FDs abandon ship for lucrative private equity sector

UK plc is facing the threat of losing its best financial directors to
lucrative private equity-backed businesses at a time when listed companies are
facing stricter regulation and tough new accounting standards.

Earlier this month Next announced that it was introducing a risk/reward
investment plan for its executives, including group finance director David
Keens, in a bid to counter the lure of private equity.

Advising shareholders to back the plan, Next (pictured) said it was ‘less
able to compete’ with privately owned retailers, particularly those with private
equity backing.

The FTSE100 fashion retailer said that organisations financed by private
equity offered executives the opportunity to invest in a company personally,
which offered the prospect of a ‘significant leveraged capital profit on
eventual sale or flotation’ – an incentive which listed companies could not
match.

The head of the financial executive practice at a leading headhunter said
that the trend of top financial executive talent moving away from UK plc was a
‘big issue’ and happening more frequently.

‘What you are earning at a plc and what you can earn in the private equity
environment is not comparable in a month of Sundays,’ the recruiter said.

‘An FD at a listed company is very capable of walking into a private equity
business on a similar bonus and salary but will earn an extra £7m in share
options.’