Mark Kleinman: Proxies, a stock market exodus and a Kingfisher mystery
Mark Kleinman is Sky News’ City Editor and is the man who gets the City talking in his weekly City PM column. This week he tackles ongoing rows over pay with proxy advisors, the state of the stock market and what next for a departing Marks and Spencer exec
Let battle commence. Michel Demare, the AstraZeneca chairman, spoke for many of his FTSE-100 peers when he lamented the unlevel playing field holding back the competitiveness of British companies in the area of executive pay.
Writing in the Financial Times earlier this week, he defended the pharmaceutical giant’s decision to increase the potential annual pay package of chief executive Pascal Soriot to £18.7m.
In his firing line? The proxy pay advisers – by implication Glass Lewis and ISS – who both recommended that AstraZeneca shareholders should oppose the revised remuneration policy.
It has become a familiar theme: bosses of London-listed companies castigating the proxy advisers for basing their recommendations on comparisons with British or European, rather than global, peers.
“We do not compare ourselves with the top companies of the FTSE, the narrow approach taken by the proxy agencies, and one irrelevant to the decisions of our current and future employees,” Mr Demare declared.
Similar sentiments have been expressed by board members I’ve spoken to FTSE-100 companies in sectors such as oil, financial services and mining.
But what to do about it? Demare’s intervention offered few solutions, although he deserves credit for putting his head into the lion’s mouth.
For a while last year, there was talk of Treasury ministers seeking ways to bring the proxy advisers into the UK’s regulatory orbit. This seemed like a strange solution to the problem: it’s not obvious why tougher oversight would lead to alternative voting recommendations.
A more effective step might be for FTSE-100 chairs to make a joint public statement demanding that the proxy agencies take into account their global – and in particular, US-based – peers when assessing the appropriateness of their remuneration policies.
Better still, the owners of public companies, many of whom are griping about the disappearance of quality businesses from the London market, could lend their shoulders to the wheel. Sounds like the perfect job for the revamped Investor Forum.
Pace of London’s stock market exodus is hard to ignore
Talk about not mincing his words. Ali Mortazavi took to X last week to deliver the kind of diatribe of which even the social media platform’s owner, Elon Musk, would have been proud.
Announcing his plan to delist from the London Stock Exchange, the boss of E-Therapeutics, a biotech company, described the City’s equity market as “completely broken and closed”.
It has become a familiar refrain in recent weeks, with C4X Discovery and RedX Pharma similarly citing London’s illiquidity when they announced they were delisting.
The former boss of a mid-cap broker who is now involved in a number of growth companies lambasts the investment community as well as a regulatory framework he insists is stymying the ability to raise capital on the public markets.
According to my source, many investors won’t even take meetings with loss-making company bosses in sectors like biotech.
“For growth companies seeking to raise capital, London is dead,” they said.
For all the Treasury-commissioned reviews scrutinising London’s competitiveness as a financial centre, there has been little concrete action to address the issues that Mortazavi raises.
Shell’s deliberations about whether to pursue a US listing are united by the common thread of dissatisfaction with the valuation its stock attracts in London. Its departure would be truly seismic.
This ongoing de-equitisation of the stock market, which is being accelerated by the wave of takeovers of listed stocks, can only be countered by a robust pipeline of new issuers listing shares.
The picture there is not great, either. Whichever way you interrogate the data for last year or the first quarter of this, the fact is that London is not attracting growth companies at scale.
That makes tempting elephantine floats disproportionately important. Almost illogically, the decision of Shein, the Chinese-founded online fashion giant, about whether to list in London, New York or not at all, seems to acquire greater significance with each passing month.
Kingfisher mystery leaves Bickerstaffe with a DIY job
Katie Bickerstaffe’s decision to step down as co-CEO of Marks & Spencer came as little surprise when it was announced earlier this year. Bickerstaffe’s role had effectively been that of a deputy chief executive to Stuart Machin – but there’s no escaping the impact that they, and chairman Archie Norman, have made.
Steve Rowe, the co-CEOs’ predecessor, also deserves credit for gripping hold of the multitude of long-term drags on M and S’s valuation: the wrong clothing product, an outsized and expensive store estate, and an anachronistic supply chain.
Even last week’s confirmation of a new seven-year financial services partnership with HSBC projected an M&S on the front foot: a loyalty and payments superapp which could position it at the forefront of digitally enabled retailing.
What, then, of Bickerstaffe’s future? Sources told me in March that the timing of her M and S exit was at least partly motivated by her lining up a role on the board of Kingfisher, the DIY retailer which owns B&Q.
Kingfisher has been curiously silent about the appointment, and I’m now told that the leak of talks between them may have cost Bickerstaffe the role. If true, that seems slightly sinister. I doubt, though, that she’ll be short of other offers.
Mark Kleinman can be found tweeting at @markkleinmansky