Bailey Trinity bonanza makes Sorrell’s WPP package look like peanuts – comparatively

May 3, 2012

WPP chief executive Sir Martin Sorrell may not have been best pleased with the publication timing of the latest Sunday Times Rich List.

Just as the awkward information trickled out that he had taken a 60% rise in pay and bonuses last year (£6.18m in 2011, as opposed to £4.2m in 2010), up popped the unhelpful information – tricked out in headline bold – that Sir Martin is the UK’s wealthiest advertising mogul, with a fortune of £174m (up from £148m the previous year) and a personal stake in WPP worth £156m.

A red rag to a bull, you might say. Some of WPP’s shareholders are becoming increasingly cantankerous about such generous settlements, as last year’s hullabaloo at the annual general meeting all too clearly demonstrated. This year’s AGM in June promises similar excitement.

However, Jeffrey Rosen, chairman of WPP’s remuneration committee, can rest easy in his bed. Shareholders, no matter how vociferous, haven’t a prayer of overturning the pay agreement. Sorrell may have an uncomfortable 15 minutes caught in some headline crossfire, but he can adduce powerful arguments he has deserved well of his shareholders. Look at the underlying performance of the company; the bonus element which is in any case increasingly linked to the share price; and – crushing final point – what would shareholders actually do without him?

Alas, Rosen’s oppo over at Trinity Mirror, Jane Lighting – who once headed Five – can expect no such easy ride. Shareholders are baying for her blood after she waved through Trinity chief executive Sly Bailey’s £1.7m pay package, apparently without a murmur of protest.

Why the fuss? After all, £1.7m is financial foothill stuff compared with Sorrell’s £6.18m. But then Sorrell – unlike Bailey – has built a £10.67bn world-leading marcoms business. And  – again unlike Bailey – he has not presided over the systematic destruction of shareholder value these past 9 years.

When in 2003 Bailey joined Trinity, publisher of The Mirror, The People and sundry local newspapers, it was valued at £1.1bn. Today, that valuation is near £84m and dwindling fast. Trinity has not paid a dividend since 2008, and its pension liabilities of £1.7bn now dwarf market capitalisation.

Personally blaming Bailey for the destruction of Trinity would be a bit like blaming Canute for the tide coming in. All said and done, it’s the internet wot done it; and no one else in the newspaper publishing sector has successfully outflanked its effects. But paying her a near-FTSE100 wedge for running a small cap company looks increasingly absurd. All the more so since Bailey has no identifiable long-term solution to Trinity’s plight.

It’s time to move on Sly, maybe to some non-exec roles. I’m sure you’ll be a lot tougher on pay deals than Lighting.

UPDATE 4/5/2012: SLY TAKES THE HINT AND RESIGNS SHOCK! Bailey handed in her notice shortly after share-trading closed last night, once it became clear she faced an unquellable revolt over her pay deal from at least 25% of Trinity’s shareholders. Interestingly, prime among the rebels was Aviva, which is experiencing internal sedition over its own chief executive’s handsome package. It seems Bailey will not exactly be missed by her staff, who have in recent times endured massive cuts to editorial budgets. A journalist at the Liverpool Echo, one of Trinity’s regional newspapers, is reported to have said: “Every time her bonuses were going up we were losing people from the newsroom. We called her the wicked witch of the south.” Apparently, unrestrained whoops and guffaws were to be heard in the Mirror’s offices after the news broke that she was leaving.

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Rosenfeld’s wretched road to Mondelez

March 22, 2012

By and large, corporate life is no laughing matter. One exception – and a cause of bottomless mirth at that – is the pompous business of corporate name-minting.

Latest in a long line of jokes is “Mondelez International”. What, you ask? It’s the new monicker for the Kraft spin-off snack business which will shortly be headed by Irene Rosenfeld, after offloading the lumbering US grocery business onto poor old Tony Vernon.

One of Vernon’s few high cards will be the fact that he retains the Kraft name which, whatever its downmarket connotations, has the merit of being agreeably monosyllabic and memorable.

If only we could say the same for Mondelez International. Why, oh why (as The Daily Mail might put it) couldn’t it take the Cadbury name? After all, organisationally and with the exception of a few Kraft legacy brands such as Oreo, Mondelez is the ex-Cadbury company. It faithfully maps Cadbury’s emerging markets strategy and, if it is to achieve the higher margin growth commonly associated with the snack sector, that will in no small part be due to the dominance of Cadbury brands within its portfolio.

Instead of the instant mnemonic, however, we have the instantly forgettable “Mondelez”. Apparently, this was dredged up from an exhaustive trawl of 2,000 ideas – fashionably and inexpensively crowd-sourced from Kraft employees. The ultimate choice was, in fact, a portmanteau word derived from one suggestion fielded in America and another in Europe. Which probably tells you all you need to know about Rosenfeld’s imaginative powers. Camel, horse, committee anyone?

On second thoughts, however, I’m not entirely convinced by this folksy little conceit of hers. “Mondelez” has about it a strong whiff of corporate ID specialist. Allegedly it’s a bit of cod-Latin, derived from a hybrid of mundus (world) and delectatio (delight or pleasure), which is more readily understood by substituting the French modern equivalents “monde” and “délice”. Note the subtle potential French wordplay – Mon délice – perfect but for the fact it is grammatically incorrect, délice being feminine.

What does all this remind you of? Yes, right first time: Diageo, Altria, Aviva and most memorable of all – for the wrong reasons – Consignia. All of these rejoice in being bland latinisms (although Diageo sounds all Greek to me – dia, “through”; geo, “world”: but let’s not get pedantic about it). It seems a curious irony that at a time when interest in classical languages is at an all time low, corporate identity specialists have turned their abuse into a high art form.

And, in their earnestness not to create offence by minting something more meaningful, have often achieved laughable results. Take Aviva for example. On one reading, it could mean “Without life”.

As for Mondelez, which Americans clearly have difficulty in pronouncing, I shall leave you with the wise words of Sharon Shedroff, founder of San Diego consulting firm Strategic Vision Inc:

“Until the brand is established, it will be difficult for people to give it meaning in the US and probably in Asia. Brands under it, like Oreo, could lend credibility to Mondelez.”

So why go to the trouble and expense in the first place?


British Airways’ not very Bright move

February 16, 2011

Mystery surrounds, as they say, the unanticipated departure of Kerris Bright, BA’s head of global marketing – which hit the news last week.

Bright lives up to her name. She is a marketing luminary, a Fellow of the Marketing Society, and highly placed in those “power leagues” that do the rounds (usually not far off Aviva’s Amanda Mackenzie in ranking). BA spent about a year head-hunting her after her predecessor – head of marketing communications Katherine Whitton – took voluntary redundancy in 2008.

All to little avail. Though Bright signed up for the BA job about a year ago, she in fact joined in June. So she has served little more than 6 months before handing her notice in.

Ostensibly, she had had an offer she could not refuse from her former boss at ICI, David Hamill, whom she describes as “the most inspirational person” she has ever worked for. Hamill is now chairman and chief executive officer of Ideal Standard International, the bathroom fixtures company. The job he was offering her? Chief marketing officer and a team role in spearheading ISI’s international expansion.

Ideal Standard, the formerly British brand, is now part of an international consortium – mainly financed by private equity specialist Bain Capital Partners – with a focus on Europe and the Middle East. No doubt Bright has been lined up for a cut of the PE action over time – enticement in itself, it could be argued. And no doubt Hamill is every bit as charismatic as he sounds. Nevertheless, the abrupt U-turn in her career aspirations has set tongues wagging about her “real”motives for leaving BA. After all, try as you might to juxtapose Ideal Standard as a brand (under-rated, as it happens) with BA, however degraded it has become, and something doesn’t stack up.

The missing ingredient is called Frank van der Post. Van der Post, formerly chief operating officer of hotel group Jumeriah, was parachuted in last December to fill the new and senior role of BA managing director brands and customer experience. His appointment was part of a top-echelon management reshuffle as BA limbered up for its merger with Iberia, as a result of which BA chief Willie Walsh got to run the new holding company, International Airlines Group.

The important point to note here is that Bright’s immediate boss, sales and marketing director Andy Crawley, was boosted to an executive boardroom role at BA as commercial director with “particular responsibility for exploiting the revenue opportunities” arising from the near £6bn merger. He is no longer BA specific. And what did Bright get out of all this? Very little, except perhaps a smack in the face.

Not only had she not received a promotion herself, she had a new boss, van der Post, whose experience of brand strategy is arguably inferior to her own. All right, he is hugely experienced in the other area of his remit, customer relations. But so he should be, with over 25 years in the hotel business – most of it spent at Intercontinental Hotels Group. With all due respect to the Flying Dutchman, I doubt that he has ever achieved a branding success that bears comparison with Bright’s work for Dulux at ICI then AkzoNobel.

In sum, Bright had been “restructured” out of the strategic part of her role, but left with the less interesting tactical stuff (like dealing with agencies). Not, I imagine, what she thought she had been brought in to do.

Of course, a mitigating case could be made for BA’s behaviour. The chronic industrial unrest that continues to plague it makes the appointment of an experienced customer relations expert a great deal more of a priority than that of a first-class brand strategist. It’s difficult to launch a meaningful corporate brand campaign when so much of BA’s recent past is tainted with the memory of the Terminal 5 fiasco, and so much of its future with the possibility of paralysing industrial action. Furthermore – and I do not know the answer to this – it may be that Bright is more comfortable working with product rather than service brands (check her CV).

All the same, it looks as if BA has made a prime cock-up over the handling of Bright. Now, why does that not surprise me? I wonder how long the company will take to recruit her successor.


Banned pensions ad shows Aviva doesn’t really know what it’s talking about

December 24, 2010

Aviva, one of the world’s largest financial services groups, has been caught with its integrity down by the Advertising Standards Authority.

The offending TV ad  – Aviva is one of our biggest television advertisers – is part of a series starring master-of-many-disguises Paul Whitehouse (the other half of the Harry Enfield comedic duo). On this occasion, he was masquerading as an OAP enjoying the fruits of his retirement in a recently renovated French country house:

Where’s the offence in that, you may ask? It lies in the apparently throwaway scripted line: “Aviva got me nigh on 20% more income from my pension pot.” And a more emphatic end-line to the same effect.

Not true, says the ASA. Despite exhaustive research into its own market place, Aviva simply could not provide substantiation for what it hoped was true: that it offers the best current annuity rates.

The ASA finding is interesting not so much because it exposes a degree of corporate dishonesty in Aviva (BCAP 5.1.1 and 5.1.2), but because it underlines what we have long suspected is the case. That is, the insurance-led pension annuity market is of such complexity and opacity that not even one of the principal operators within the sector really understands it. Ring a bell? Securitised sub-prime mortgages? Lehman Brothers?

Don’t just take my word for it. Here’s the ASA’s assessment, laid out in the mind-sapping and achingly dull analytical detail that is so characteristic of the pensions industry. It’s enough to send anyone but an actuary to sleep. And that, of course, is what the industry has relied upon over the years to lull us into a false sense of security.

But no longer. With so many baby-boomers – the key voting cohort – passing the pension line, annuities have become a hot issue. Most don’t like what they see – and for good reason. Annuity rates are vanishing before their eyes, thanks to the reducing effect of increased average longevity. And they’re equally unimpressed with a lack of industry transparency; and the way that insurance companies are permitted by law to pocket their pension pots once they die.

No wonder the Government is working so feverishly to change the system. Whatever else 2011 brings us, it looks like being the year of the drawdown-friendly SIPP.


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