Change of UK takeover rules - more complexity for little gain?

New rules regulating UK takeovers have been devised by the cartel is run by industry insiders and while rule is piled upon rule there is little change to the basic flaw in the set-up: the Takeover Panel is dominated by industry insiders that have little or no interest to stop the merger merry-go-round that does little to inculcate British business with a more long-term outlook to business management. In a perverse fashion some participants in the merger game are already plotting to suggest their clients make meaningless 1p bids in order to circumvent the spirit of the new regulations. One has to wonder what the investor's fiduciaries, the major investment institutions that are the overall paymasters of the managements of listed companies will do to prevent such abuses from happening.
(31/10/11)

Another sad end to a 'Private' Equity buyout

Exaggerated claims about the advantages of the 'Private' Equity business model receive another dampener from news that the former British Printing Company which sailed under the name of Polestar UK for the past years has left the UK Pension regulator (clear text: the British Taxpayer)  with a massive bill to safeguard the pension scheme. Where are now the financial acrobats that benefit massively from the 'Private' Equity compensation model, where are the (mostly) anonymous investors who wash their hands when things in the funds they back go wrong?
(29/10/11)

$687 Mio Dollar 'fee' for an M+A adviser

We often have reiterated that the business or mergers and acquisitions needs to be more closely supervised. Not only do corporate laws and market regulations a good overhaul but the fiduciaries that control most of the major listed equities also need to review their practices. One can say that the top 20 to 30 investing institutions could at the stroke of a pen revolutionise corporate governance as their holdings constitute in effect a controlling bloc in most company registers. When it is disclosed that Olympus paid nearly a third in 'advisory fees' during the acquisition of a British company one is left in disbelief as this is certainly a highly unusual - and extreme - case of corportate governance gone AWOL. Is it beyond the Japanese regulators to clean up their act and once and for all drag corporate practice in Japan into the 21st century? Or is it necessary for international and national regulator to ringfence the Japanese Market in order to protect non-Japanese investors?
(21/10/2011)

One Million Free Shares for new Apple CEO

Time and again commentators, academics, politicians and fund managers repeat the same mantra: 'We do not mind how much (chief) executives get paid as long as it is for performance'. This cop-out will be tested to its limit by the announcement that Apple has 'awarded' the newly-appointed successor of Steven Jobs the round number of one million shares, currently valued at just under US$ 400 (!!) million. The doubts we always have when hearing that pay for performance is OK is the problem that it somehow implies that there is no upper limit to pay at all. Following this argument the Apple board might as well award 2 or 3 million shares to the chief executive - as long as it is for 'performance'. As usual, the myth of the superhero CEO reigns supreme, the effort of tens of thousand of other company employees are belittled by this form of corporate governance. Even more galling than the fact of this over sized 'award' is the lack of any performance criteria apart from the requirement that the new CEO sits out a period of five and ten years at the helm of Apple in order to be able to claim full ownership of the shares.
(27/08/11)

Pay 'revolts' are pointless posturing

Another day, another pay 'revolt' - with equally predictable results. Shareholders of Britain's FirstGroup may feel better after 42 per cent of those that voted rejected a 'retention' award for the Chief Executive. ProGov continually argues that all perks and special payments to Chief Executives and senior directors - apart from the level of basic pay - should be banned. This would level the playing field and avoid time-consuming and ultimately futile discussions about any exceptions, special cases and other excuses to line the pockets of those senior executives in an arbitrary way.
(16/07/2011)

Cavalier attitude towards pensioners

The provision of pensions for ordinary citizens (not the executives and politicians who allow themselves gold-plated schemes) is becoming more pressing by the day in most western 'democracies'. That relying on government-sponsored regulators offers little hope - and even less help - is demonstrated by instances where venture (vulture?) capitalists or those whose primary activity is shuffling around corporate assets can escape from their obligations toward their past and present workers in order to maximise their personal profits.
(03/06/2011)

Cadbury Takeover: Closing the Stabledoor after horse has bolted

There is no point in British MPs complaining about the 'dismissive attitude' of Kraft's CEO now that the takeover has long since been executed. Better regulation of takeover law and corportate governance is indeed required and would help in cases such at the takeover of Cadbury by Kraft.
(23/05/2011) 

Erste Bank doubles compensation of Supervisory Board

Without judgement on the merits of this particular case we get surprised reactions about the fact that the Supervisory Board members of Austria's Erste Bank will have their remuneration doubled to a total of Euro 750 000 (for the whole unit). This is not accounting for the attendance fees of around Euro 160 000 they received in the last year. A delicate detail is that the head of the Austrian investor's protection association is among those benefiting from this largess. This highligts one of the main problems of good corporate governance: What are Corporate Boards meant to achieve? In the German tradition the Supervisory Board exists to oversee the company management and defend the interests of the shareholders while in the Anglo-Saxon tradition the board is a mixture of executive managers and non-executives that are elected to advise and supervise management at the same time. In both cases the management - and in particular the CEO - plays a decisive role in appointing board members and therefore to a certain extent controls himself! The same can be said for the setting of compensation which procees on the basis of 'I scratch your back if you scratch mine'.
(13/05/2011) 

Starbucks CEO Schultz blames 'speculators' for high coffee prices

Anyone who has visited a Starbucks coffee shop - or any copycat business - will have wondered why the price of a cup of coffee (more often than not served in a cheap plastic cup) is so high. The contribution of the coffee that goes into a cup is minute compared to the price of the finished product. So we were bemused when Howard Schultz, CEO of the Starbucks coffee chain, delivered a rant about speculation in the Commodities Markets. A look at the P&L of the company - and Schultz's extremely generous compensation package - makes it clear that Schultz - and many other commentators - want to pin the blame for high food prices on speculators when long-term economic and demographic factors may in reality be the driving factors behind the recovery of many commodities from a decades-long slump in price.
(12/04/2011) 

Insider Dealing brought to light

The detection of a year-long insider scam by the US authorities may well serve as a deterrent to those tempted to perpetrate such a scheme. But the fact that wire-taps play such an important role in helping to uncover illegal insider transactions is also worrisome. When criminals stop using telephones to communicate with each other it may become more difficult to detect illegal schemes. High-risk sectors of the financial industry are another area where prosecutors find it hard to uncover illegal transactions as they can easily be hidden behind a smokescreen of large numbers of unrelated transactions.
(7/04/2011)