Throughout 2001 and 2002, FDs became increasingly interesting to the media. The back-office boys with their calculators and spreadsheets were suddenly the architects of major corporate disasters, then accounting scandals and, finally, outright frauds. The press had to put faces to names.
Whether it was Mayo, Andrew Fastow, the CFO of Enron charged with fraud, or Scott Sullivan, former WorldCom CFO, FDs became newsworthy. Journalists love a good story about bad news, and there is a lot of it about.
One FD who has had his fair share of bad news to impart is Stephen Hester, group FD at Abbey National. The bank has recently been caught on the hop as its diversification into corporate bonds away from its traditionally successful mortgage business contributed to the bank’s loss of nearly £1bn for 2002. It became the first bank to cut its dividends since Barclays in 1993.
The press pounced and Hester, who only joined the company in May 2002, had the most press mentions of any FTSE-100 FD during the year, according to our searches on www.nexus.com.
Hester is not surprised at the media interest. ‘The only time I deal with the media is when I should as normal practice, or in response to things some of the media try to do. But my name is rather prolific in the press because Abbey National has been in a lot of trouble,’ he says.
But Hester doesn’t have any real gripes with the media and he doesn’t shy away from talking to the press. He says it pays to be accessible: ‘I believe that over the medium term we do get treated fairly by the press. But there are always times in every company’s life when the odd article is unfair – positively and negatively.’
Hester is popular with the press because he makes himself accessible and, at 41, is relatively young to be a FTSE-100 FD. But, most importantly, he is FD of a multibillion-pound business that has millions of UK customers and a presence on every high street in the country. ‘Because we are a name known to everyone in the UK it gives us profile on the business pages, but also more broadly within publications,’ he says.
In general, FDs of consumer-facing organisations, such as the high street banks, media companies and retailers, are the most prolific in the press.
Manufacturers, property companies and mining companies get much less exposure.
Take David Williams at Bunzl. His company is making money, it has successfully changed focus from manufacturing to outsourced services and was admitted to the FTSE-100 in 2002. But still the company struggles to find a voice in the media and, when it does get exposure, some newspapers find it hard to stop describing Brunzl as ‘boring’ and ‘paper manufacturer’.
‘We sold the last of our paper assets in 2002, so if the press talk about our paper business now they are misunderstanding what we do,’ says Williams.
‘It has taken us some time to evolve and invest in areas with better returns,’ he says.
But Williams, who unlike Hester doesn’t assume responsibility for all media relations, says you have to appreciate the way journalists work.
‘There is a reasonable amount of churn in journalism and it must be quite difficult for them to pick up those sort of trends when they don’t know what they will be covering until half an hour before.’
Williams, with 10 press mentions in 2002, isn’t doing too badly. Some FTSE-100 FDs, such as Peter Hooley of Smith & Nephew (the only FTSE-100 FD with no press mentions last year), are under-represented. Perhaps they are media-shy or consider press relations to be a less important part of their week.
Maybe the newspapers just don’t find such solid and dependable companies interesting. By far the FDs with the most press mentions in 2002 were from companies in real trouble. Marconi’s John Mayo dominated the press in 2002, with more than 300 mentions in major world publications. Amey’s former FD David Miller, who told the Telegraph after he resigned that ‘being a public company finance director is a bit of a shitty job’, managed nearly 150 mentions.
Most FDs don’t ask for this sort of coverage. And even if they do agree to speak with the press, the results are often unfortunate. This is especially true for female FDs of large companies. Rona Fairhead of Pearson and Judy Boynton of Shell both come in the top 20 FDs for press mentions in 2002, but a certain amount of their coverage was devoted to stories about ‘the most powerful women in the UK’, many of which were patronising or sexist.
Kathleen O’Donovan of Invensys (formerly BTR) refused to be profiled in the press for some years after articles like, ‘The Belle of BTR’ started appearing in the press when she joined in 1991.
And we expect Boynton wasn’t too pleased with a profile that appeared in the Sunday Telegraph in late 2001, in which she was described as ‘the Penelope Pitstop of the oil industry … petite, with big brown eyes, a delicate manner, and perfectly coiffed hair’.
While such examples are unfortunate, the financial press is nevertheless a useful tool for conducting corporate and investor relations activities.
As Kent Atkinson, former group FD at Lloyds TSB and current chairman of Marconi’s audit committee, says: ‘The financial press helps investor relations because you can’t get to see all shareholders. The serious financial publications are very useful to appear in because they get seen around the world.’
In order to generate exposure, Atkinson suggests you get to know some of the journalists and papers. ‘Hopefully, you can try to build a relationship by which you get responsible reporting. But as an FD you must treat journalists as adults for that to happen,’ he says.
If FDs are used to talking to the press on a regular basis, the more comfortable they become with the media and the easier it is for them to use the press to their advantage.
Natalie Evans, head of policy at the Investor Relations Society, says the most common mistake executives make when talking to the press is becoming flustered under heavy questioning. ‘Many executives treat journalists with fear. If you are confident, prepare yourself and know the boundaries of what you are going to talk about, that will help you deal effectively with the media.’
A very important piece of advice comes from Atkinson. ‘Don’t say “no comment”. If there is a legal or regulatory reason why you can’t answer a question, then make that clear. Look at the way politicians handle difficult situations – you can learn a lot from them.’
This is an edited version of an article that appears in this month’s Financial Director magazine.
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