Bumper pay is fool’s gold
Efforts by Britain to stamp out rampaging pay in the boardroom date back to the report by the late Marks & spencer chief sir richard Greenbury in 1995.
But in spite of years of governance reforms, compulsory votes on remuneration reports at annual meetings and mounting public anger over the rapacious behaviour of ftsE 100 chieftains, abuse goes on.
the ratio of chief executive pay in Britain – at 94 times the average employee – outstrips our Continental competitors, according to research done by the Vlerick Business school in Belgium. this at a time when real wages in Britain have been squeezed by the financial crisis and the post-Brexit fall in the pound, which raised inflation.
Investors, including all of us with pensions and IsA savings, might be tolerant of this gross inequality if the ftsE chiefs delivered great new wealth. the truth is that, compared with other stock markets around the world, ftsE 100 bosses are serial underachievers for investors.
the ftsE 100 has climbed a measly 5.5pc in 2017 (so far), against 25pc for the Dow Jones, 16pc for Germany’s Dax, 19.8pc for Japan’s Nikkei and 15pc for france’s CAC. Britain may not be that much out of whack with Germany, where top pay is 91 times that of the average employee, but is way out of kilter with sweden, at 37, and the Netherlands, at 40.
the value of better loyalty and connection between top brass and employees was seen at Holland’s Akzo Nobel and Anglo-Dutch Unilever in the last year where staff were enlisted to fight unwanted takeovers.
In British boardrooms there is a immoveable sense of entitlement to riches, reinforced by weak remuneration committees and self-serving pay consultants.
By allowing a divisive culture to develop ftsE 100 chiefs make life easy for Labour’s left-wing agitators at Momentum, and Jeremy Corbyn.
Sharing times
tHE commercial property market is still a magnet for overseas investors in spite of claims that Brexit would scare them off.
It will be another big pay day for regus founder Mark Dixon if the Canadian private equity firms onex and Brookfield Asset Management decide to bid for Londonquoted IWG Plc, in which Dixon’s Estorn has a 25.3pc stake.
Just three months ago IWG stock fell from grace after a profits warning, blaming a weakening London market and natural disasters in America.
Property can’t be that bad. After all, earlier this year a Chinese investor paid £1.15bn for the Cheesegrater building in London, developed by British Land. And Hong Kong-based oyster sauce king Lee Kum Kee spent £1.3bn on the Walkie talkie building at 20 fenchurch street in the City.
IWG may have had a temporary setback in october but it operates in an increasingly fashionable space.
the ‘sharing’ economy, typified by disrupter Airbnb, is all the rage. In June, the American private equity behemoth Blackstone grabbed a stake in the office Group founded by tycoon Lloyd Dorfman.
Another big player in shared space is WeWork, which operates several iconic properties in Britain including the distinctive former Prudential headquarters in the City. WeWork recently bought the flagship Lord & taylor department store in New York City to create designer units.
such disrupters work on the assumption that in a fast-changing technological landscape many renters no longer want to be tied down to 15-year leases or longer and desire more flexible space. IWG, with global reach, is one of the pioneers of the concept if less trendy than WeWork, which offers common networking areas.
After a 28pc rise in IWG shares in latest trading the Canadian buyers will have to pay at least £2.4bn to take out the regus owner. Doesn’t look as if the huge exit of finance and tech workers to frankfurt, Berlin and Paris is happening just yet.
Bruised Barclays
LIfE doesn’t get any easier for Barclays chief executive Jes staley who is still waiting to learn of his fate over his effort to track down and crush a whistleblower.
Now we learn that the 2017 financial results will be hit by a writedown of £1bn following the impact of trump tax reforms on the value of deferred tax credits.
the new lower Us 21pc headline corporate tax rate may help but Barclays cannot be absolutely sure because multinationals are treated differently. More uncertainty.