CEO.

Investor relations remain full of the unexpected challenges. It’s not every day that a CEO is grilled by a 13-year-old on an earnings call. During Jefferies’ “Take A Child to Work Day”, PepsiCo CEO Ramon Laguarta faced exactly that, as 13-year-old Milena Gajrawala asked an unexpected question about the impact of upcoming GLP-1 weight-loss pills. Analysts on the call were impressed by her sharpness, and Laguarta praised the question, focusing PepsiCo’s focus on adapting its offerings to new dietary trends. Meanwhile, Milena’s brother put Keurig Dr Pepper’s CEO in the hot seat, asking about a new drink flavour. While the answers from the CEOs leaned heavily on corporate jargon, both CEOs expressed appreciation for the thoughtful questions, providing a light-hearted moment during otherwise serious discussions.