On the money with Gavin Hinks
It’s official; shareholders and investors really do care about just how much company executives are paid
And we didn’t need a fancy market research agency to tell us that. No, it
took just a few simple words from Nigel Burton, finance director of Granby Oil
& Gas. Burton also happens to be former FD of the company running the
Financial Times Annual Report Service.
And when his company looked at which pages were read most online they found
that 90% of annual reports was unused. Everyone was too busy looking at
directors’ remuneration.
This is ironic if you think of HSBC’s annual report now weighing in at almost
a kilo and a half. It means the bank is probably publishing more unread material
than ever.
Should we be surprised at this interest in pay? No. Search ‘fat cat pay’ on
the UK pages of Google and you get 400,000 responses. I searched ‘executive pay’
elsewhere and found 500 articles in national newspapers over the last year.
It seems that if your money’s in the company, you want to know how much the
bosses are taking home. Fair enough. But what should surprise us is that these
results come via the FT’s annual reports service, a service that should be used
by the more serious readers of reports.
Burton must have been disappointed to find that even these discerning
observers of company performance were really just interested in the boardroom
paychecks.
Two things here. It sounds like concern about executive pay is getting in the
way of considered assessment of a company’s performance. That can’t be good for
executive accountability. And clearly there’s some improving to be done in
communications and design if other important bits of the report are to be read.
Mind you, the HSBC report might also represent a risk of back injury. I leave
you to judge.
Gavin Hinks is the editor of Accountancy Age