Companies in the news ... and how they were assessed
Saudi Aramco: City spoilsports?
Saudi Arabia’s powerful deputy crown prince, Mohammed bin Salman, will shortly make a final decision about where to list the country’s $2trn state oil company, said the FT. And the stakes are hotting up. New York and London have been in battle for months to secure what is likely to be “the world’s biggest ever flotation”. New York was thought to have the edge, because Saudi Aramco’s financial advisers considered it the more “prestigious” venue, with “the deepest pool of investors”. But lawyers trump financial advisors, and Aramco’s legal firm, White & Case, has reportedly warned that a US listing would be “reckless” given the country’s “litigious culture” – making London the “front runner”. Hosting Saudi Aramco would certainly be a feather in the City’s post-brexit cap, but the deal could yet be scuppered from within, said Aimee Donnellan in The Sunday Times. The Investment Association (the trade body for top fund managers) is trying to “torpedo” the float, on the grounds that it doesn’t adhere to FTSE rules requiring companies to float at least 25% of their shares – the percentage needed to protect the market’s “integrity and standards”. Aramco wants to list just 5%. The Saudis are reportedly “confident” they’ll be granted an exception. But we can expect a standoff between the City’s do-gooders and “those who stand to make a fortune in fees”.
BT: piggy bank boost
Great news for anyone who has been losing sleep over the huge shortfalls in British corporate pensions, said Christopher Williams in The Sunday Telegraph. The country’s “biggest private retirement fund”, the BT pension scheme, has just received “a £7bn boost on the back of Brexit”, taking its total assets to £50.1bn at the end of the last financial year: the weaker pound has worked wonders on its stock market investments. BT is far from the only big company to have profited from soaring stock markets this year, said The Observer. According to pension adviser Mercer, the collective deficit of final salary pension schemes among FTSE 350 companies has fallen by more than £10bn in the past month alone, reducing the black hole in retirement schemes to a mere £134bn. Another, less welcome, factor affecting liabilities is “a slowdown in decades of improving life expectancy”. After showing “fairly steady improvements” between 2000 and 2011, mortality rates have plateaued. If the trend persists, accountant PWC estimates that total liabilities for Britain’s 5,800 final salary schemes – which it currently puts at £2trn – could fall by 15%, or £310bn. It’s certainly one way of getting the bill down.
Vodafone: poker-faced
The sun is definitely shining on Vodafone boss Vittorio Colao, who took home a £6m pay package last year (up 15% on the year before) even though the company reported a s6.1bn loss. It makes no sense, says Patrick Hosking in The Times. Had you invested £100 in Vodafone stock eight years ago, your investment would now have grown to £285 – some £2 less than if you’d plonked your cash into a passive index such as the Stoxx Europe 600. Colao’s total rewards over those eight years, by contrast, come to a “breathtaking” £59.3m. Val Gooding, who chairs Vodafone’s remuneration committee, insists the firm’s pay plans “only deliver significant rewards if and when they are justified by business performance” – and she manages “to keep a straight face, too”.