A couple of thoughts spring naturally from that astonishing statistic. First, it’s little wonder that mid-cap and smaller listed companies complain about capital starvation. If a fund manager wants to invest a billion pounds, they can analyse the prospects for just two companies and buy a 0.5% shareholding in each – or spend a lot more time evaluating up to 250 companies for the same proportionate exposure.
Now imagine you’re the FD of a global business which, by itself, is worth more than half the FTSE-250. It’s an awesome responsibility. If your CEO coughs, he could wipe out market value equal to the combined worth of maybe 50 mid-caps. Now ask yourself one question: how much would you want to be paid for that sort of responsibility? How much personal downside would you be prepared to risk?
I’m delighted that, thanks to our friends at BoardEx, we are able for the first time to produce a FTSE-350 FD salary survey; it makes enlightening reading. You may want to know that the FDs of HSBC and BP (Douglas Flint and Byron Grote) do not receive pay and perks worth that of all the FTSE-250 FDs. Not only are they not the best paid FDs in the 100 index (well, not quite), the top two FDs in the FTSE-250 (Thomas Singer at William Hill and Colin Dearlove from Barratt Developments) are very much in the same pay league as Messrs Flint and Grote, but they look after companies barely 1% the size.
What does any of this tell us? Maybe not very much, other than to provide a thought-provoking backdrop to the corporate governance and executive remuneration debate. But, in the meantime, it may help if you ‘accidentally on purpose’ leave the survey somewhere where the chairman of your remuneration committee will see it.
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