So-called fat cat pay scandals are guaranteed to get the nation and its media in a lather. Even in a bull market, fat cat scoops are fantastic headline material. But when markets are tough and companies are struggling to meet shareholder expectations, the media's reaction to extravagant CEO pay is savage - as a number of the UK's biggest firms have discovered to their reputational cost in recent weeks.
GlaxoSmithKline was the first to suffer at the hands of the UK press, with CEO Jean-Pierre Garnier's £22m 'golden parachute' pay deal coming under fire from the press and sparking a humiliating AGM shareholder revolt.
The firm last month became the first British blue-chip company in history to have its pay scheme rejected by shareholders.
Shortly after that, shareholders at HSBC likewise exercised their voting right at the group's AGM. Twenty per cent declined to back a pay package worth up to £35m for the head of its US operations William Aldinger.
Then there were press accusations that Vodafone's outgoing CEO Sir Christopher Gent was an overpaid fat cat, earning an estimated £18m over the last four years, while the group's shares have plummeted from a peak of 399p in 2000 to under 130p.
And just last week, a furore broke out over WPP CEO Sir Martin Sorrell's generous salary, which last year saw an 80 per cent increase to £1.6m, alongside a £3m payoff written into his contract. The group's annual results, however, reveal a profit slump from £411m in 2001 to £205m in 2002.
While some of the aforementioned are no doubt leading intensive investor relations campaigns to help woo the City back on-side, two key shareholder bodies are celebrating their successful PR efforts in bringing the issue of reckless fat cat payoffs to the fore.
The Association of British Insurers (ABI) and the National Association of Pension Funds (NAPF) are gaining acres of coverage attacking what Trade and Industry Secretary Patricia Hewitt's consultation paper termed 'reward for failure'.
A team of three PROs at the NAPF have been working relentlessly to get the body's name and messages out there in the media. 'The main message is that the NAPF would like directors of British businesses to earn more money, but the operative word in that is "earn",' says the body's director of communications Andy Fleming.
The NAPF has been actively ramping up its PR in recent years, ensuring the release of their reports on the UK's top 350 companies coincide with the AGM season to get maximum PR effect, and achieving noticeable results.
The Times insurance correspondent Antonia Senior says: 'Both the ABI and NAPF used to be a lot more sleepy. Whether it's a function of the bear market and the stresses that's put on their members I don't know, but they're now awake and growling.'
The NAPF has done well in raising the profile of the issue of unacceptable executive pay packages, but some believe the body is straying too far from its core messages. 'The NAPF has been very successful in raising its own profile, but it has deflected attention away from its main raison d'etre - it's there to bolster private pension funds, but it's becoming known as a "fat cat" scourge,' says Senior.
The ABI - whose members own a fifth of all UK equities between them - has been more targeted in its PR tactics than the NAPF, latching on to particular cases, such as GSK, as a vehicle for their messages. ABI head of media and political affairs Alan Leaman says: 'The easiest thing to do would've been to hold an almost permanent press conference giving the media tit bits and chasing headlines. But we've resisted that temptation, because we want to build an acknowledgement in the media that we're not an organisation that just sounds off.'
Leaman and his team of three have also led a concerted effort to put its head of investment affairs Peter Montagnon forward as a key spokesman on fat cat issues, which has seemingly paid off. Financial Times investment correspondent Tony Tassell believes Montagnon has become 'an increasingly influential voice on corporate governance'.
But communications at the ABI and NAPF have not always attracted the right kind of recognition. 'Their political lobbying, particularly, was seen to be poor,' says Tassell. 'The removal of tax exemptions on dividend income by Gordon Brown in 1997 was seen as a failure of the NAPF's political influence even by many of its members. However, they have raised their game over the last couple of years.'
It is in the interest of both bodies not only to be active, but also to be seen to be active by a Government keen to encourage shareholder activism. To this end, the ABI and NAPF have successfully used PR to gain powerful media profiles. But from here, both bodies need to maintain a delicate balance between self-promotion and their primary duty to meet members' interests.