The MoneyWeek manifesto

Companies are all too often run for the benefit of the board at the expense of investors, says Merryn Somerset Webb. That needs to change.

Want to make $500,000 a year? How about getting into the aid business? I interviewed Africa expert and author of The Rift, Alex Perry, earlier this week. Get a job helping to sort out the misery that the aid agencies tell us is Africa, and your package won't come in much below that of a London fund manager's. That's nice for the employee (if not for the donors or the needy). But it epitomises the way the aid industry has become corrupted by money.

As Perry puts it: "If you pay that much money, what kind of person applies for the job? The kind of guy who's interested in a lot of money; not the guy that's doing it out of the goodness of his heart... Combine that with a culture in which there's almost no checks and no accountability (and) you have a guy that messes up in South Sudan, gets promoted, and goes to eastern Congo and makes even more money... It's a systeman institutionalised system."

I suspect the sentiments are familiar.It is all about how money skews incentives. Should an aid worker be well paid? Sure.But not so much that the main aim of aid (doing the basics well and leaving) is forgotten. Should a council chief be paid well? Sure, but not so well that the cost of his pension pot bankrupts local services. Should a fund manager be paid well? Yes. But not with bonuses that give him an incentive to ignore the wellbeing of his end customers in favour of index tracking and asset gathering.

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And what of corporate executives? Should they be paid well? Again, yes. But their packages should not be so huge that they promise the potential to transform the finances of their families for generations to come. Otherwise executives end up doing all they can to hit the targets that will effect that transformation. And who wouldn't?

We are all for money: earning lots of it; making lots of it via our investments; and building the ability to spend lots of it. We love money. But we also know how it skews behaviour. Would VW bosses have allowed cheating on emissions tests if it made no difference to their incomes? Would Glencore executives have borrowed their way to disaster, or US CEOs indulged in endless buybacks to force share prices to bubble levels, if pumping up shares wasn't going to make them rich? We doubt it.

And what of dividends? Dividend cover (which measures the ability to actually pay the dividend) is at a 20-year low in the UK. Boards have bumped up payouts to keep share prices up but they might not be able to maintain these levels for much longer. We've had enough of all this manipulation at MoneyWeek. We're investors too, and we want the firms we own to be run in our interests, not in the interests of their corporate executives.

So we are putting together a MoneyWeek manifesto a list of changes we want and are going to keep pushing for. John has outlined the first four things in this issue. Watch this space for the rest.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.