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Fat Cats

All you can do with a fat cat, to slim him down ? He needs to consume less.

I once had cause to take a cat to a vet.

The vet, a sensitive and caring professional, wanting to ensure the cat was in good health, now and into the future, sensitively advised me of an issue which would later (if not sooner) impact the said cat.

The vet suggested that the cat needed to… errrmmm… consume less… and that’s all you can do with a fat cat – to slim him down, he needs to consume less.

The rise of the “fat cat” is a matter of public record. But there are truly some absolute horrors out there, who bring big business into disrepute; who under-perform and over-reward and who could (arguably) be removed without any material difference to the company’s performance.

In a previous vent, I’d posited that personal greed was one of the great Corporate Evils. And there are three who exhibit this evil in a manner that is eye-wateringly gratuitious and show the fat cat in the starkest light possible – PhilGreen, MartySorrel, MickeyAshley (names changed (hopefully enough) to avoid search engines).

These three men rightly deserve reward for enterprise, endeavour and entrepreneurship – that’s a simple fact.

But when and why does ‘reward’ become ‘greed beyond the dreams of avarice’; to the point that the simple gall of their demand (on top of already havivg wealth beyond measure) become intolerable ?

Sorrel’s “demanded” (yes, he “rightly expected” this) remuneration of some £75million doesn’t speak to corporate performance one jot. It shows the levels of greed and complete lack of understanding of the world we’re presently in. He has lost touch with reality in such a way that beggars belief and asks some bigger questions about the worlds in which these people live.

On June 7th this year, MickeyAshley said to a Commons Select Committee – “The value of Sports Direct is its people.

Honestly, I don’t think he had any idea what he was saying, let alone any belief in what he was saying. Listening to him being interviewed, it was clear he had but one interest – the shareholder.

Post-Brexit, I heard a “captain of industry” interviewed, saying he would “continue to work for the good of his shareholders.

I still don’t get this. Of all the people connected with any company, the employees, the customers, the one group which seems to stand above both is the shareholder… and, aside from a casual and transitory gamble on the company’s performance, he has absolutely no skin in the game, and invariably no interest in company beyond making a quick return before going on to bet on another.

Now I get what Capital Markets are intended to do, I really do. Business needs capital. To raise capital you need to sell (a portion of) the business. Aside from organic growth, this is the only way any company can get a financial boost.

But this is where capital markets stop providing any benefit. Once the capital is in place, the ownership is free to be transferred, and subsequent shareholders take on the stake, not as an investment because they believe in the company, the product, the market, but as a “gamble on performance.” The original capital investor is now gone, and the new shareholder has no interest beyond seeing his horse come in first.

A punter betting on a horse is not the first and only person the trainer thinks of. So why is it the case that the shareholder gets consideration ahead of the employee and the customer ?

I had the pleasure to work for a private company many years ago. No shareholders… just employees and customers… in that order.

I was based out to the European head office and on the boardroom wall was a plaque and a quote from one of the companies founders. It was an epiphany.

Herbert Fisk Johnson Sr., the second generation leader of the company that bears his surname, said, in December 1927, just a few months before he died, when explaining his underlying philosophy to employees at a Profit Sharing Meeting:

When all is said and done, this business is nothing but a symbol. And when we translate this, we find that it means a great many people think well of its products, and that a great multitude has faith in the integrity of the people who make this product.

The goodwill of people is the only enduring thing in any business. It is the sole substance. The rest is shadow.

That, Mr. Ashley, is a man who understands and appreciates those who work to make his company a success and provide him with a standard of living others can only dream of. Yes, it’s reward for endeavour and entrepreneurship. But more than anything else, it’s a reward for doing the right thing by the right people… and not some faceless punter with no skin in the game.

Fat Cats won’t slim down until companies return to understanding that their primary concern is to their employees, followed very closely by their customers. Anyone who wants to have a punt on the company is free to do so, but he should have absolutely no consideration in any aspect of the company beyond that. Then and only then can some very unhealthy, financial-obese, people start to slim down and enjoy a healthier life style… and others might share in the wealth their own efforts have gone some way to create.