executive pay

Andrew Hill Glenstrata is polling the wrong people about pay

October 1, 2012 11:07 am by Andrew Hill

Xstrata’s novel decision to allow its investors to uncouple their vote on whether to approve retention payments from their vote on whether to back a merger offer from Glencore is fascinating.

But it seems to me that Glencore and Xstrata are polling the wrong people. If it is true, as Xstrata chairman Sir John Bond and the non-executive directors say, that “without the ability to retain key Xstrata managers to run the combined group’s mining operations… the value proposition of the combined entity is at risk”, shareholders are still short of a piece of vital information. Read more

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Posted in Mining |

John Gapper The CEOs who look down as well as out

June 14, 2012 7:42 pm by John Gapper

I wrote in my FT column about Sir Martin Sorrell of WPP, whose remuneration was rejected by 60 per cent of shareholders on Wednesday, and the fact that most CEOs demand to be paid at least as much as their rivals.

That leads to the steady ratcheting up of pay that has enraged UK investors in this year’s “shareholder spring”.

But one aspect of companies such as Barclays and WPP, home to the two highest-paid UK chief executives, is less noticed. It is that the bosses of investment banks and marketing groups tend to compare themselves not just to outsiders, but to the people within their organisations.

Investment banks such as Barclays Capital, employ traders and bankers who earn more than their CEOs, but are invisible because they are not on the board, and so their pay remains secret. Bob Diamond, Barclays’ chief executive and the former head of the investment bank, is the public target. Read more

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Posted in Business, Finance, Media |

Andrew Hill Investors start to say how much pay is too much

May 30, 2012 1:48 pm by Andrew Hill

As head of the world’s largest advertising group by revenues, WPP’s Sir Martin Sorrell is used to talking about image. His own, which he assiduously promotes through the media, is about to take a battering.

Sorrell – "totally aligned"

ISS, the shareholder advisory firm, has recommended investors at its June 13 annual meeting should vote against WPP’s pay policies, according to which the chief executive will receive total pay and bonuses of £6.8m, up 60 per cent on the previous year.

Nothing new here, you might think. Investors holding more than a third of the stock voted against the remuneration report last year. Sir Martin, one of the longest-serving chief executives of a FTSE 100 company, shrugged that off and probably will again this time. Speaking before the ISS recommendation, he told the UK’s Sunday Times that his interests were “totally aligned with shareholders’. I am a big shareholder – 85 per cent of the package is performance related”. While his base salary had increased from £1m to £1.3m, he pointed out he had had “only one increase in 10 years”. Read more

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Posted in Advertising, Business, Management |

Andrew Hill Performance not pay doomed Aviva’s Moss

May 8, 2012 12:38 pm by Andrew Hill

Spare me the “shareholder spring” allusions. Not only does the parallel devalue the genuine sacrifice of those who took part in the popular revolts of the “Arab spring”, it misrepresents the nature of the shareholder rebellions that have now defenestrated three UK chief executives, including, today, Andrew Moss of Aviva.

Andrew Moss - no longer lord of all he surveys

Andrew Moss – no longer lord of all he surveys

The natural assumption is that high pay is the root cause of investors’ disgruntlement, whereas tone-deafness on remuneration was merely a symptom of a wider concern about Trinity Mirror, AstraZeneca and now Aviva. What really did for Mr Moss (apart from his habit of letting himself be photographed looking out over the City, like a jut-jawed lord of all he surveyed) was his performance not his pay. Read more

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Posted in Business |

Andrew Hill Vodafone/Cable & Wireless: Mr Angry on the line

April 23, 2012 3:41 pm by Andrew Hill

In the 1980s, British radio presenter Steve Wright used to stage phone-ins to his show from a ranting imaginary listener, “Mr Angry from Purley”.

Well, the phone lines from Purley are burning up, judging from some of the reactions to Vodafone’s agreed £1bn cash takeover of Cable & Wireless Worldwide, which was created by the demerger from Cable & Wireless in 2010. It’s rare to find a deal that has got up so many people’s noses.

CWC:LSE

Underwater: C&W – privatisation to demerger*

Investors may be happy with a 38p-a-share bid, compared with the 19.8p at which CW&W stock languished in February before an approach was made. But they are angry about the drop in CW&W’s share price since demerger, and those who enjoyed the growth spurt of the late 1990s are even angrier about the overall decline of the once-mighty Cable & Wireless group, a descendant of the Victorian consortium that laid the first submarine cable across the Atlantic . One City fund manager told the FT recently that Cable & Wireless Group was “the worst stock he ever bought“. Read more

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Posted in Business, Telecoms |

Andrew Hill Shed light on companies’ “vicious obscurity”

December 7, 2011 5:24 pm by Andrew Hill

When it comes to companies, the less murk, the better.

In the new edition of London Review of Books, author and journalist John Lanchester points out that three recent corporate “outrages” – the sale of UK lender Northern Rock to Virgin Money, the collapse of MF Global, and the Olympus scandal – share “a crucial similarity”:

An interested outside party, paying the closest of attention, and immersing herself in all the publicly available information, would have had no chance of knowing what was really going on.

 Read more

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Posted in Business, Regulation |

Andrew Hill High pay and Victorian values

November 22, 2011 5:31 pm by Andrew Hill

In its new report, the High Pay Commission makes much of the risk that Britain will slide back to “Victorian levels of pay inequality” if runaway executive pay awards are not somehow reined in.

The parallel with the Victorian era is a resonant one. Even some of the characters in the modern-day saga are Dickensian. The avuncular Vince Cable, Britain’s business secretary and supporter of the thrust of the independent commission’s proposals, is half-Micawber, half-Cheeryble. John Varley, former chief executive of Barclays, seems a stiff-collared braces-wearing throwback to an earlier era in most respects – except one: the commission points out that top pay at his old bank is now 75 times that of the average worker, compared with a ratio of only 14.5 times in 1979.  Read more

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Posted in Banks, Business, Philanthropy |