IR Society Corporate Governance Review Seminar

As moderator for yesterday’s IR Society seminar focusing on current trends in Corporate Governance, Richard Davies assembled a superb panel of speakers to address the 40-strong audience. 

Corporate Governance

Beginning with experts from corporate governance trade bodies, Will Pomroy, Policy Lead: Corporate Governance & Stewardship at NAPF, opened the seminar with discussion of Pension Funds and Environmental Social Governance (ESG).

Pension Funds (PFs) outsource management to Investment Managers, but are still very keen to ensure that they carry out stewardship responsibilities as asset owners – by making their own informed voting decisions, for example. NAPF have been facilitating communication between the PFs and their Investment Managers – through Stewardship Accountability forums – to emphasise what is important to them. Perhaps surprisingly, in a recent survey conducted by the NAPF, 90% of PFs agreed that ESG factors have a material effect on investments.

The Investment Association’s (IMA), Director of Corporate Governance & Engagement, Andrew Ninian, revealed that whilst Remuneration has dominated discussions in recent years, issues surrounding Board effectiveness are one of the largest agendas facing the IMA today. He stressed the need for long-term decisions to be made by the right people on a company’s Board and that this is crucial to its investors. Ninian also spoke about the increasing requirement for diversity within Boards and a requirement for a matrix of skills. He described a pressing concern pertaining to the lack of ‘Board-ready’ candidates available to ‘step up’, and suggested companies need to be more willing to expose their senior executives to Board activity and decisions, in order to prepare them for Director roles. He emphasised the importance of the role of the Chairman, referring to the position as the ‘lynchpin’ of the Board and that ultimately, the Chair is responsible for the cohesiveness of the Board.

George Dallas, Policy Director at ICGN (International Corporate Governance Network), an investor-led membership body, spoke about the role of ICGN in fostering partnerships between companies and investors, rather than seeing the relationship as ‘us and them’. The ICGN operates a number of policy committees and is at the forefront of governance thinking: it produces frequent ‘Viewpoint reports’ on topical governance themes

Peter Swabey, Policy & Research Director of ICSA (Institute of Chartered Secretaries & Administrators) offered insight into the role of the Company Secretary and touched on trends within corporate governance. Peter suggested the CoSec role:

  • delivers strategic leadership
  • adds significant value as a bridge in the boardroom between the executive team and the non-executive team
  • facilitates the delivery of organisational objectives
  • occasionally referred to as ‘wise friend and counsellor’ of non-execs

According to ICSA, the role of Company Secretary is increasingly outwardly-focused with many CoSecs currently involved in investor engagement and corporate communications. The role has developed beyond the administrative function of old. Peter warned of the conflict of interest in combining the roles of Head of Legal or General Counsel and CoSec, suggesting they should remain separate entities.

Before concluding, Peter referred to the PSC Register (Person of Significant Control), created as part of the Small Business, Enterprise & Employment Bill, due to come into effect in April 2016. All companies must disclose their beneficial owners via the register, defined by BIS as:

  • Those with ownership of more than 25% shares
  • Those with ownership of more than 25% voting rights
  • Ownership of right to appoint or remove a majority of the board of directors
  • Right to exercise significant influence or control
Sustainable Investments and ‘Impact Investing’

The following two speakers, Simon Howard, CEO of UKSIF (UK Sustainable Investment & Finance Association) and Tomas Carruthers, CEO of Social Stock Exchange, focused on the potential for investors to drive sustainability through investing into businesses that positively impact the environment and society.

According to Simon Howard, investing in companies with sustainable business practices is imperative from a financial point of view, as well as any sort of ethical one. He explained that an increasing number of investors are concerned by how businesses, especially in the oil and gas sectors, plan to transition to a low carbon economy. He mentioned how the ‘Aiming for A’ coalition saw shareholders successfully campaign for BP to report on its progress in this respect and in relation to climate change, through the submission of a shareholder resolution. Addressing his audience, he suggested that, based on his experience, the longevity of IR teams in comparison to that of individual CEOs, could present an opportunity for investor relations professionals to be the ‘conscience of the company’.

Tomas Carruthers, spoke passionately about his pioneering organisation, the Social Stock Exchange (SSX), as an alternative to the traditional route to capital-raising. The Social Stock Exchange is the world’s first regulated stock exchange with RIE status and seeks to “bridge the gap between the increasing desires of businesses to make a difference, alongside making a profit.” His passion for ‘impact investing’ evident, he described how the SSX offered small cap companies a platform to increase their visibility and attract “capital at scale, via a growing community of global impact investors.”

Currently led by a retail investor base, ‘impact investing’ has enjoyed an explosive growth in the last five years. Research has pointed to Millennials as the driving force within this investment area. Since 2012 there has been a 60% rise in the global growth of market for sustainable investments (*Global Sustainable Investment Review, Global Sustainable Investment Alliance, Feb 2015). 

Voting, Governance and Stewardship

This four-strong panel of experts included, Mike O’Sullivan of Glass Lewis & Co, Sarah Wilson of Manifest, Anita Skipper of Aviva Investors and Diandra Soobiah of NEST. Each speaker gave insight into their organisation’s role and the trends they perceive with regard to voting and stewardship, and the integration of corporate governance research within investment firms. Mike O’Sullivan and Sarah Wilson distinguished between their work as proxy advisory agencies. O’Sullivan noted that Australia has proved a leader in best-practice, and that experiences could prove relevant and beneficial for the UK going forward. Sarah Wilson attacked what she perceives as ‘zombie voting’, which in effect dilutes the efforts of shareholders who do make informed decisions. There was agreement across the panel with regard to the challenge shareholders face in responding adequately to the volume of meetings and resolutions proposed. This led to suggestion that perhaps shareholders might proceed by focusing on a reduced number of holdings, where issues can be examined in detail, rather than prioritising quantity over quality.

Anita Skipper, in accordance with Sarah Wilson, highlighted the importance for investors to develop and implement their own voting guidelines in light of the fact that not all shareholders have the same views and solutions. Anita, who is a Corporate Governance advisor to Aviva Investors, commented on the firm’s progress on integrating responsible investment practices within the investment and stewardship process. There is a perception that across the industry there needs to be better communication between fund managers and their corporate governance teams to optimise the sharing and incorporation of research and industry developments.

Diandra Soobiah spoke about the importance of integrating ESG as a risk governance strategy and carrying out stewardship responsibilities for NEST as a defined contribution pension scheme. For NEST, the National Employment Savings Trust, the incorporation of ESG issues reflects the Trust’s long-term horizon, which in turn represents the expectations and concerns of its members. NEST not only engages with investee companies as part of its stewardship strategy but with regulators and standard setters, and, crucially, its fund managers too.

Ethics and Governance

Peter Montagnon, Associate Director of IBE (Institute of Business Ethics) and a member of RD:IR’s Advisory Board, closed the seminar by providing the audience with anecdotal insight into the importance of ethics in business. He emphasised the need for companies to have a business model that reflected their core values and that if the two are not aligned, a company risks entering into very muddy waters. He went on to the say that values and culture must drive a company’s behaviour and that this should come from within a company. Not only should investors demand transparency on ESG progress, but the CEO in particular must provide a beacon of light and an example for employees to follow. 


For more information regarding IR Society events please visit their website here.


Authors: Sarah Blackshaw & Alice Essam

RD:IR attracts a brood of ducklings!

Every year a collective ‘Ahhhh’ reverberates around the RD:IR office as it is discovered that a mother duck, who seems to have become fond of our window box, has taken up her annual residency to raise her twelve ducklings.

Unfortunately, a past experience has taught us that nesting at second-floor height, in a busy commuter area, is not safe for the ducklings and as such the RSPCA were called this afternoon, in order to re-house the newborns.

As sad as we are to see them go, the ducklings will be taken to a wildlife park outside the city to be reared in a more sheltered environment.

Until next year… sniff sniff.



RD:IR announces major new contract wins in FTSE 100 & FTSE 250


Richard Davies Investor Relations (“RD:IR”) is thrilled to announce new contract wins within the FTSE 100, as BT Group plc and Marks and Spencer Group plc join its growing list of blue-chip clients.

RD:IR is also delighted to welcome FTSE 250 constituents, AA plc, Ophir Energy plc and Tullow Oil plc to its mid-cap stable. RD:IR acts for one-third of this Index.

RD:IR is pleased to act for over 630 public company clients in the UK and internationally, across a range of sectors and market capitalisations.

New FTSE 100 clients

BT Group plc, one of the world’s leading fixed line telecommunications groups, and international multi-channel retailer, Marks and Spencer Group plc, have both taken RD:IR’s integrated IR InTouch service, combining rigorous share register analysis, powerful targeting, in-depth profiling and tailored investor relations contact relationship management in one online platform.

New FTSE 250 clients

Roadside assistance provider, AA plc, and oil and gas, exploration and production companies, Ophir Energy plc and Tullow Oil plc, have all chosen to employ RD:IR’s proprietary IR InTouch platform to assist and manage their investor relations activity.

Richard Davies, Managing Director of RD:IR, said, “We are very pleased to make more client gains within the FTSE 100 and FTSE 250. We welcome all our new clients, large and small, and look forward to working with the investor relations teams of these businesses in the coming months and years.




For further information please contact:


Richard Davies, Managing Director

+44 20 7492 0501 or


Sarah Blackshaw, Head of Marketing

+44 20 7492 0533 or

Shifting Sentiment

Leading European equity indices are 7–12% more expensive now than at the start of 2015. For example, the FTSE-100 index  currently trades at a calendar year 2015 estimated  P/E multiple of 18.9x (source: FactSet consensus data), an expansion of 148 basis points compared with 17.5x at the start of the year,  an 8.4% re-rating.

We note that increasingly stronger equity valuations are not a purely European issue, as the STOXX Global 1800 index has re-rated by 10.2% over the same period.



Furthermore, current P/E multiples are not only expanding, they are also getting close to historical highs. For example, the entire UK equity market (FactSet aggregate data) currently trades at a CY’15E P/E of 16.7x, representing a 14% premium to the 2000–2014 historical average of 14.6x.


Consequently, both sell-side analysts and investors are getting nervous and market sentiment has deteriorated in recent months.

The share of sell-side buy/overweight recommendations has been falling across the board on the back of very strong price performance year-to-date, particularly in Continental Europe, boosted by the ECB’s quantitative easing measures. For example, the share of positive (buy/overweight) ratings among all DAX companies is 38.1% today, a drop of almost ten percentage points from 47.6% of positive at the start of the year.

To rate a stock positively, analysts have to offer some upside to their price target (usually at least 10%). With raising share prices, analysts have basically two ways to continue offering upside potential: 1) raise earnings estimates, which has to be supported by strong trading updates, or 2) apply higher target multiples to earnings forecasts. In other words, stock ratings are being downgraded because analysts can’t justify increasing their earnings projections in a fairly muted macro environment. Again, this is even more evident in Continental Europe, where quantitative easing is first and foremost aimed at reviving sluggish Eurozone economies.


Picture 3

Investors are also getting more nervous about equities. The April 2015 Bank of America Merrill Lynch fund manager survey highlights the deterioration in investor perception of European stocks since the start of the year.

A net 8% of worldwide respondents said that European equities were overvalued in February, rising to 23% in March and then 25% in April survey. Manish Kabra, European Equity and Quantitative Strategist at Merrill Lynch noted: “We are seeing a form of rational exuberance in Europe where a positive view on stocks is supported by fundamentals – but investors no longer believe valuations are cheap.

The belief that European equities are now overvalued is not limited to international investors. In March a net 3% of European managers believed European equities were undervalued, yet in the April survey, sentiment shifted significantly, with a net 10% now saying Europe is overvalued.

While this sentiment prevails, it is worth noting that global investors see the US as the most overvalued market, with 68% of respondents holding this view. However, we would add that, in comparison, the US is in a much better position in terms of earnings recovery potential.


What does it all mean for quoted companies?

When equity valuations are getting stronger and trending above the historical average, it becomes increasingly challenging for active fund managers to generate alpha (and justify charging more than tracker funds). This may well mean an increased focus on portfolio rationalisation and a more thorough review of what constitutes top picks and best investment ideas.

In this context, and also given the changing dynamics of the corporate access market in the UK, quoted companies, particularly the smaller ones, need to be even more proactive with their engagement with shareholders and potential investors.

Investor targeting is not simply about identifying and prioritising investors, whether current shareholders that could invest more, or absentee investors that could re-invest or invest for the first time. Good targeting is also about developing high quality relationships with target investors in order to gauge their sentiment towards your stock and to provide them with adequate information about your stock in order that they can make an informed choice about monitoring your stock and/or meeting with you.

A list of targets is only useful if acted upon methodically and quickly, via direct outreach, to investors on a global basis. Such an exercise can be very time-consuming for in-house IR teams, as a targeting campaign may involve hundreds of target investors. The companies that most need this type of campaign are very often also those with more limited internal resources.

RD:IR is well-versed in helping corporates reach out to investors, gathering useful feedback from the buy-side within a short period of time, as well as providing quarterly updates on target sentiment, keeping the target lists fresh and current.

Please do not hesitate to contact us to discuss our Targeting / Investor Access services or any of our other IR services in more detail.


Authors: Mark Robinson (Senior Client Manager – European Issuer Services) & Philippe Ronceau (Senior IR Consultant)

Mark Robinson joins RD:IR as a Senior Client Manager


RD:IR is delighted to welcome Mark Robinson, who joins the company as a Senior Client Manager (European Issuer Services). Mark will be responsible for our European clients and will work closely with both the Analytics and IR Services teams, as we expand our relationships with new and existing clients on the Continent.

Mark graduated from the University of East Anglia in 2005 with a BSc in Mathematics and started his career working for Camelot where he was responsible for analysing the retail sales of the National Lottery products. From there, he moved to Thomson Financial, joining the Corporate Advisory Services team to cover corporates in the UK and Northern Europe and developing shareholder identification reports.

Mark joins RD:IR from a global financial data provider, where he was responsible for clients across central and emerging Europe. He brings with him a wealth of experience and has been involved with panel discussions outside of the UK, including, discussing liquidity at the TUYID (Turkish IR Society) annual event, and also leading discussions on the impact of ETF investments at the AGM of CIRA (Circle for Investor Relations Austria).

Richard Davies, Managing Director of RD:IR, said, “I am thrilled that Mark has joined us. This is a particularly exciting time in the company’s development as we expand into Europe. Mark has a great understanding of investor relations and we look forward to introducing him to our clients and prospective clients.”