Monthly Archives: January 2012

By James Mackintosh, investment editor

Arise, Mr Fred Goodwin. The banker who single-handedly brought down the British banking system has had his knighthood stripped away, and no one is sorry. Politicians, the public and the press are united in supporting the move against the former chief executive of Royal Bank of Scotland.

The pitchfork-wielding mob is wrong. Read more

I’ll say one thing for co-chief executives: two scapegoats are better than one. Since Research in Motion’s fortunes took a sharp turn for the worse last year, its dual-leadership structure has taken a beating. With the BlackBerry-maker’s decision last week to revert to one chief executive, the double-edged knives really came out for Jim Balsillie and Mike Lazaridis.

Andrew Hill

Politicians would like to think that Stephen Hester’s decision to give up his bonus marks the start of a mass renunciation of “excessive pay” by private sector bosses. It is certainly time the UK corporate and political world moved on and refocused on what is really important: i.e. how to restore growth. But far from starting a trend, the Royal Bank of Scotland CEO’s case is unique. Here are three reasons why: Read more

John Gapper

It is rare for customer service to be so good as to take one’s breath away but Swiss Federal Railways achieved it on Sunday by making a personal stop for me when I boarded the wrong train.

On my way back from the World Economic Forum in Davos, I had to change at Zurich’s main station to get to the city’s airport. Lacking in concentration after a long week, I got on a train on the left side of one platform instead of the right and found myself heading swiftly along Lake Zurich in the opposite direction.

My fellow passengers informed me that I would have to stay on the wrong train for up to an hour before I could get one back to Zurich, thus ensuring that I would miss my flight to London. Gloom descended. Read more

Andrew Hill

I have met Debbie Bosanek. I’ve also met her boss Warren Buffett. But as far as this week’s US political news is concerned, the more important figure is Ms Bosanek, the billionaire investor’s secretary. She’s important because she’s met Barack Obama, who gave her a high-profile spot in the audience for his State of the Union address this week, transforming her into a symbol of tax inequality in America.

Mr Buffett started this, of course. In a New York Times op-ed last August he attacked a system that allows him to pay a lower tax rate than any of the other people in his Omaha office. This has spawned the “Buffett rule”, the benchmark that Barack Obama is using to promise that the richest Americans will not pay tax at a lower rate than their secretaries.

Ms Bosanek is both an obvious and an odd choice to become – as an ABC interviewer put it this week – “the poster woman” for this campaign. Obvious, because she is the gatekeeper for Mr Buffett. Odd, because she is far from a typical secretary (in her polite but terse emails, she actually styles herself, in the modern way, as “Assistant to Warren Buffett”). Read more

For the world’s financial elite, now might be a good time to be on a Swiss mountainside, protected by a cordon of armed police, and able to take one’s mind off things by skiing and popping into a private bank.

Andrew Hill

We know where many chief executives are now. In a snowy Alpine resort thinking big thoughts. But where were they over the past few months? Answer: locked in their offices, responding to multiple-choice questions, if the avalanche of Davos-pegged surveys is anything to go by.

I’ve ranted about such surveys before. Business leaders who participate tell me they find them tedious. They inevitably reach roughly the same conclusions (this year – surprise – “It’s gloomy out there”). Yet still they’re rolled out, and still they get written about (yes, by the FT, too).

The World Economic Forum – captive elite audience, massive press corps, low quotient of breaking news – is catnip to the pollsters who carry them out, and the companies that back them. So if you don’t want to risk a broken leg, snow-blindness and schmooze-fatigue by trekking to the Alps, here, as a public service, is my Top 10 of Davos surveys, ranked by number of respondents. I make no apologies for using the headlines from these polls’ press releases.  Follow the links and dig into the data if you wish, but always remember: this isn’t science, it’s PR. Read more

Andrew Hill

“Petrobras is a very successful company, completely male-dominated,” Maria das Graças Silva Foster told the FT’s Women at the Top Conference in November 2011. “But things are changing and it’s just question of time.”

A question of just two months, in fact. On Monday, the Brazilian company’s gas and energy director was named as the next chief executive of, in the FT’s words, “arguably Latin America’s most important company”.

Her promotion will also make her, by a long shot, the most prominent businesswoman in Latin America, and a symbol of the diversity policy of Brazil’s first woman president Dilma Rousseff – who used to chair Petrobras and is said to be close to Ms Graças Foster. The president appears to be lining up another Brazilian businesswoman - Luiza Helena Trajano Inácio Rodrigues, who heads the retailer Magazine Luiza – to become a minister for small business. But the number of top female CEOs in Brazil still looks low compared with, say, India or China. Read more

KFC tempura chicken strips get progressively spicier, the deeper you penetrate inland China. Iglo’s frozen fish fingers used to have four different colours of breadcrumb, depending where you bought them in Europe.

John Gapper

The initial noises out of the shake-up at Research in Motion, although it was more far-reaching than had been expected, are not especially encouraging for the investors and analysts who want radical action.

Mike Lazaridis and Jim Balsillie, the joint chairmen and chief executives of the maker of BlackBerries, have relinquished both roles. But they have handed over to an insider who looks determined to stick to the same course.

Thorsten Heins, the new chief executive, told the FT:

“I want to maintain the focus on enterprise, but we need to communicate a bit more with our consumers. We need to do more marketing.”

 Read more

John Gapper

Kodak’s Chapter 11 filing is a sad day and it makes me wonder how long Antonio Perez plans to stick around as its chairman and chief executive.

There is no mention in the Kodak announcement of Mr Perez  stepping down, although his strategy of shifting the company from film to digital printing clearly ran out of road. Instead, he portrays the event as another step in his strategy: Read more

The internet industry scored a tactical victory this week with Wednesday’s blackout of sites such as Wikipedia and Reddit, and the White House’s decision to oppose parts of two bills intended to curb the file-sharing of films and copyrighted material. “Piracy rules,” tweeted Rupert Murdoch angrily.

Andrew Hill

The route to success in corporate India starts early, and it usually goes via business school. That’s one message from new research into the performance of Indian chief executives, from the same stable that brought us what claimed to be the first ranking of the world’s CEOs over their entire tenure.

Insead professors Bala Vissa, Morten Hansen, Herminia Ibarra and Urs Peyer have now produced a compelling ranking of top Indian CEOs, published on Wednesday by Business Today, based on shareholder performance since they took office. It is topped by Naveen Jindal of steel company Jindal Steel and Power (JSPL). Read more

Andrew Hill

Almost everything about the introduction of new internet domain names stinks of self-interest. Politicians, pornographers, regulators and big business have been dragged into the suffix wars, as Icann – the internet naming organisation – tries to add new tags to the familiar handles in the web’s current system, such as .com and .org.

Andrew Hill

“Secretive hedge fund manager” is one of those adjectival pairings to rank with “flamboyant impresario” and “introverted computer programmer” as a journalistic cliché. So when I read the headline “Hedge funds lobby SEC over secrecy rule” in Monday’s FT, I naturally assumed the hedgies wanted the US regulator to erect even higher walls around them. Not so.

Colleague Sam Jones points out that at least part of the myth of secretive hedge funds is constructed on the regulatory legacy of rule 502(c) of Regulation D. This “arcane piece of Depression-era legislation… defines how the modern hedge fund industry operates”, outlawing general advertising and solicitation by funds but also making them paranoid about talking to any “unqualified outsiders”. The Managed Funds Association, the funds’ US lobby group, has written to the Securities and Exchange Commission seeking its elimination. Read more

Andrew Hill

Jeremy Irons as the bank boss in 'Margin Call'

To those who think all bankers are villains – or heroes, for that matter – let me commend Margin Call, the excellent and balanced film about a Lehman-like bank’s implosion, released last autumn in the US and out this week in the UK.

When the movie first came out, the FT invited two real-life bankers to the screening. One of them said:

I don’t think any banker will want to go, because they lived this, and traders will just point up the stuff that wasn’t right.

It was a film “made for outsiders who want to be smart about the inside”, he added.

But, speaking as an outsider, I think it’s much better than that. Read more

Eastman Kodak’s last big investor meeting ended with its executives trying to finish while a shareholder shouted at them: “You guys have no credibility. Zero.” Since then, things have got worse

John Gapper

 BMW M5 Sedan: Design

The news that sales of Rolls-Royce cars in China have overtaken those in the US, and that China now accounts for 31 per cent of Rolls-Royce’s sales, makes me wonder if we have reached a turning point for luxury design.

That sprung to mind when I saw a BMW M5 driving along a parkway in the US the other day. Although this is subjective, my first reaction to looking at its rear view and tail lights was that it would have looked more at home on the Bund in Shanghai. Read more

When Kazuo Inamori was appointed to lead the restructuring of Japan Airlines (JAL) two years ago, analysts worried about his lack of experience in aviation. Never mind that he was about to turn 78, had founded two of Japan’s best-known companies – Kyocera, in electronics components, and KDDI, in telecoms – and was, for good measure, an ordained Buddhist priest. Studying Buddhist teachings, he told the Wall Street Journal four months into his new role, “improves the quality of my heart and mind and enriches myself as a human being. This enhanced spirit is useful when it comes to revitalising JAL”.

Andrew Hill

I understand why Shell UK plans to close its final salary pension scheme to new recruits, but I hate the justification. The company told the FT that the decision “reflects market trends in the UK”. That’s precisely the sort of reasoning that you hear from companies and their bosses when they wish to award their chief executive a hefty pay increase. Read more