A pandemic and a recession would, you might think, force remuneration committees of public companies to pause and reflect. After many years of loose talk about showing “restraint” on boardroom pay, should 2021 be the year when the word means something? Maybe some companies are asking the question. But it’s striking how many pay proposals are creating controversy. After Cineworld and The Restaurant Group and others, here comes Future Publishing.
Zillah Byng-Thorne, the chief executive of the firm behind magazines such as PC Gamer and Real Homes, has been paid a little over £25m over the past four years, so can’t really grumble about her lot. Future’s long-term shareholders also did well, it should be said, which is why Byng-Thorne’s incentive schemes came up trumps. If you invested £100 in Future in September 2015, your holding was worth almost £1,500 by September 2020.
The company’s idea now, though, is to take potential jackpots up a few notches. Byng-Thorne would be able to make £40m in three tranches via the new proposal, while the finance director could top out at £17m. The duo would jointly comprise 20% of a plan that would cover all 2,300 employees.
The virtues, as the company sees things, are twofold. First, Future’s share price would have keep to flying for the full payments to be triggered (an additional £4bn of shareholder value over five years, it calculates, at a company currently worth £2bn), and second, all staff are in the scheme.
Yes, the proposal is less cheeky than, say, Cineworld’s, which involved executives with large shareholdings bullying other investors into accepting supercharged arrangements at a moment when the cinema group’s share price (unlike Future’s) is on the floor. Nor did Cineworld’s proposal include all staff.
But Future’s plan still deserves a thumbs-down. By all means spread incentives across the organisation – that’s laudable. But potential £40m bonuses for FTSE 250 chief executives is a step beyond current norms at a bad moment. Next week’s vote represents another test for City fund managers, who tend to spout the same “restraint” line. They’ve flunked most of those tests recently.
Musk’s ‘GameStonk’ tweet was a gamechanger for some
“I am become meme, destroyer of shorts,” tweeted Elon Musk, who seems to be enjoying his ability to cause nuclear-level havoc for short-sellers. Musk’s shout-out about Dogecoin, an obscure cryptocurrency, caused the price of a unit to surge. And last week Musk’s “Gamestonk” tweet preceded the last surge in the video game retailer’s share price.
At one level, it’s harmless mischief, and one can understand why Musk might be entertained. In Tesla’s tricky early years, short-sellers’ bearish talk dominated the narrative around the electric car company and, arguably, made fundraising harder.
But Musk should know that the chief beneficiaries of his price-moving tweets won’t always be small punters, which is perhaps what he imagines. The Wall Street Journal this week carried the intriguing tale of Senvest Management, a US hedge fund that banked a profit of nearly $700m from GameStop, having bought a 5% stake before the Reddit-inspired mania started.
How did Senvest decide when to cash out completely? The clincher, it seems, was Musk’s “Gamestonk” tweet, which was a giveaway that peak silliness was close, which indeed it was. GameStop reached $450 and soon reversed. Yes, it’s helpful to have such neon-lit clues.
Shell didn’t see which way the wind was blowing before share buyback
The big event at Shell falls next week, which is when its chief executive, Ben van Beurden, tells the world how much capital he’s prepared to allocate to the renewables push, and how quickly. Thursday’s full-year results, therefore, were just a warm-up – which, admittedly, is an odd thing to say about a thumping pandemic-related loss of almost $20bn.
But, since Shell and Van Beurden seem pleased with themselves for increasing the quarterly dividend slightly (having cut distributions by two-thirds last April), one cannot let the moment pass without reminding them of their horribly timed share buyback. Between July 2018 and January 2020, Shell spent $16bn on its own shares, all at prices above £22. The price today: £12.46.
Shell can’t be blamed for failing to anticipate a pandemic and lower oil prices, of course. But, on a $16bn buyback, the difference between those two share prices represents a sum that would buy more than a few windfarms.
