Shire shows activists’ growing addiction to UK companies, Robey’s onward march and the FRC has its plate full

 
Mark Kleinman
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Pharmaceuticals giant Shire has circulated a chunky document to its largest shareholders (Source: Getty)

Among the products manufactured by Shire, the London-listed drugs group, are several treatments for Attention Deficit Hyperactivity Disorder. That might explain why the company keeps encountering the same difficulties with investors over the sums paid to its top executives.

In the last few weeks, the pharmaceuticals giant has circulated a chunky document to its largest shareholders setting out plans for a new three-year pay policy.

Parts of it, I’m told, read like the formula for a particularly complex drug compound; so much for simplifying boardroom pay. One investor who has seen the proposals says they are marginally less contentious than previous efforts, but that’s not Shire’s only problem. Sachem Head Capital Management, an activist US hedge fund, has begun building a small stake in the company, pushing the board to pursue more radical options than the spin-off of its neuroscience arm.

Read more: Shares in Shire rise as its dry eye drug nears Europe-wide approval

In fairness, CEO Flemming Ornskov has pledged to announce a decision on that issue by the end of the year. Investors are hopeful that separating the unit will help reverse a 25 per cent fall in the share price over the last year.

But there’s yet another headache that none of Shire’s drugs will address. I understand the company has also attracted the attention of the Investor Forum, the body that includes representatives of Britain’s multi-trillion pound asset management sector.

The exact scope of the Forum’s concerns is unclear, but another pay row would only add fuel to the fire.

Robey’s onward march

Bulge-bracket bankers, beware the boutiques: fans of alliteration will no doubt feel a sense of smug self-satisfaction at this truism of the post-crisis investment banking arena. The rise of Moelis, PJT Partners and Robey Warshaw has been so striking that moves by their protagonists have become worthy of close attention.

So it’s notable that Sir Simon Robey – arguably the most successful British M&A adviser of his generation – has quietly taken on the chairmanship of Connaught, a financial advisory firm focused on founder-led companies in the technology, media and entertainment sectors. The move, disclosed on the City watchdog’s register this week, partners Robey with Ian Osborne, an impeccably networked tech adviser and investor whose tenure as a partner at DST Global involved backing Alibaba, Airbnb, Facebook and Twitter.

Read more: Mega-deals help boutique investment bank Robey Warshaw double profits

The Connaught duo are coy about the significance of Robey’s appointment, but I understand that he will advise its clients alongside those (and not instead) of Robey Warshaw, the boutique which is now the UK’s leading independent deals adviser.

With TMT now taking the biggest slice of global M&A, and the emergence of gargantuan tech companies such as Alphabet and Apple, I’d put money on Osborne’s alliance with Robey making waves on both sides of the Atlantic.

FRC has its plate full

Ofgem, the FCA, Ofcom and the accountancy watchdog: the race to bare teeth has become of paramount importance for a clutch of regulators often accused of being captured by those they supervise.

This week’s decision by the Financial Reporting Council to fine EY £2.75m over its audit of Tech Data Limited comes at a crucial time for the body, which is being given an enhanced remit to oversee the government’s latest corporate governance reforms. What got curiously overlooked, though, was that Julian Gray, the partner on the account who was fined £59,000, is now in the employment of PwC – a firm already in the FRC’s cross-hairs for apparent failings at BT Group, BHS and elsewhere.

Read more: The UK's accounting regulator has just clarified exactly what it does

And with Tech Data now settled, that leaves EY as the only one of the six largest auditors without a live investigation against its name.

The FRC will have its enforcement work cut out for some time to come.

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