Another year, another record rise in the pay of the men – and one woman – who run our biggest companies. In 2003 the chief executive of a top 100 company earned an average £2.1 million in pay and benefits. That is 20 per cent up on 2002. Over the same period the average wage rose by just 4.3 per cent.
No-one objects to chief executives earning a lot as long as the company is well run and its shareholders are rewarded. The Independent newspaper has analysed the pay of every chief executive of the top 100 companies and how their shareholders have done. And there seems to be no correlation between the amount of the pay and the performance of the company’s shares.
The worst performer was Rolf Stahel of Shire Pharmaceuticals who took home £4.66 million in 2003 while his shareholders nursed a three year 58% loss on their investment. Also worth mentioning is the retiring Sir Christopher Gent of Vodafone who walked off with £6.2 million while shareholders lost nearly a quarter of their cash.
By contrast, the low profile Micky Arison of cruise company Carnival was given an above average £3.1 million in 2003. But over the last three years his shareholders have made 114% return on their money. So no-one complains.
But the very best return for shareholders was given by pub owners Enterprise Inns. Its chief executive Ted Tuppen earned a modest – by these standards – £720,000. Investors who got a 195% return on their money over three years are unlikely to object to Ted’s 16.1% pay rise.
The average value of shares in the top 100 companies did fall in 2001-2003 – by about 39%. But that is not always comparable to any one company’s result as they all use different year ends to work out their annual results.
Not all big pay offs bring peace of mind. Dick Grasso was chairman of the New York Stock Exchange for eight years until he retired in 2003 with $139 million (about £80 million) in pay and benefits. Eliot Spitzer, the New York state attorney general, is taking Mr Grasso to court to try to recover most of this money on grounds that it was ‘excessive’ and paid through what he calls a ‘flawed process’. Whoever wins, lawyers are rubbing their hands.
Photographs: the new collectibles
The exciting thing about collecting photographs is that it is a relatively
new art. Photography itself of course has been around for more than 150 years.
But the first auction sale of photographs only happened in 1975 and it is even
more recently that contemporary artists have taken it up as a profession.
Nowadays, you can invest in Victorian photographs, where the age and technique
of the image can be as interesting as its subject and who took it, to the
wonderful monochrome photojournalism of the 1930s and 40s, to 21st
century works by young and unknown photographers whose worth has yet to be
assessed.
Kate Stevens, the director of the Hackelbury Gallery in London, says the range of quality and price makes it a wonderful hobby for a new investor.
"The market for photography has only ever gone up. It is not like oil paintings where records are achieved and then prices go down. It goes up steadily as it has grown. It is also a young market and so much more accessible than painting and sculpture."
Her gallery specialises in 20th and 21st century images. They range from the wonderful photojournalism of the 1920s and 1930s to very contemporary works. And prices range too. You can start at £1000 and buy something really rare and beautiful for twice that. You can buy a print of the wonderful classic images of Henri Cartier-Bresson (b.1908) for about £3700. Similar, though not as good, are Frank Horvat (b.1928) or Willy Ronis (b.1910) whose evocative images of Europe in the 1950s can be picked up for £1000 or less.
Marc Riboud (b.1923) Darjeeling, 1956, Silver Gelatin print 12"x16" Signed on recto in ink $1800 +VAT
Kate Stevens says the market for photographs is now so strong there may well be interesting finds in boxes of photos in garages and attics. You should take them to an auction house for valuation.
As with any non-financial investment, it is vital to pick items you like and do not expect to sell them for a profit in the short-term. Avoid modern ‘editions’. Stick with established photographers whose images are signed and authorised.
The colour of luck
Normally it is the punters who have a run of bad luck. But Ladbrokes claims
that one of its betting shops is so much less profitable than the others it
called in Feng Shui specialist Paul Darby to advise on what was is wrong.
Ladbrokes claims the shop, in Putney Bridge Road, London is the worst performing
in its chain of 1900 bookies, paying out almost 20 per cent above average to its
customers.
Dr Darby, who has a PhD in oriental studies, says he knows why. First, it faces north-east, the worst direction for a retail outlet. Second, the offices are in the basement which puts the business the wrong way up. He told Saga Magazine "It is like taking a rich man with money in his trousers and tipping him upside down. It all falls out." The shop’s one good point is that it faces running water – in this case the River Thames. But the ‘energy’ from that has now been blocked by a large new building.
Ladbrokes has decided not to change the shop. Indeed Paul Darby was allowed to conduct a ceremony to make the luck flow even more in the punters’ favour. They would have needed it on Derby Day. Dr Darby’s tip for the race was to avoid cool colours such as those worn by the jockeys on North Light and Rule of Law. They came first and second. The fiery colours that Paul tipped to win were worn by jockeys on American Post, which came 6th, and Let the Lion Roar which managed 3rd.
[if you want an image of Darby – who has a beard – call Darby’s office 01623 658390 or his agent 07786 501 377 – I believe he does a show on East Midlands Saga Radio. Ladbrokes may have an image of the shop – call 020 8868 8899 ask for PR guy Damian Walker.]
Cost of a place in the sun
Retiring abroad can damage your wealth. If you pick the wrong place.
Research by Prudential has found that the difference between the cost of a
basket of groceries in Cyprus is more than twice the cost of the same basket in
South Africa. But they were equally popular – with six out of a hundred people
surveyed intending to retire there.
Britain – which of course is where most British people actually spend their retirement – is about in the middle of the cost table with the basket of groceries costing just under £15. In Cyprus, the most expensive country, they would cost an extra fiver a week. While in South Africa it would be nearly £6 a week less.
The survey failed to take account of other important costs – health care, housing, and local taxes. And it also failed to look at income. In five of the top destinations your state retirement pension is frozen. In other words it never goes up with inflation. But in the other five – Europe plus Jamaica – the pension is increased as it is in the UK.
So people choosing the most popular destination – Spain – have the advantage of cheaper food and a pension which is increased each year. But those who pick the second most popular country – Australia – face a basket of groceries that costs an extra £2.52 a week and they will be paying that out of an income that never rises.
Although nearly one in two would like to spend their post-working life outside the UK, only about one in five think they will manage to do so and in fact only around one in twenty UK pensioners do live abroad.
If you do go to live abroad you will have to prove to the Department for Work and Pensions that you are alive. In a new measure to combat fraud, the DWP is writing to all state pensioners with a foreign address asking them to prove they are still around. About 15,000 letters a year go out and if you do not reply – or the letter gets lost in the post – then your pension will be stopped.
Credit to the Government
The Government has responded to complaints about the complexity of credit
deals, appoint made several times in these columns. New rules which begin on
October 31 should make it easier to compare loans and credit card offers. In
future, a loan or credit card advert will have to show the Annual Percentage
Rate or APR of the loan more prominently than anything else. If there is a
special offer, for example a zero percent deal for six month, then the rate that
applies after that must be shown in bigger type. And from 31 May 2005 lenders
will have to get a separate signed agreement from a customer if they are also
selling them insurance to protect their repayments. Other rules which will cut
the cost of repaying a loan early will begin at the same time for new agreements
but will not apply to existing agreements until 2007 or 2010.
August 2004
e-mail Paul Lewis on paul@paullewis.co.uk