Pfizer… it’s only about the money
ASTRAZENECA chief executive Pascal Soriot dropped a clanger last week when he argued that Pfizer’s planned takeover could delay the release of life-saving drugs. If he now recommends a takeover once Pfizer has raised its price, he will stand accused, by his own words, of putting the money before lives.
He would have been better to stand by the truth of all corporate mergers – as far as the City is concerned, only money talks.
Private investors can put other considerations before pure profit. In the now often-quoted case of Cadbury, many small investors did indeed resist Kraft’s bid, even though it made them a bit richer.
Institutional investors can do the same, but in reality the pressure they face is to make money for clients (largely pension funds). If people are sufficiently strongly opposed to the takeover, they should write to whoever handles their investments or pensions and make their voices heard. But in the absence of such a mass opposition from customers, fund managers have little choice but to pursue simple financial returns.
This fact does not mean the City is a pit of evil. It is an amoral, impersonal herd, whose role is to improve the efficiency with which capital is invested. But this does not mean public or even moral interest cannot be addressed. That is what politicians are for.
Just as bankers will not curb their greedy pay without some arm-twisting from authorities, it is unrealistic to expect companies and fund bosses to ignore returns.
The market will decide if a new offer from Pfizer is good value.
Politicians must decide if it is in the country’s long-term interest and try to make sure it is.
TALKING of greedy levels of pay, The British Bankers’ Association fired a broadside at the Bank of England last week over proposed rules for clawing back bonuses.
The BBA argued that the proposals set too long a period for clawbacks (up to 11 years), extended the reason for clawback unfairly to include a collapse in a bank’s performance (and not just demonstrably bad behaviour) and that the whole thing was retrospective and would affect bonuses already awarded.
It is wrong. I have long argued that the cap on bonuses as a ratio of salary, being imposed by Europe, is the wrong tool to deal with bankers’ pay. The higher the proportion of pay in bonuses, the more the banker has at risk in the event of trouble emerging later on. I – and the Bank of England and the Treasury – would rather bankers took a higher ratio of pay in bonuses so that if things go wrong more, can be taken back.
By whinging about clawbacks the bankers are in fact showing that they are at least as powerful a tool for reigning in greed as the poorly thought out bonus cap.