The advertising giant WPP Group has a board consisting of 14 directors. Chief executive Sir Martin Sorrell is one. Name any of the others.
As far as financial teasers go, that one has the potential to stump more folk than just Diane Abbott. Even among those who take time to actually read the City pages, it is a struggle to recall anybody other than the group’s diminutive founder when pressed for a line-up of WPP management.
This may reflect either (i) an advertising group’s hilarious decision to hire 13 directors who can’t publicise themselves; or (ii) the possibility of the chief exec being rather partial to hogging the limelight himself (and the media indulging him). Still, Sorrell’s apparent total control is increasingly becoming a real issue, as we might hear at WPP’s AGM this week.
That event has traditionally been the moment when the City kicks the great man about his pay – but the poor bloke took a 31.6% pay cut last year and now scrapes by on £48m. Shareholder pressure has led to the announcement that pay will be cut again to a maximum of about £13m – although not until 2021, when the leader will be 76.
All of which means succession has now superseded pay as the main issue facing the company.
Can Bob the Banker fix it for Panmure Gordon?
Patric Johnson, the boss of City broker Panmure Gordon, reckons life for small City brokers like his is tougher than it’s been since before Big Bang.
He says higher costs and stingier clients mean they face “one of the most competitive landscapes” since 1982.
Still, that’s for his rivals to worry about. Panmure has a plan, which will dominate its AGM on Thursday.
The broker is bracing itself for a takeover from an investment vehicle led by Bob Diamond, the former Barclays boss who was forced out in the wake of the Libor-rigging scandal.
The takeover has led to some speculation over future strategy, particularly when one recalls some of the City’s more exotic deals. You know the ones: the (hypothetical) float of KGB Mining where the founder, Vladimir Takyorneekapov, still owns 80% of the shares.
Huge investment banks once made fortunes from such floats: they calmed investor nerves by (perhaps) taking some risk themselves and parking Takyorneekapov’s stake on their own balance sheet.
The fallout from the financial crisis means large institutions can’t do that now – but smaller shops can. The reputation of Panmure Gordon, hard-earned over 141 years, might give added confidence to investors sourced from Diamond’s vast contacts book. But surely that isn’t Bob the Banker’s plan?
Not many winners in the spread-betting game
Anybody who has listened to the marketing of the financial spread betting industry over the years will know that one of the great trumpeted advantages is that even retail punters can have a flutter on shares going down.
So, if you or I had bet on disaster for investors in a company that, say, floated at 240p a share in 2016, and those shares were now trading at around 130p, we would have made 110 (240–130) times our original stake.
Funnily enough, that is exactly what would have happened if you had shorted the shares of financial spread betting group CMC Markets, which floated last year and whose management will have to face shareholders this week when it announces full-year results.
Despite the already painful drop, analysts at Numis reckon the shares are “not cheap enough” and say they could drop by another 20% or so, as people have started to notice the industry’s dirty little secrets – chief among which is how few people actually make any money from this game.
Shareholders are nursing losses but CMC Markets founder Peter Cruddas has trousered millions. Meanwhile, only 20% of financial spread betting’s customers actually profit from products pitched as investments.
Little of that ever makes it into the industry’s advertising, funnily enough.
