Little more than six months from now, European Economic and
Monetary Union (EMU) will start to become a reality. Politically, the UK
may be adopting a ’wait and see’ stance and, although it is not among
the first wave of 11 countries to take part, the reverberations will
nevertheless be felt across the corporate and financial landscape.
Although the euro will not entirely supersede the national currencies of
the participating states until 2002, it will become an investment
reality from the start of 1999. Trading prices of equities, bonds,
futures and options will be quoted in euros. There will be a euro
interest rate and, once established, the likelihood is that the euro
will become a major trading currency to rival the dollar and the
’The euro is going to mean profound changes for European capital
markets,’ says Chancery Communications managing director David Waller,
whose clients include pan-European stock exchange EASDAQ.
In the area of equities, for example, the share prices of many of
Europe’s leading companies will suddenly be directly comparable and ever
more investment decisions will be taken on a pan-European basis.
Shares will be bought not because they are listed in a particular
country, but because a company is seen as having good prospects for
growth in comparison not only with its fellow nationals, but also when
evaluated against other euro-quoted corporations.
’Companies will have to view themselves as belonging to a pan-European
sector rather than a national geographic area because that kind of
investment will almost disappear,’ says Citigate director Noga
Increasingly, US and other non-European corporations and investors have
been classifying Europe as a single market and constructing strategies
based on this view. EMU will only intensify that attitude. Moreover, an
end to currency fluctuation between the participating countries will
make investment into euro equities and bonds an attractive proposition
to many institutional and retail investors.
One implication is that investment will become more index driven.
Evidence of this came in February with the launch of Stoxx, four
European equity indexes (two specifically covering the euro zone;
another two taking western Europe as a whole). Edelman is handling the
PR for Stoxx, a joint venture between Dow Jones and three leading
European stock exchanges: SBF-Bourse de Paris, Deutsche Borse and Swiss
Exchange. But internationalisation does not necessarily mean
homogenisation - corporations and individuals will still retain many of
their own national characteristics.
’We’ve got to be able to understand the implications for shareholders in
other territories,’ says Financial Dynamics chief executive Nick
There are, adds Waller, subtly different forms of capitalism on the
For example, in Germany there is more emphasis placed on the workforce,
while in France there is a greater government focus. These and other
variations need to be taken into account.
But, argues Villalon, the growing internationalisation of investment
will entail the loss of companies’ ’natural national investor base’.
Companies need to tailor their communications to reflect this
Almost certainly, there will be more international roadshows, yet there
will be attitudinal, as well as practical, differences. Arguably there
will be an upsurge in cross-border mergers and acquisitions because an
international shareholder base will have few qualms about businesses
being bought by companies listed in other countries. EMU will also make
such M&As more straightforward.
Villalon speculates that UK plcs may eventually produce two sets of
financial reports and accounts - one in sterling, the other in euros -
to meet the needs for comparative data of international investors,
analysts and financial journalists.
She also believes the single currency may call into question the
long-term viability of Europe’s smaller national stock exchanges as
investors concentrate on the markets in those cities that already have
international financial standing and pan-European alternatives such as
Although the first impact of the euro will be on the capital markets,
the broader effects on business will not be far behind. Some
multinational firms operating in Europe intend to use the euro soon
after 1 January 1999 as a means of simplifying their accounts and
finances, which will clearly affect UK suppliers. ’If your customer says
’we’d prefer you to invoice in euros’ you’d have to feel you were in a
pretty strong position to say ’no’,’ says Hill and Knowlton senior
associate director Andy Pharaoh.
H&K has been working on euro-related communications for NatWest
Corporate Banking Services for the past 18 months. In March this year,
NatWest CBS became the first UK bank to offer a full range of euro bank
Siemens was the first company to open such an account in preparation for
dealing in euros with customers and suppliers.
NatWest CBS is running an EMU awareness programme for customers. To
date, over 2,000 businesses have attended seminars dealing with the
practical problems posed by the euro such as cash management, payments,
international trade and Treasury issues.
Ludgate head of public affairs Stephen Lock wonders whether all those UK
PR consultancies with European operations and clients are themselves
getting geared up for the new currency. His consultancy is currently
considering changes to its accounting system to handle euros.
The euro will undoubtedly have a profound effect on cross-border trade
as prices become directly comparable across 11 countries and the single
currency is likely to act as a spur to the buying and selling of goods
on the internet.
Suddenly, businesses and consumers will be able to order goods from
anywhere in the euro zone without having to worry about foreign
There is a genuine fear that British business is by and large unprepared
for these changes. At the time of writing, the Treasury, advised by the
Central Office of Information, is understood to be putting together a
pounds 5 million advertising-driven information campaign. A massive
financial communications task lies ahead. The time has come for business
communicators of all kinds to get to grips with the euro.
IoD: TACKLING THE ISSUE OF THE FAT CATS
Although it was four years ago, who can forget the furore surrounding
former British Gas chief executive Cedric Brown’s decision to accept a
75 per cent pay rise to pounds 475,000.
Other utilities bosses also came in for harsh criticism for their
handsome remuneration packages. In what appeared to be almost a fad, the
’fat cat’ label was applied to a succession of executives.
But four years on, we see clearly that the fat cat debate is not a
Although the Greenbury Report and its successors on corporate governance
have impressed upon companies the need for responsible reward
structures, excessive remuneration for top directors remains very much a
live issue.College Hill chairman Alex Sandberg refers to it as a
The Institute of Directors is so concerned that reports of fat cat
directors may be harming the image of business as a whole that it has
launched a communications campaign called the ’hub initiative’ to try to
improve the standing of companies in the community.
’The public likes to see pay tied to some kind of productivity
What business hasn’t been doing is either explaining why it is
justifiable or, worse, rewarding people excessively when it isn’t,’ says
Quentin Bell, who is advising on the campaign.
The most recent fat cat brouhaha involved Smith Kline Beecham chief
executive Jan Leschly, whose potential share option and incentive reward
package of pounds 66 million was raked over by the media after the
collapse of merger talks with Glaxo Wellcome.
In Leschly’s defence, SB argued that the package was a reflection of the
huge rise in the value of the company under his stewardship and that in
a global business it had to offer global rewards in order to attract the
Sandberg agrees this is the best strategy. PR advisers having to defend
charges of fat cat behaviour should point out that packages are
generally linked to shareholder value and that remuneration committees
exist to ensure directors are not paid far more than they are worth.
But there are times when remuneration cannot be satisfactorily justified
and investors and the public disapprove when they learn of poor quality
people getting big pay-offs. These are often contractual, and in such
situations there is little PR can do. The onus is on companies to ensure
that they do not offer their directors overly long contracts or share
options that are not tightly linked to performance.
RINGMASTER: QUICKENING UP THE REPORT PROCESS
Anyone who has ever been involved in putting together an annual report
and accounts will know how much amending, checking, double-checking and
scrutiny of proofs is required in order that this vital financial
document is published free of errors.
Therefore, anything that can ease this painstaking process is to be
To this end, technology company Automatrix International - with input
from design consultancy Thumb - has developed RingMaster, an electronic
publishing system designed to save time in the production of annual
reports and similar publications.
In essence, RingMaster is a workgroup design and publishing system based
on standard DTP software and technology that can be used over a wide
area network. This means that clients can make on-screen corrections to
the report text from their own office. And as RingMaster allows 24-hour
access,clients can make corrections at any time.
Access is controlled by user names and passwords, thereby allowing
appropriate working environments to be set up for various users.
RingMaster tracks layouts, text, photographs and graphics. It manages
these files and their revisions and facilitates their final
Thumb has used RingMaster for clients such as Laura Ashley and
Rival annual report design consultancy Michael Peters Literature has
licensed RingMaster as a means of offering clients, such as 31, Bass and
Tesco, more effective project management with reduced leadtimes.
’The great thing RingMaster does is speed up the communication of
changes, which at the back-end of the annual report process is really
critical,’ says MPL marketing director Charles de Haan.
’What the client sees at their end is exactly what the designer sees,
only the client is locked out of the layout but can get into the boxes
that contain text to make amendments.’
De Haan elaborates that there is no need to hang around for proofs from
typesetters. Clients can print proofs immediately, and when these have
been checked the amendments can be sent by ISDN line to MPL’s
The adjustments indicated can be made at once and the updated design
sent right back to the client - all within minutes rather than days.
Automatrix is, says its business development director Nick Smart,
working on adapting RingMaster so that it can be used for web-based