Premier Foods told Nissin of US Interest

Strange things happen in Corporateland. It will be interesting to see what regulators have to say about this situation. Was Nissin an Insider after being told of potential bid interest? I guess if Joe Blogs would have been told by his girlfriend in the mailroom at Premier before quickly buying some shares the regs would have come down on him like a ton of bricks. So come on chaps at the FCA and/or PRA (wherever you hang your hats in the revolving regulatory circus) and shed some light on this. And the concerned 'fiduciaries' in the investment management firms should have a word to say as well, not least about the off-board transaction when a 'Private' Equity firm (handling the money of the wider public but keeping a hefty share for itself) got a sweet deal selling a stake to Nissin.
(30 March 2016)

CEO Pay - another Black Eye for sleepy Governance Crowd

Sotheyby's CEO Got $20 Million Pay Package in First Year at the Helm (Bloomberg)
And what should be even more infuriating - total earnings were just $46 Million!
(27 March 2016)

Chairman - only Jobs for the (mostly) old Boys?

American Banks are standing tall, and most of them do not have an 'independent' Chairman to micro or macro manage their CEO's. So what IS the point of employing expensive Chairmen? Most of them are past their best years and this reverse ageism surely does not lead to the desired performance as the examples of quite a few (all?) of the European Banks attest. Maybe HSBC could save a penny or two by not wasting money on headhunters.
( 18 March 2016)

Anger at £60 Mio Sorrell Bonus Deal

Report that PIRC's head of governance and financial analysis criticised the £60 Mio. compensation package for WPP's Martin Sorrell can only be welcomed. But it leaves the wider question why the fiduciaries in the asset management industry cannot be more effective in reigning in the pay for top executives. Apart from the question whether or not such incentive schemes are really required to obtain top performance from executives - it also leaves the wider question of morality that both sides of the deal have to answer for.
(16 March 2016)

CEO Pay Depends on Board's Independence

This study (paywall) may well be one useful contribution to explain (excessive) CEO pay. There is too much circularity in the appointment of board members, who in turn appoint the CEO. So they scratch each other's backs. But that leads to the question: how to find and appoint board members that ARE independent. And even if that problem is solved: what is the appropriate compensation for the CEO? The pay for performance mantra can be manipulated to justify ANY number
(14 March 2016)

ABP to introduce 'Carbon Budget'

Does it really make sense to introduce 'Carbon Budgets' as a constraint on the mandates for Asset Managers? First of all, the calculation of carbon usage for all investment options is expensive and it is also more than likely to be imprecise or liable to be gamed. And why not a Carbon budget for fixed income investments (even more complicated and expensive, how much Carbon usage to you allocate to a bond?), and before we forget, I hope there will be Carbon budget for 'Private' Equity and Hedge Funds? And last not least, don't forget the HFT firms. And what about Bank lending?
Nevermind that there is a simple solution at hand (Tax Carbon if you are hell-bent on limiting its use). Why not act according to the principle, what is good for the Consultants MUST be good for the Consumer (here in the shape of hapless end investors in Mutual and Pension Funds, Private Banks and Insurance Companies).
And while we are on the subject of Climate Hysteria, has any political or business 'leder' ever received a democratic mandate for imposing ever-more 'green' taxes, costs and regulations on the citizen/consumer/investor anywhere in the world?
(7 December 2015)

Exec Pay Surveys - nice work but key point missed

Studies and Surveys about Executive pay packages are proliferating. Fresh off the press is 'Sunlight is the Best Disinfectant' authored by PriceWaterhouse. Concluding that pay packets are now closer aligned to company performance may satisfy some of those concerned about pay levels for the top staffers but this omits one crucial aspect: how high should pay levels be in any case?
Aligning pay can mean any absolute amount of pay is justified according to the criteria used by PwC and many others. The unquestioned mantra is always: 'We are happy to pay for performance'. But then why not pay 20% of the 'performance' to top management, or just the CEO? Why not 30% as some particularly greedy money managers seem to demand?
Recently there has been more and more realisation that bonus payments are not really producing more economic growth overall since they became standard practice in the mid-1980s. And morally they are highly objectionable as they benefit only a narrow 'Elite' while the overwhelming majority of company staff gets nothing or just some pitiful crumbs by comparison.
 (10 November 2015)

Commodity Traders - the next shoe to drop?

While the focus was on the level of debt that can or cannot be sustained by Glencore one should also ask what amount of taxes are paid by the Commodity trading houses - most of them based in tax-friendly Switzerland. A lot of criticism was recently directed at the tax avoidance schemes employed by Amazon and Starbucks, to name just a few prominent names. But who really knows where the trading houses book their profits?

Investors let down on Executive Pay Excess

I guess the 'fiduciaries' who look after the interests of the real owners are sleeping at the watch when it comes to executive compensation. PRO GOVERNANCE suggests for a long time that 'incentive' packages should not be handed out on a discriminatory basis, i.e. only to a few people at the top of the organisation. While basic salary can be set at any level (only AFTER the shareholders have had a say, with decision being binding) all perks (bonus, share options, incentive schemes, pensions, health insurance, perks) should be given to all staff members (relative to the basic compensation).

Institutions not vigorous defending investor's interests

The Top 20-30 Investment Institutions worldwide have a de-facto control over nearly all listed companies. If they complain about poor governance practices they only have to blame themselves. While cooperating on business decisions would compromise their decisions and make them insiders they could and should agree on core principles. These could cover executive compensation and closer scrutiny of mergers for a start. Complaining about poorly thought-out Mega Mergers lacks credibility and can only be seen as hand-wringing if not followed up by concrete proposals. Why not start with the muted takeover of BG by Royal Dutch Shell? Prohibit any merger 'agreement' unless shareholders have had a proper say, ban all 'Break fees'! To prevent large holders from squeezing out small shareholders there should be a two-step vote, one where each holder is capped out at a 1% share of the overall vote.
(30 August 2015)