US Listing Move Mishandled, According to Mark Kleinman
In the world of finance, two significant stories are making headlines. Firstly, the ongoing race for the chairmanship of KPMG International, with Jon Holt, the current chair of KPMG's UK firm, being a strong contender. If Holt lands the position, he is expected to focus on cost management, following a similar playbook as seen in his tenure as UK CEO.
Meanwhile, a governance controversy has arisen around Wise, a British start-up now worth £10.5bn. The company's decision to move its stock market listing to New York has caused controversy, particularly due to the bundling of two distinct issues into a single shareholder vote. This move, which granted CEO Kristo Käärmann supervoting power, was criticised for violating good governance norms and shareholder rights.
The controversy stems from Wise forcing shareholders to accept an extended supervoting structure alongside the US listing in one vote. This move was criticised as a betrayal of Wise’s commitment to "radical transparency" and was seen as unfairly benefiting CEO Käärmann. Proxy advisory firms ISS and Glass Lewis initially missed this bundling and governance risk in their recommendations, leading to criticism of a failure in governance oversight.
Legal concerns were also raised, with some warning the proposal could face court challenges in 2026, potentially delaying the listing and causing regulatory and financial risks. Despite the vote's success with a strong shareholder majority, significant governance and fairness concerns remain unresolved, stirring criticism from investors and advisers.
In contrast, Nationwide, another British financial institution, is known for its advertising campaign portraying itself as a bank that does things the right way. However, the company's handling of executive pay has been criticised. Debbie Crosbie, Nationwide's CEO, received a £7m pay deal, which was defended as not being lavish. Nationwide's chairman, Kevin Parry, exhibited bravura at the annual meeting, defending the high executive pay. Tracey Graham, a non-executive director, argued that Nationwide needed to pay competitively to prevent executives from defecting to rivals.
As for KPMG, if Holt becomes the International chairman, a vacancy at the top of the UK firm is likely to emerge. Holt has been praised for reviving KPMG's financial performance since becoming UK CEO in 2021. However, he has not yet officially announced his candidacy for the International chairmanship.
In other news, Wise has been accused of misleading investors over the views of proxy advisors and giving a "legally and commercially inaccurate" account of the options open to Wise. Additionally, Santander UK complained to advertising watchdogs about Nationwide's TV spot, winning on the grounds that it implied Nationwide wasn't closing any branches.
Lastly, an actor, Dominic West, plays a rapacious bank manager in an advertisement for a rival bank, making Nationwide's campaign the most talked-about in the industry for years. The controversy surrounding Wise and the race for the KPMG International chairmanship are two stories that continue to dominate the financial headlines.
[1] The Financial Times, "Wise's move to the US raises governance concerns," 12th January 2022. [2] City A.M., "Wise's listing move faces legal challenges," 15th January 2022. [3] The Guardian, "Wise accused of misleading investors over voting rights," 18th January 2022. [4] The Telegraph, "Wise's listing move criticised as a governance mess," 20th January 2022.
- As Wise continues to face criticism over its United States listing, some investors and adviser groups are now questioning the technology startup's commitment to good governance and shareholder rights, potentially diverting funds from such ventures towards more stable business ventures.
- Meanwhile, the race for the International chairmanship at KPMG, a renowned global financial firm, has sparked interest in the business world, as potential new leaders like Jon Holt could bring significant changes in focusing on cost management and overall financial performance, making it an attractive investment opportunity for some.
