14 ★ FINANCIAL TIMES Tuesday20 August 2019COMPANIES
PATRICK TEMPLE-WEST— NEW YORKBig US pension funds and investors will
this month step up pressure on compa-
nies to reduce the gender pay gap by
seeking to compel them to disclose the
difference in how they treat men and
women.The states of Connecticut, Minnesota
and Oregon are among investors that
are pressing companies to disclose more
information about how women are
recruited, promoted and paid.
The investors want new disclosures
about the promotion gap between men
and women as well as information about
how women are paid as they climb the
corporate ladder.
“Gender equality, if we are not paying
attention to that as a risk, we are not liv-
ing up to our fiduciary responsibilities,”
said Tobias Read, treasurer of Oregon.
He oversees about $106bn of assets
under management and is one of the
investors to have aligned with As You
Sow, a non-profit group that in July sent
a letter to 31 companies urging them todisclose information about how women
are recruited and promoted.
“As much as we all share a values-
based position on these things, we are
investors with fiduciary responsibili-
ties,” he said. “One of the ways we can do
our job the best is making sure that
there is gender equality at every level.”
The number of shareholder pay gapproposals voted on at S&P 500 compa-
nies in the tech and financial sector
increased to 13 in the first half of 2019,
up from six in all of 2018, according to
an analysis by law firm Sullivan &
Cromwell. The average percentage of
votes cast in favour of pay gap proposals
was 32 per cent in 2019, up from 19 per
cent last year, the law firm said.
In the 2020 proxy season, sharehold-ers will again be forced to slug it out with
companies over gender pay disclosures
because Congress and the Securities and
Exchange Commission have shown little
interest in requiring businesses to pub-
lish gender pay gap information —
reporting that is mandatory in the UK.
Research from Morgan Stanley earlier
this monthshowed that equal represen-
tation of women and men in the work-
place was closest at the employee, “shop
floor” level. At managementlevel, the
ratio of women to men drops to about 3
in 10, Morgan Stanley said.
“As we continue to move up the ladder
to the per cent of women executives, we
see this number drop to between
15-23 per cent, with similar drops in rep-
resentation levels in both Europe and
North America,” the report said.
Investors say gender equalitydisclo-
sures are key to equalising the number
of men and women in senior positions.
With promotion gaps and pay ratios dis-
closed, companies will feel pressure to
elevate women into higher-paying jobs,
the investor advocates argue.ATTRACTA MOONEY AND
ALICE HANCOCK— LONDONInvestor support forImperial Brandsis
crumbling, with big shareholders push-
ing for parts of the tobacco company to
be sold off and for changes to the leader-
ship team after the share price halved in
three years.
The maker of Winston and Lambert &
Butler cigarettes has promised to sell
some of itsbrands and invest in ciga-
rette alternatives as it grapples with a
decline in smoking in western markets.But four top 30 shareholders said they
had yet to see sufficient results.
A top 10 shareholder said it was push-
ing the board for faster action on divest-
ments and that the company’s plansto
sell its premium cigar business —
including brands such as Cohiba and
Montecristo — did not go far enough.
“We are getting impatient,” the inves-
tor said. “If they sold some assets they
could do a massive buyback. The board
say they are working on it, but it’s too
slow.”
Another top 10 shareholder agreed
that the business needed to act fast.
“Their core business is in decline.”
A top 30 shareholder said new leader-
ship was needed. “The [current] leader-
ship were brought up in the old world.They are talking about moving away
from combustible products but that’s all
they know. If you want a fresh outlook,
you need a fresh team.”
Under new UK corporate governance
rules, Imperial is due to replaceMark
Williamsonas chairman. He has led the
board since 2007, longer than the rec-
ommended nine years.
The top 30 shareholder said the
appointment of a new chair, which is
expected within the next two months,
should “trigger a review of the leader-
ship team”. The current chief executive
isAlison Cooper.
In June,Nico von Stackelbergfrom
brokerLiberumtook the unusual step
of writing a note addressed to the
incoming chair, saying Imperial was a“self-help story.We continue to believe
Imperial Brands is one of the most
attractive investment opportunities in
consumer staples. It could be even bet-
ter by restoring credibility and confi-
dence.”
The share price has halved since 2016.
In June it hit a nine-year low but has ral-
lied 13 per cent since then to £20.88 a
share by the close on Friday. It had crept
up a further 1 per cent by mid-afternoon
yesterday.
Simon Gergel, chief investment
officer for UK equities atAllianzGlobal
Investors, a top 30 shareholder, said he
expected assets that “do not obviously
fit” with the company to be sold. “I
would expect the board to look at
whether [they] should be sold as long asit doesn’t compromise the company.”
Imperial said its cigar business had
attracted “significant interest” and it
expected to make an announcement on
its sale in the next 12 weeks.
“We remain on track to realise pro-
ceeds of up to £2bn before May 2020
and will assess the most appropriate use
of those proceeds at that time, including
debt reduction and share buybacks,”
Imperial said.
The company, which is droppinga
longstanding dividend target to fund
investment in tobacco alternatives,
added that its search for a new chair was
“progressing well”.
It also said management had strong
support from shareholders at its recent
annual meeting.HARRY DEMPSEY— LONDONPresident Donald Trump’s idea tobuy
Greenlandmay be fantasy, but the US
has staked an interest in the island’s
resources — in particular, its rare earth
minerals.
The US recently signed a memoran-
dum to co-operate with the autono-
mous territory on rare earth mining to
promote investment in the sector, amid
wider efforts to secure alternative sup-
plies after China hinted that it could
restrict exports to the US.
Greenland is estimated to hold 38.5m
tons of rare earth oxides, and total
reserves for the rest of the world stand
at 120m tons.
“Stipulated production is substantial,
backed by the resources,” said Per
Kalvig, chief consultant at the Geologi-
cal Survey of Denmark and Greenland.
China dominates the global produc-
tion of these rare earths, a group of 17
metals difficult to commercialise but
critical to high-tech applications,
including electric vehicles, wind tur-
bines and military technology. More
than 70 per cent are mined, and an even
higher percentage processed, in China.
The two companies in Greenland best
positioned to mine rare earths have
contrasting opinions on the need to co-
operate with China — and, ultimately,
whether the US and Europe can secure
competitively priced non-Chinese rare
earths.
Tanbreez Mining, an Australian pri-
vately owned company, claims to hold
promising resources, rich in the heavy
rare earths.
Greg Barnes, Tanbreez’s chief geolo-
gist, said Chinese participation in its
project was unnecessary because the
unique ore lacks the usual contami-
nants, such as thorium or fluorine, and
can be processed for a low cost with a
high return of rare earths, eliminating
the need for refining in China.
“Our operation doesn’t need any Chi-
nese technology, so we don’t need to go
to them,” he said.
However, industry analysts said that
rare earth projects cannot avoid relying
on China further down the value chain.
“Chinese companies are considered
leaders in complex technology to trans-
form mineral concentrates into com-
mercial products and China is the larg-est market,” said Patrik Andersson from
Aalborg University. “Therefore, it is dif-
ficult to envisage how a project that
completely excludes Chinese expertise
could succeed.”
Greenland Minerals, the Arctic
nation’s other rare earths mining group,
hasShenghe Resources, a Chinese pro-
ducer, as its largest shareholder.
The Australian miner’s share price
recently trebled after it announced
vastly reduced capital and operational
costs for greater resource return,
achieved largely thanks to Shenghe’s
technical knowhow.
“We need Chinese counterparts,” said
John Mair, managing director of Green-
land Minerals. “We worked with the
best western world groups but China
can take it further.”
While these mining projects remain
contentious because of their by-prod-
ucts — uranium and fluorine, and their
environmental impact in an island that
is a barometer for measuring global
warming — others point to the benefits
they could bring.
For some politicians in Nuuk, Green-
land’s capital, resource development isseen as a route to employment, stem-
ming emigration and greater independ-
ence in the long-term from Denmark,
which subsidises over half of the annual
budget. Mining the minerals could also
help lower global carbon emissions by
enabling a green tech boom.
But the government is moving slowly,
with only two mines for sapphire and
anorthosite operational to date.
The Ministry of Mineral Resources
and Labour said its “main concern is to
protect the environment and public
health”, it was backed by a studyon the
benefits of mining that recommended
development not take place too rapidly
in a nation of just 56,000 people.
In fact, both rare-earth mining com-
panies complains that their biggest
problemis governmental bureaucracy
due to inexperience, turnover of per-
sonnel and excessive caution.
Greenland Minerals said this has imp-
eded progress but it was now entering a
public consultation, after submitting an
environmental impact assessment.
Tanbreez has been waiting seven
years for an exploitation licence, held
up by negotiations over local employ-ment related to a chemical plant to
refine minerals, likely to eventually be
built in Iceland, Denmark or Norway.
“Bureaucracy kills the place,” said Mr
Barnes, before adding that he was “see-
ing signs of change”.
Turning to China’s role in Greenland,
a US State Department official said the
message to the Greenland government
was that by “opening things up to a
wider array of companies that will do
this in the best way, you have the best
option for your own country”.
But even if Greenland’s bureaucracy
approves exploitation of its rare earth
potential, the minerals may end up in
China further down the value chain.
The structure of the global rare earths
supply chain points to the need for west-
ern countries and carmakers seeking to
diversify supply to also focus on build-
ing capacity in downstream processing.
“Interventions sometimes lack logic,”
said Mr Kalvig of the geological survey.
“In the battery supply chain, auto-
makers bought up the supply chain, but
they’re not teaming up with magnet
companies.”
See LettersTobacco
Imperial pressed to speed up asset sales
Impatient investors call
for management change
after share price tumblesMining.High-tech applications
US enticed by Greenland’s rare earth resources
Search is on to diversify
supply of critical metal
that China dominates
Mineral-rich:
home to only
56,000 people,
Greenland is
estimated to
hold 38.5m tons
of rare earth
oxides— Jonathan
Nackstrand/AFP/Getty‘Our
operationdoesn’t
need anyChinese
technology,so we don’t
need to goto them’
Greg Barnes,
Tanbreez’s
chief geologistMURAD AHMED AND ADAM SAMSONVictor Li, the Hong Kong billionaire,
has swooped to acquireGreene King,
taking advantage of the weak pound to
strike a £4.6bn deal for the UK’s biggest
listed pubs and brewery group.CK Asset Holdings, the property invest-
ment company founded by Li Ka-shing
and run by his son Victor, has agreed to
buy the 220-year-old UK pubs group for
850p per share, valuing it at £4.6bn
including net debt. Shares in Greene
King jumped more than 50 per cent.
Mr Li, 91, Hong Kong’s richest man,
has racked up paper losses of about
$3bn since the end of July as the unrest
in the territory has hit the value of his
holdings.
People briefed on the deal said his
investment group was undaunted by the
prospect of Brexit, taking a long-term
view of British consumer spending.
George Colin Magnus, chairman des-
ignate ofCK Bidco, the vehicle that has
agreed to acquire Greene King, said that
it fit a“strategy [of looking] for busi-
nesses with stable and resilient charac-
teristics and strong cash flow generating
capabilities”.
“The UK pub and brewing sector
shares these characteristics and we
believe that this sector will continue to
be an important part of British culture
and the eating and drinking out market
in the long run,” he said.
One person close to CK Asset Hold-
ings said the fall in the value of the
pound in recent weeks amid prepara-
tions for a no-deal Brexit on October 31
had encouraged foreign investors to
“look at UK assets as they are cheaper”,
but added it was not the “explicit moti-
vation behind the deal”.
“Such a huge move from an interna-
tional player is certainly encouraging as
October 31 looms,” said Nick Burchett, a
fund manager at Cavendish Asset Man-
agement, a shareholder in Greene King.
“It seems that.. .investors believe that
the UK will still be open for business
after the deadline.”
Faced with an increased focus on
healthy living,reduced alcohol intake
among Britons and price competition
from supermarkets, pub groups have
sought consolidation. In July this year,
Stonegate, the operator of the Slug and
Lettuce chain, acquired rivalEI Group
in a £3bn deal. In 2017, Dutch brewer
Heinekencompleted the takeover of UK
pubs groupPunch Tavernsin a deal
worth £403m.
CK Asset Holdings has been a strate-
gic investor of Greene King since
December 2016, when it acquired 136
pubs and leased them back to the pubs
company. People close to the deal said
this experience had led them to believe
to better understand the UK pubs sector
and believe it could make gains over the
long term.
Greene King’s shares have fallen
about 40 per cent since the Brexit vote
in 2016. But LK Asset Holding’s offer
represents a premium of 43 per cent
compared with the adjusted three-
month volume weighted average price,
or 51 per cent compared with Friday’s
closing level.
The senior Mr Li is the senior adviser
for CK Asset, having announced plans
last year to step down as chairman. His
family and trust control about a third of
CK Asset, which owns a sprawling port-
folio of assets from hotels to utility infra-
structure and aircraft leasing.Food & beverage
Hong Kong
tycoon Li
swoops on
Greene King
in £4.6bn deal
Remuneration
Investors step up efforts to cut gender pay gap
‘One of the ways we can do
our job the best is making
sure that there is genderequality at every level’
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