BusinessCorporate FinanceOn the money

On the money

In the corporate clash that is the two-horse race between Unilever and Reckitt Benckiser, one subplot has, sadly, come to an end – the competition between the two companies’ FDs

The tussle has ended with the announced retirement of Unilever’s
long-standing finance chief, Rudy Markham. Ironically, a 60-year-old Markham has
revealed his exit plan just as Unilever has staged something of a recovery after
a series of not too hot results.

His adversary is investors’ favourite Colin Day, Reckitt’s master of the
balance sheet. But Day has never been just about making sure the numbers add up.
Last time around, Day earned himself an annual pay cheque of £1.1m, including a
bonus of £720,000.

Markham, on the other hand lagged behind his oppo on a take-home of £982,000,
including a bonus of £290,000.

Now, while few people would say no to Markham’s pay deal, Day’s position over
at Reckitt is plainly more attractive.

But could the performance of the respective companies be explained by the
remuneration of their finance bosses?

When Accountancy Age interviewed Day a couple of years ago, we were
told that pay was off the agenda, but he did have this to say: ‘You don’t come
here for base pay. You come here for total compensation if you deliver. Our key
managers accept that, are motivated by that, and perform to that.’

It will be interesting to see just what incentive Unilever offers Markham’s
successor. A very big performance-related bonus could be on the cards for the FD
that helps guide the company back to winning ways.

And that in turn will probably help Day set his own salary. After all, if
Reckitt continues outperforming its rivals, he’ll be worth a bit extra, won’t
he?

And that, I suppose, is how fat cat pay gets ramped out of all control.

Gavin Hinks is editor of Accountancy Age

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