The week in investor relations: Jack Ma’s fines and fortunes, Coinbase goes public and CEO pandemic pay hike
– The Wall Street Journal (paywall) reported that Jack Ma’s Ant Group will apply to become a financial holding company overseen by China’s central bank, revamping its business to adapt to a new era of tighter regulation for internet companies. In a statement, the People’s Bank of China said Ant representatives were summoned to a meeting with four regulatory agencies that also included the country’s banking, securities and foreign-exchange overseers. It said a ‘comprehensive, viable rectification plan’ for Ant has been developed under the regulators’ supervision over the past few months. This week Ma’s Alibaba Group was also hit with a record fine of $2.8 bn over alleged market violations, reported MSN, though the fine was less than investors had expected, with the news pushing up Alibaba’s ADRs 9.3 percent and increasing Ma’s wealth by more than $2 bn.
– Cryptocurrency exchange Coinbase Global ‘finally went public’, noted CNN, with a valuation of nearly $100 bn, as the company takes advantage of surging demand (and prices) for Bitcoin, Ethereum and other digital currencies. The company listed its shares directly on Nasdaq, with CNN reporting that the firm is now worth more than three times the value of Nasdaq and also has a higher market value than NYSE parent company Intercontinental Exchange.
– CEO pay surged in 2020, reported MarketWatch. Median pay for the chief executives of more than 300 of the biggest US public companies reached $13.7 mn last year, up from $12.8 mn for the same companies a year earlier and on track for a record, it said, citing WSJ analysis. Pay kept climbing in 2020 as some companies moved performance targets or modified pay structures in response to the Covid-19 pandemic. MarketWatch noted that salary cuts CEOs took at the depths of the crisis had little effect, with the stock market’s rebound boosting what top executives took home because much of their compensation comes in the form of equity.
– As ByteDance – owner of micro-video app TikTok – prepares for ‘a historic initial public offering’, a leaked internal memo showed that it plans to grow advertising sales in China 42 percent and triple the size of its e-commerce business this year, reported Bloomberg News (via Yahoo! News). Bloomberg added that the ‘aggressive targets’ do not include TikTok but ‘underscore ByteDance’s intention to take on China’s largest internet companies on their turf’. The firm, whose overall revenue more than doubled to $35 bn last year, has kicked off preparations for an IPO of some of its main businesses, including Douyin, TikTok’s ‘Chinese twin’, and is choosing between Hong Kong and the US as the listing venue, people familiar with the matter told Bloomberg.
– According to Reuters, US President Joe Biden’s interim regulators are moving to unravel Wall Street-friendly measures introduced under the previous administration. They have dropped or delayed more than a dozen Trump-era measures that critics said eroded consumer protections, weakened enforcement and limited investors’ ability to push for ESG changes. Lawyers and consumer groups say that, rather than taking on the lengthy process of rewriting the rules, agencies have in many instances used speedy legal tools such as delaying unfinished rules, issuing informal guidance, rescinding old policy statements or issuing new ones and choosing not to enforce existing rules. ‘The interim Democratic leadership for these agencies is moving very quickly to tackle the deregulatory policy shifts that occurred under Trump,’ said Quyen Truong, partner at Stroock & Stroock & Lavan. ‘The agencies’ use of guidance and reversal of policy statements demands a quick turnaround of compliance for firms.’
– CNN reported that New Zealand lawmakers will consider legislation that would require banks, insurers and asset managers to disclose the impacts of climate change on their businesses. The government said the bill is the first of its kind to be proposed anywhere in the world. It will receive its first reading in parliament this week, and it would make climate-related disclosures mandatory for around 200 organizations. The legislation would require financial services firms to disclose how climate change affects their business and explain how they will manage climate-related risks and opportunities.
– According to Reuters, the SEC released accounting guidance for special purpose acquisition companies (Spacs) that called into question whether warrants issued by hundreds of Spacs could be considered equity instruments. The guidance suggests that many Spacs may potentially have to refile their financial statements to account for the warrants as a liability. Spacs have raised a record $170 bn so far this year, surpassing last year’s total of $157 bn, according to Refinitiv.
– A group of 56 big investors with £7 tn ($9.6 tn) in assets is calling on UK-listed companies in the construction and materials industry to check for modern slavery in their supply chains, reported the Financial Times (paywall). The call follows a year-long campaign at hospitality groups where instances of forced labor were unearthed. Asset managers including Schroders, Aberdeen Standard Investments and Fidelity International, as well as religious groups including the Church of England’s investment arms, said modern slavery was rife across many industries, adding that businesses needed to properly examine their supply chains.
– The Street reported that BlackRock’s assets under management rose to a record $9 tn in the first quarter as the world’s biggest asset manager benefited from financial markets surging to new records amid government stimulus and the accelerating rollout of Covid-19 vaccines. Net flows into long-term investment products including ETFs and cash totaled $172 bn as of March 31, BlackRock said, a stark reversal from a year ago when investors withdrew a net sum of about $18.7 bn when the pandemic set in, driving a global sell-off in stocks. ‘BlackRock’s differentiated platform and our insights on some of the biggest issues society is facing today are resonating with clients,’ said BlackRock CEO Larry Fink in a statement.