It would be odd to write about City events and not reference the Pfizer/AstraZeneca saga. I am in no position to make any comment about how well, or otherwise, either of the two PR firms involved (Brunswick and RLM Finsbury respectively) performed; only their clients can make that judgement.
However I was struck by the contrast between the Pfizer approach and that of corporate giant GE to Amersham a decade ago. For younger readers Amersham, for a time called Nycomed Amersham, was like AstraZeneca, a great British success story in medical research that had also merged with a Scandinavian company, Nycomed of Norway.
All of the potential issues about UK jobs and intellectual property existed then and shareholders held the firm and its management team, led by Sir William Castell, in very high regard.
GE took a very different approach. It conducted negotiations over many months, none of which leaked to the press. When GE announced the transaction, it had a package of measures for all stakeholders. GE offered full price in its stock, as good as cash, which won over the shareholders.
It proposed moving the HQ of its global medical business to the UK, where it still remains in Little Chalfont, Buckinghamshire. Finally, GE invited Castell to join its board.
This was, for its time, a huge transaction and GE boss Jeff Immelt and his team rolled into town, like visiting US presidential envoys, to announce the transaction. By the time they left for the airport that evening, the deal was done and everyone was happy. If Pfizer is to come back in six months’ time, might it be an idea to take a leaf out of GE’s book?
Speaking of high-profile company announcements, it is now the AGM season and this is the first year that shareholders have a vote on a firm’s remuneration policy. Three years on from the depths of the financial freeze and with economies and markets on the up, the long-term incentive plan is this season’s new black. Some of the sums are eye-watering to the man or woman on the street – and Business Secretary Vince Cable.
Big business is constantly fretting that it is losing the trust and respect of the public, which in turn makes it fair game for attacks from politicians. Pay continues to be one of the main lightning rods as the ratio between CEOs’ and workers’ pay grows to 230 times and 185 times in the US and the UK respectively. I can’t help feeling that until the public feels that the rewards are more evenly shared between the executive class and the rest, pay will remain the great dividing line between the corporate and public worlds.
In future, the challenge for those who sit on remuneration committees and determine policy, and for shareholders who have to approve it, is not simply to reduce levels of executive pay, but to devise a system that retains the incentives for senior management. Also it should more effectively share the value created with all of those who work in companies to deliver it. Answers on a postcard, please.
Andrew Grant is the founder of Tulchan Communications
