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Off Balance: Who let the dogs in? Wetherspoons asks FRC

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14 Oct 2014 | Off Balance

OFF BALANCE loves a JD Wetherspoon press release.

They're usually published in the jokey comic sans font, which makes them look not very corporate. Which is fine, there's too much corporate stuff going around anyway.

And it seems JD Wetherspoon aren't happy with ‘corporate stuff' either. Or accounting watchdog the FRC.

In an article by JD Wetherspoon chairman Tim Martin for Propel, he castigates current corporate governance rules as creating too few execs, and not enough experience on the board.

"The unholy combination of a majority of part-time non-executives, including the chairman, with a maximum of nine years' tenure, and CEOs who average only four or five institutionalises these weaknesses," states Martin in the article for Propel.

"The composition of the board of the Financial Reporting Council, which oversees governance, mirroring the non-executives on PLC boards, consists almost entirely of "City" types, with little experience of civvy street, let alone pub or supermarket companies."

Wow, Martin is really venting his spleen here. And speaking of watchdogs, he begins the piece with: "Woof, woof! What's that at the boardroom door? Why, it's the [corporate governance] dog that hasn't barked - until now."

A fascinating read, click here for more.

Off Balance: Cleaner comes good at Adnams

Pint of beer

08 Oct 2014 | Off Balance

SO THIS IS a bit of an off-the-wall Off Balance article; it's not about financial impropriety or incompetence. Or naked CFOs.

Instead it's about Karen Hester. You probably don't know her; in 1988 she was a part-time cleaner at brewery and pubs business Adnams. But with her logistical and transport knowledge gleaned from her time in the Army, she worked her way up the ranks.

Hester has now been brought onto the Suffolk brewer's board as executive director, having headed up operations since 2007.

"Adnams is a fantastic company which firmly believes in nurturing and developing its own people I feel honoured and extremely proud to be the first female executive director to join the board and am looking forward to continuing to support others to develop their own careers," said Karen this morning.

As Off Balance wipes the tears off of the keyboard, we can only look back ourselves at how we've progressed since being caught rifling through Financial Director's bins. Twenty years on, it doesn't feel as if we've moved on as far as Hester, to be honest, particularly as Off Balance is mainly in charge of putting the bins out...hmm.

But, congratulations anyway Karen, a great story.

Off Balance: Rifici's high hopes as CFO

cannibis-plant

30 Sep 2014 | Off Balance

BEING A voluntary CFO of the Canadian Liberal Party is probably no easy thing - Off Balance imagines it to be a full-time job.

But incumbent Chuck Rifici can seem pretty relaxed and chilled about matters - what with him being a multi-millionaire and co-founder of Tweed Marijuana Inc. Yes, Rifici, who has done well for himself as a quick-witted entrepreneur, set up the medical marijuana facility Tweed.

As the Libertarians are pushing hard for marijuana legalisation in Canada, Rifici has been accused of having a conflict of interest.

As he cutely pointed out, he's a business guy looking for the next ‘thing', he wants to let people do what they want, and he's a beer drinker. So smoke on that.

And maybe now, he'll have more time for the Liberal Party, having resigned from Tweed.

Predicting the future is a job for soothsayers, not directors

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19 Sep 2014 | Roger Barker, Institute of Directors

TODAY, I'd like everyone to gaze into a crystal ball and predict their own future. Not a week or a month ahead, but really stick the boat out - be bold and give me your predictions of how your world will look in two to three years. Tough ask, isn't it?

We all have to make provisions for the future but defining that future inevitably gets more fuzzy and uncertain the further ahead we have to make our predictions - and in a complex, fast-moving global environment, things (as we know) can change very rapidly and often without warning.

But it would seem that long-term predictions are something that investors will now expect from the directors of the UK's premium listed companies following the FRC's recently announced changes to the UK Code for Corporate Governance.

Before I go any further let me say that the announcement contained many welcome changes. The rationale behind the revisions is to "strengthen the focus of companies and investors on the longer term and the sustainability of value creation". Exactly the ethos that the IoD believes is needed to continue to improve business performance and help mend its reputation in this country.

Two alterations stand out for particular recommendation: first, strengthening the link between executive performance and pay. This will help increase confidence among UK stakeholders and the wider public. Second, it's right that companies should explain how they intend to engage with shareholders if and when a significant percentage of them have voted against any resolution. It's a drum we've banged loudly following a string of shareholder rebellions this year, including at Sports Direct, Burberry and Standard Chartered.

The code also now requires directors to provide more details to shareholders around their risk management and internal controls. Again, we don't see this as too much of an issue.

However, we do have concerns about another amendment which essentially requires directors to guesstimate how long their businesses will be able to continue as a going concern under the current financing arrangements and to take this beyond the generally agreed accounting principle of 12 months.

It's part of this greater push towards ‘long-termism' for companies and boards which in itself is positive, but must still operate within the bounds of realism and practicality.

Investors are demanding more scrutiny and greater transparency around areas such as risk management, in the wake of the banking crisis, the blame for which, fairly or not, was largely levelled at boards, their audit committees and auditors. The question is whether, when it comes down to it, they will really believe the longer-term predictions placed in front of them?

Just as importantly, will it be helpful? The certainty that many investors are looking for may still elude them, even under these revisions. Equitable Life? Who knew? It wasn't just the scale of the collapse, but also the unexpectedness that caused such huge shockwaves.

We'll have to see how boards respond to the impact of the changes. It would be hard for many to avoid the lure of looking over at competitors to see what predictions they are making. The concern is to what extent they will allow this to influence their own forecasts. Will boards feel that they need to somehow match or better the estimates of others on the basis of the influence that it could have on the investment community? Or will investors question the legitimacy of lengthy projections, and dismiss those extended beyond a particular time period as mere conjecture?

The greatest likelihood is the majority will hold sway and hopefully good judgment will carry the day. There is too much volatility in world markets for predictions more than 12 months hence to be anything other than guesswork.

The notes that accompany the going concern will be of interest, and investors will no doubt want to read details of a company's long-term plans to raise capital, its investment strategy and future plans.

Al in all, however, we believe this attempt to look beyond the horizon is simply going to stretch credibility too far. We can only hope that common sense will prevail.

Off Balance: Getting too old to add

wooden-abacus-black-and-white-beads

17 Sep 2014 | Off Balance

A year in business is a long time. In fact, Off Balance frets when we think about the great wodge that is our workload between now and Crimbo.

Then again, they say that busy people make more time. And this must have been the case for CME Group's CFO Jamie Parisi, who has retired from the futures and options marketplace at 49 years old.

As he is someone of such ‘advanced years', OB was surprised that he has then been replaced by his deputy John Pietrowicz - who is a whopping 12 months older.

OB is, of course, concerned for Pietrowicz's welfare, and can only assume that a stairlift and walk-in bath have been fitted to help accommodate him.

As you can tell, OB has no intention of retiring late. Anyway, this is more of a lifestyle gig as it is.

Off Balance: Captain Obvious strikes out at negotiation survey

Captain Obvious

11 Sep 2014 | Off Balance

IT PAINS Off Balance to invoke Captain Obvious, our award for the most trite and self-serving of press releases. But then, we get so many of them that we can't help ourselves.

Anyway, the October Captain Obvious Award goes to our friends at Huthwaite International. The sale and negotiating business' latest survey finds that 36% of business people didn't have traditional negotiation roles, but were actually involved in complex discussions.

So negotiation training business runs a survey that flags up that lots of people do negotiations. Hmm...

"To meet with increasing demand for negotiation courses that cater for the needs of all employees, not just those in sales or negotiation roles, Huthwaite International has enhanced its all-round negotiation suite by releasing its VBA Negotiation Skills course," Huthwaite helpfully adds.

OK, guys, we get the message. Have a Captain Obvious Award - you've deserved it. And no arguments.

Off Balance: Tesco's case of the 'invisible' CFO

The invisible businessman

29 Jul 2014 | Richard Crump

OFF BALANCE was recently hob-nobbing with a finance bod who described the ‘invisible' job of the CFO post-acquisition. The FD was talking about all the nuts and bolts integration work that often goes unnoticed once the glory of the deal has faded.

Tesco, it seems, have taken a more literal approach. According to a report by Reuters, Britain's biggest retailer has had to remove a photo from its corporate website of newly-appointed FD Alan Stewart after rival Marks & Spencer complained he was still technically their employee. Now that's rubbing salt in the wound.

According to the report, Tesco had earlier shown a head and shoulder pic of Stewart, who it described as ‘chief financial officer'. The pic has since disappeared and Stewart is now described as ‘incoming CFO'.

Both M&S and Tesco declined to comment, but it brings a whole new meaning to the CFO's lot as an invisible board member.

Off Balance: FRC loves Mark 'Amour' Armour. Fact

Awesome

17 Jul 2014 | Off Balance

THE BEAUTY of publishing online is that you don't have to check your copy as thoroughly - you can always edit at your leisure...which means wait until someone spots Off Balance's mistake(s).

So when a typo was flagged up in the Financial Reporting Council's latest annual report by some lovely people in the Twittersphere, OB had to investigate.

It appears that former Reed Elsevier CFO Mark Armour, who sits on the FRC's board, had his name misspelled. OB is now left to wonder whether the missing ‘r' from Mark Armour's name, leaving him with a lounge singer-esque moniker ‘Mark Amour', was actually a Freudian slip made by a besotted FRC staffer.

In fact, OB is not going to dwell on that thought for too long. And anyway, the fun has been spoiled now that the typo has been corrected. But OB will never forget Mark Amour...

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