At the Marconi annual general meeting in July 2001, a couple of photographers from the national press were having a conversation within earshot of Financial Director magazine. We were all waiting to see if John Mayo, ousted FD of the troubled telecoms equipment manufacturer, would turn up to the meeting. “What does John Mayo look like?” asked one photographer. “Just shoot any fat guy in glasses and we’ll work it out later,” replied the other.
Throughout 2001 and 2002, FDs became increasingly interesting to the media. The back-office boys with their calculators and spreadsheets were suddenly the architects of major corporate disasters, then accounting scandals and, finally, outright frauds. The press had to start putting faces to names.
Whether it was Mayo, Andrew Fastow, the CFO of Enron charged with fraud, or Scott Sullivan, former WorldCom CFO led in handcuffs from his office by the US authorities, FDs became newsworthy, even outside the business pages of the world press.
Journalists love a good story about bad news, and there is a lot of it about. One FD who has had his fair share of bad news to impart to investors, analysts and the media is Stephen Hester, group FD at Abbey National.
Abbey National has recently been caught on the hop as its diversification into corporate bonds away from its traditionally successful mortgage business contributed to the bank’s loss of nearly £1bn for 2002. Abbey National became the first bank to cut its dividends since Barclays in 1993.
The press pounced and Hester, who only joined the company in May 2002, had the most press mentions of any FTSE-100 FD during the year, according to our searches on www.nexis.com (see panel, page 36).
Ironically, Hester can’t remember having made a single outgoing phone call to the press in all that time. But he is not surprised the media have taken an interest in him. Showing great commitment to his corporate communications responsibilities, he took time out in-between announcing Abbey National’s year-end results and going on an investor roadshow to talk to Financial Director.
“The only time I deal with the media is when I should as normal practice, or in response to things some of the media try to do. But my name is rather prolific in the press because Abbey National has been in lots of trouble,” he says.
But he doesn’t have any real gripes with the media and he doesn’t shy away from talking to the press when the reporters come knocking. In the end, he says, it pays to be accessible. “I believe that over the medium term we do get treated fairly by the press,” he says. “But there are always times in every company’s life when the odd article is unfair – positively and negatively.
“I don’t have any major complaints. If you talk about something with lots of warts they (journalists) write about the warts. But they also respond well to straight talk. Sometimes it can work against you. But that is overwhelmingly the best path to take,” he says.
Hester considers it one of his duties as FD to make himself accessible to the media. “We have been making lots of headlines and, primarily, the two major spokespeople on such matters in any company are the finance director and the chief executive,” he says.
He has overall responsibility for all Abbey National’s corporate and investor communications and relies on a press relations team to direct his media activities. “The team is outstanding, although some of the messages they have been called upon to communicate lately are not always as outstanding,” he jokes. “They are entirely in charge of directing the group’s media relations and they use me or our chief exec or chairman as they see fit.”
Hester is popular with the press because he makes himself accessible and, at 41, is relatively young to be a FTSE-100 FD (the press love that sort of thing). But, most importantly, he is FD of a multibillion-pound business that has millions of UK customers, and his company has a presence on every high street in the country. “Because we are a name known to everyone in the UK it gives us profile on the business pages, but also more broadly within publications,” he says.
In general, this rule applies across the FTSE-100. FDs of consumer-facing organisations, such as the high street banks, media companies and retailers, are the most prolific in the press. (It is interesting to note that 11 of Peter Williams’ 42 press mentions were in the Daily Mail, the newspaper he manages.) Manufacturers, property companies and mining companies get considerably less exposure.
Take David Williams at Bunzl. His company is making money, it has successfully changed focus from manufacturing to outsourced services and was admitted to the FTSE-100 in 2002, when companies such as British Airways were being hammered by the markets. But still the company struggles to find a voice in the media and, when it does get exposure, some newspapers find it hard to stop using the words “boring” and “paper manufacturer” in their descriptions of Bunzl.
“We sold the last of our paper assets in 2002, so if the press talk about our paper business now they are misunderstanding what we do,” Williams says. “Bunzl’s history was very much tied to paper, and it has taken us some time to evolve and invest in areas with better returns. When I sit down with the chairman on results day, the press will all be told,” he says.
But Williams, who unlike Hester doesn’t assume responsibility for all media relations, says you have to appreciate the way journalists work.
“There is a reasonable amount of churn in journalism and it must be quite difficult for them to pick up those sort of trends when they don’t know what they will be covering until half an hour before. It is beginning to come right – at least the press, in general, doesn’t call us a paper business anymore,” he says.
Williams, with 10 press mentions in 2002, isn’t doing too badly. Some FTSE-100 FDs, such as Peter Hooley of Smith & Nephew – the only FTSE-100 FD with no press mentions last year – are underrepresented. Perhaps they are either media-shy or consider press relations to be a relatively unimportant part of their working week. Sadly, arranging an interview with Hooley for this article proved rather difficult; he is probably out presenting results to shareholders, creating value as he goes.
Maybe the newspapers just don’t find such solid and dependable companies as Smith & Nephew interesting. By far and away the FDs with the most press mentions in 2002 were not from FTSE-100 companies, but from companies in real trouble. Marconi’s John Mayo dominated the press in 2002, with over 300 mentions in major world publications. Amey’s former finance director, David Miller, who told the Telegraph after he resigned that “being a public company finance director is a bit of a shitty job” and new accounting standards are “as appealing as a little cup of sick”, managed nearly 150 mentions. Miller’s replacement, Michael Kayser, quit Amey after only six weeks and still managed as many mentions as his predecessor.
Most FDs don’t ask for this sort of coverage. And even if they do agree to speak with the press sometimes, the results are often unfortunate.
This is especially true for female FDs of large companies. Rona Fairhead of Pearson and Judy Boynton of Shell both come in the top 20 FDs for press mentions in 2002, but a certain amount of their coverage was devoted to stories about “the most powerful women in the UK”, many of which are patronising or frankly sexist.
Kathleen O’Donovan of Invensys (formerly BTR) refused to be profiled in the press for some years after articles like, ‘The Belle of BTR’ started appearing in the press when she joined in 1991. And we expect Boynton wasn’t too pleased with a profile that appeared in the Sunday Telegraph in late 2001, in which she was described as “the Penelope Pitstop of the oil industry … Petite, with big brown eyes, a delicate manner, and perfectly coiffed hair”.
While such examples are unfortunate and do nothing to help serious journalists’ reputations, the financial press is a useful tool for conducting corporate and investor relations activities nevertheless.
As Kent Atkinson, former group FD at Lloyds TSB and current chairman of Marconi’s audit committee, says: “The financial press helps investor relations because you can’t get to see all shareholders, even all your major shareholders. The serious financial publications are very useful to appear in because they get seen around the world … Analysts, shareholders and the press are three different constituencies, but you must have a good rapport with all of them.”
In order to generate exposure, Atkinson suggests you get to know some of the journalists and papers well. “Hopefully, you can try to build a relationship by which you get responsible reporting. But as an FD you must treat journalists as adults for that to happen,” he says.
This echoes what Douglas Flint, HSBC’s group FD, told us in November 2002 soon after the bank’s interim results presentation. “Having a good and trusting relationship with the outside is incredibly important. We (HSBC) will always have an open and honest communications policy.
One benefits from building up relationships with people at times when you don’t need to use them. You should be talking to people so regularly that they are not surprised when they hear from you.” All this must be done within the accepted boundaries of disclosure regulation, of course.
If FDs are used to talking to the press on a regular basis, the more comfortable they become with the media the easier it is for them to use the press to their advantage.
Natalie Evans, head of policy at the Investor Relations Society, says that the most common mistake executives make when talking to the press is becoming flustered under heavy questioning – often brought about by inexperience. “Many executives treat journalists with fear. Finance directors shouldn’t be too worried about what they are saying. If you are confident, prepare yourself and know the boundaries of what you are going to talk about, that will help you deal effectively with the media. Companies’ investor relations departments should help you out,” she says.
Hester agrees that honesty is best. “What I have always found is that it pays to be straight with people. Don’t agonise about how a story is going to look and don’t try to spin. You might be successful in the short term, but it will come back to bite you.”
A final and very important piece of advice comes from Atkinson. “Don’t say ‘no comment’. If there is a legal or regulatory reason why you can’t answer a question, then make that clear to the journalist. You have to say ‘no comment’ without actually saying it. Have a look at the way politicians handle difficult situations – you can learn a lot from them.”
Kent Atkinson will be speaking on the subject of corporate communications at this year’s Richmond Events FD Forum, 11-14 June.