Sir Philip Green vs Select committee
Discussion
sidicks said:
Nonsense - if you are taking a cautious approach you would hedge the key variables - interest rates, inflation, longevity etc!
And investment strategy is NOT only reviewed every 3 years - the formal fund valuation is carried out every 3 years - that's fundamentally different.
...which are expensive and difficult to find hedges for. Refer back to skinning vs shearing the sheep. And investment strategy is NOT only reviewed every 3 years - the formal fund valuation is carried out every 3 years - that's fundamentally different.
I never mentioned strategy. You did. I agree, fund valuation is measured every 3 years, and that valuation determines the surplus or deficit.
I appreciate robust debate, I do. Look at the Corbyn thread if you wish. Despite which, I cannot let (deliberate?) misunderstandings perpetuate a wilfully antagonistic approach. Did Green want to get shot of a poorly performing company? Probably. Did he deliberately run it into the ground? My view, and the evidence presented in Parliament, suggests not.
I have always thought that DB pension schemes are a millstone around companies' necks. Would I like one? Sure, but then I have to be very awake to the possibility of the sponsor going bust. Otherwise, accept the market risk the rest of us poor schmucks have to live with.
Whoozit said:
...which are expensive and difficult to find hedges for.
And that's still total nonsense!
There's a multi trillion pound industry ('liability driven investment') set up to manage the main market risks for DB schemes . Inflation and interest swaps are tradeable in massive size (multi-billions) with bid-off spreads of less than 1bp.
As an example:
http://www.lgim.com/uk/en/solutions/defined-benefi...
Numerous multi-billion longevity hedges have been put in place by DB schemes, so it's clear you don't have a clue what you are talking about.
Any DB scheme that hasn't chosen to implement rate / inflation hedging on their portfolio has deliberately chosen NOT to follow a cautious investment strategy of this type, in favour of trying to target higher returns by taking investment risk.
Whoozit said:
Refer back to skinning vs shearing the sheep.
Er, yes, whatever you say.Whoozit said:
I never mentioned strategy. You did. I agree, fund valuation is measured every 3 years, and that valuation determines the surplus or deficit.
I guess you're not involved in the industry? While the formal valuation is carried out every 3 years, schemes monitor their solvency positions much more frequently than that and for closed schemes you could easily monitor the high level position on a daily basis in response to market moves.Whoozit said:
I appreciate robust debate, I do. Look at the Corbyn thread if you wish. Despite which, I cannot let (deliberate?) misunderstandings perpetuate a wilfully antagonistic approach.
As far as misunderstanding the management of DB scheme liabilities is concerned, the misunderstanding is entirely yours.Whoozit said:
Did Green want to get shot of a poorly performing company? Probably. Did he deliberately run it into the ground? My view, and the evidence presented in Parliament, suggests not.
I'm not sure either of us has enough of the background to make that judgement (and I've certainly not done so), however as far as the pension scheme is concerned, the Trustees (presumably pressured by Green) deliberately ran a higher risk investment strategy for the scheme which led to the current large deficit. That can't be denied by anyone that understands how this works!Whoozit said:
I have always thought that DB pension schemes are a millstone around companies' necks. Would I like one? Sure, but then I have to be very awake to the possibility of the sponsor going bust. Otherwise, accept the market risk the rest of us poor schmucks have to live with.
No need to accept significant market risk - use LDI to manage that risk, albeit at expected higher cost for employees and employers!Edited by sidicks on Thursday 28th July 07:48
Welshbeef said:
Welshbeef said:
BumpWhoozit said:
Despite which, I cannot let (deliberate?) misunderstandings perpetuate a wilfully antagonistic approach. Did Green want to get shot of a poorly performing company? Probably. Did he deliberately run it into the ground? My view, and the evidence presented in Parliament, suggests not.
I asked before in this thread, but does not the former head of the pension trustees - Dr. Margaret Downes - have more to answer?
She lead the fund (or represented it as Chairman) for more than a decade, is a former director of Bank of Ireland, a former senior partner at Coopers Lybrand, and quite well connected...surely the board of trustees has a major responsibility to it's members and would shout from the rooftops if the main company was 'doing the dirty' on it?
Perma-tan Green might be fly, but he cannot instruct a pension fund to accept insufficient funds, no? Or would he have 'warned' that taking too much money sooner would result in no money later?
She lead the fund (or represented it as Chairman) for more than a decade, is a former director of Bank of Ireland, a former senior partner at Coopers Lybrand, and quite well connected...surely the board of trustees has a major responsibility to it's members and would shout from the rooftops if the main company was 'doing the dirty' on it?
Perma-tan Green might be fly, but he cannot instruct a pension fund to accept insufficient funds, no? Or would he have 'warned' that taking too much money sooner would result in no money later?
crankedup said:
Well yes and no, although you make good points the greed seems manifest in many as if it's the normal way to behave and be congratulated. From the fast food chain store that refused to pay staff on duty at the counter and cooking stations during the time what customer foot fall was low to the car show room with markups of 60% and more simply for putting metal on the forecourt. The airlines who jack up the ticket price when oil price increases but do not lower same when the oil price drops. Same goes for the utility Companies we are lumbered with, in fact it seems an inherent business requirement to maximise profit whilst dropping service levels and front of office staff. We have a long way to drop until we are back to mill owners morals but sure as hell we do seem to be on that trajectory.
I was referring to organisations that are run by a single owner rather than those which respond to share-holders. 'The Market trader' perspective where every single penny counts regardless of whether your selling hooky DVD's down Morecambe Market or 'wide-fitting' shoes to pensioners in BHS. Those like Philip Green who have overseen the growth of their own rag-trade retail empire will still have the same tight-fisted mentality and if they can legally take dividends from BHS whilst under their ownership then they will, and if they can legally move on the business for £1 to pass on the burden of its liabilities then they will do that too.To be clear, Philip Green hasn't done anything illegal with BHS, he's just one of many previous owners of a rapidly out-dated store concept just like Woolworths were and M&S (clothes) will very soon be. Some may say he's behaved unethically but would this even be in the paper if Philip Green didn't own a big yacht?
sidicks said:
Countdown said:
Countdown said:
Reasonably sure. For Trustees the "Employer Covenant" can be difficult to assess, and if the Employer says that increasing future oayments would put pressure on the organisation the Trustees would worry about killing the goose that lays the golden egg. From a practical point of view it's always better to stay on good terms with the Employer rather than falling out with them as it makes future negotiations tricky.
Yes, I realised what you were saying, so deleted my posts.However, my point is that if the Trustees did not believe he was paying as much as could be afforded, they do have actions they can take, they don't just have to accept a lower amount!
The Surveyor said:
I was referring to organisations that are run by a single owner rather than those which respond to share-holders. 'The Market trader' perspective where every single penny counts regardless of whether your selling hooky DVD's down Morecambe Market or 'wide-fitting' shoes to pensioners in BHS. Those like Philip Green who have overseen the growth of their own rag-trade retail empire will still have the same tight-fisted mentality and if they can legally take dividends from BHS whilst under their ownership then they will, and if they can legally move on the business for £1 to pass on the burden of its liabilities then they will do that too.
To be clear, Philip Green hasn't done anything illegal with BHS, he's just one of many previous owners of a rapidly out-dated store concept just like Woolworths were and M&S (clothes) will very soon be. Some may say he's behaved unethically but would this even be in the paper if Philip Green didn't own a big yacht?
YesTo be clear, Philip Green hasn't done anything illegal with BHS, he's just one of many previous owners of a rapidly out-dated store concept just like Woolworths were and M&S (clothes) will very soon be. Some may say he's behaved unethically but would this even be in the paper if Philip Green didn't own a big yacht?
Mainly due to his tax planning / wife owns everything guff
J4CKO said:
Simplistic question, but could Green actually, easily plug the BHS pension hole ?
I dont doubt he could, but does he have 500 million plus sat in liquid cash, could he write a cheque or is his wealth tied up in shares, property etc ?
Unlikely I know !
I read an article in the evening standard yesterday that said for him to do so, he'd have to repatriate a lot of offshore cash, thereby triggering a large UK tax bill.I dont doubt he could, but does he have 500 million plus sat in liquid cash, could he write a cheque or is his wealth tied up in shares, property etc ?
Unlikely I know !
Edit to say....it was in the Daily Mail:
http://www.dailymail.co.uk/news/article-3707837/AL...
Edited by LeoSayer on Thursday 28th July 13:15
I have posted already on my frustration at the lack of legislation or the inability or reluctance of the appropriate authorities to take firm action against large corporations and businesses when they operate,at the edges or,beyond acceptable business practice.
The big problem is how to frame that legislation so that ......
1) It does not discourage the entrepreneur from growing his business with too much red tape.
2) It does not encourage overseas investment to do business in other countries with less onerous legislation.
To really work effectively there needs to be agreement by all the large trading blocs to agree to the same legislation and I sadly don't think there's the will to do that.
To many vested interests and gravy trains.
In the USA I believe several persons have been jailed for their part in the banking fiasco,none in the UK.
Fred the Shred has had his knighthood taken away but kept his huge pension and benefits.
Sorry to bore you with my disgust at the banking scandal but so much damage has been done to the standard of living to our and our children's financial future so few of the individual's have paid the price for their involvement in the affair.
I am aware that some of the banks have been heavily fined.
The big problem is how to frame that legislation so that ......
1) It does not discourage the entrepreneur from growing his business with too much red tape.
2) It does not encourage overseas investment to do business in other countries with less onerous legislation.
To really work effectively there needs to be agreement by all the large trading blocs to agree to the same legislation and I sadly don't think there's the will to do that.
To many vested interests and gravy trains.
In the USA I believe several persons have been jailed for their part in the banking fiasco,none in the UK.
Fred the Shred has had his knighthood taken away but kept his huge pension and benefits.
Sorry to bore you with my disgust at the banking scandal but so much damage has been done to the standard of living to our and our children's financial future so few of the individual's have paid the price for their involvement in the affair.
I am aware that some of the banks have been heavily fined.
Edited by avinalarf on Thursday 28th July 13:32
avinalarf said:
I have posted already on my frustration at the lack of legislation or the inability or reluctance of the appropriate authorities to take firm action against large corporations and businesses when they operate,at the edges or,beyond acceptable business practice.
Authorities can only work on the legal aspects not moral ones.avinalarf said:
The big problem is how to frame that legislation so that ......
1) It does not discourage the entrepreneur from growing his business with too much red tape.
2) It does not encourage overseas investment to do business in other countries with less onerous legislation.
To really work effectively there needs to be agreement by all the large trading blocs to agree to the same legislation and I sadly don't think there's the will to do that.
To many vested interests and gravy trains.
Or more realistically that you can't have rule based on a interpretation of what is 'moral'.1) It does not discourage the entrepreneur from growing his business with too much red tape.
2) It does not encourage overseas investment to do business in other countries with less onerous legislation.
To really work effectively there needs to be agreement by all the large trading blocs to agree to the same legislation and I sadly don't think there's the will to do that.
To many vested interests and gravy trains.
avinalarf said:
In the USA I believe several persons have been jailed for their part in the banking fiasco,none in the UK.
You can only jail people for illegal behaviour, not for immoral behaviour. I though some people had been jailed in the U.K.?avinalarf said:
Fred the Shred has had his knighthood taken away but kept his huge pension and benefits.
Wasn't his pension significantly reduced? What benefits are you referring to?avinalarf said:
Sorry to bore you with my disgust at the banking scandal but so much damage has been done to the standard of living to our and our children's financial future so few of the individual's have paid the price for their involvement in the affair.
That sounds like nonsense to me - I what way has this damage occurred?My understanding s that the large dividends were taken whilst BHS was profitable and the pension scheme was balanced. However, there is a myriad of creative accounting foibles. Firstly, there is a long time between accounting reporting periods.Were appropriate reviews carried out inter period to assess the prudence of making 200M or whatever the dividends were.
I have no idea how big the pension scheme was when balanced but to be 500M in deficit sounds like a massive fall. It very much sounds like incompetence in the trustees as well. What were they holding as investments. One would hope very conservative assets like MM instruments, bonds and other fixed income,
Green has a big problem. Trial by public opinion. Avoids taxes via his wife. Owns two super yachts. keeps a permanent resident at the Dorchester. Almost certain to lose his knighthood. One would think common sense would prevail and he would offer £50M p.a for 10 years.
I have no idea how big the pension scheme was when balanced but to be 500M in deficit sounds like a massive fall. It very much sounds like incompetence in the trustees as well. What were they holding as investments. One would hope very conservative assets like MM instruments, bonds and other fixed income,
Green has a big problem. Trial by public opinion. Avoids taxes via his wife. Owns two super yachts. keeps a permanent resident at the Dorchester. Almost certain to lose his knighthood. One would think common sense would prevail and he would offer £50M p.a for 10 years.
re Fred Goodwin, yes he had a £700K p.a pension. He agreed (forced) to give up £200k.
True story, I did a stint at RBS. Fred didn't want anyone to know he has a private jet so the bank purchased an aircraft leasing company. Technically the other company owned the jet, not RBS (no jet on the books thanks) They kept the jet in France. The costs to run it were much greater than normal because the crew had to fly into the UK to pick him up. Aviation rules meant an overnight for the crew. I recall a flight to Spain would cost all in about £150k when you factored in the frequency and running costs. His wife and friends used the jet, his wife has a high end car with driver. That guy absolutely milked that cow(the bank) for all its worth. He was so arrogant, he bought ABN Amro and didn't even conduct proper DD. £10B in toxic debt was lurking on their balance sheet. The guy single handedly destroyed ABN/RBS and sucked Billions from the treasury.
True story, I did a stint at RBS. Fred didn't want anyone to know he has a private jet so the bank purchased an aircraft leasing company. Technically the other company owned the jet, not RBS (no jet on the books thanks) They kept the jet in France. The costs to run it were much greater than normal because the crew had to fly into the UK to pick him up. Aviation rules meant an overnight for the crew. I recall a flight to Spain would cost all in about £150k when you factored in the frequency and running costs. His wife and friends used the jet, his wife has a high end car with driver. That guy absolutely milked that cow(the bank) for all its worth. He was so arrogant, he bought ABN Amro and didn't even conduct proper DD. £10B in toxic debt was lurking on their balance sheet. The guy single handedly destroyed ABN/RBS and sucked Billions from the treasury.
sidicks said:
avinalarf said:
I have posted already on my frustration at the lack of legislation or the inability or reluctance of the appropriate authorities to take firm action against large corporations and businesses when they operate,at the edges or,beyond acceptable business practice.
Authorities can only work on the legal aspects not moral ones.avinalarf said:
The big problem is how to frame that legislation so that ......
1) It does not discourage the entrepreneur from growing his business with too much red tape.
2) It does not encourage overseas investment to do business in other countries with less onerous legislation.
To really work effectively there needs to be agreement by all the large trading blocs to agree to the same legislation and I sadly don't think there's the will to do that.
To many vested interests and gravy trains.
Or more realistically that you can't have rule based on a interpretation of what is 'moral'.1) It does not discourage the entrepreneur from growing his business with too much red tape.
2) It does not encourage overseas investment to do business in other countries with less onerous legislation.
To really work effectively there needs to be agreement by all the large trading blocs to agree to the same legislation and I sadly don't think there's the will to do that.
To many vested interests and gravy trains.
avinalarf said:
In the USA I believe several persons have been jailed for their part in the banking fiasco,none in the UK.
You can only jail people for illegal behaviour, not for immoral behaviour. I though some people had been jailed in the U.K.?avinalarf said:
Fred the Shred has had his knighthood taken away but kept his huge pension and benefits.
Wasn't his pension significantly reduced? What benefits are you referring to?avinalarf said:
Sorry to bore you with my disgust at the banking scandal but so much damage has been done to the standard of living to our and our children's financial future so few of the individual's have paid the price for their involvement in the affair.
That sounds like nonsense to me - I what way has this damage occurred?As for the damage .....QE....pumping billions of pounds to support and shore up bank balance sheets so that they remained solvent and were able to continue lending.
This amount of QE has unknown consequences and ,at the least ,will fuel inflation.
There are many other ways the banking fiasco has damaged economies and personal circumstances that I haven't the time to post right now.
I do not believe that Corporations and Banks should be allowed to operate in a way that severely damages either the environment or other peoples rights of a decent lifestyle.
They and individuals they employ should be held accountable and I give you the sanctions against BP in the USA as an example.
Don't get me wrong,I don't think that legislation ought to be in place that stifles all growth or entrepreneurship ,simply that the worst excesses of Capitalism are curbed, so that there is a level playing field for those banks and corporations and individuals they employ that are socially responsible are not disadvantaged by those that behave in a socially irresponsible manner.
Tell me if I'm wrong......
If Green had kept the property portfolio on the BHS books he could have used them as collateral to borrow to invest and modernise BHS.
Or he could have sold them, if and when necessary,at proper market prices, rather than to his wife.
What about the large dividends he awarded himself.
If he had been less greedy and took more modest dividends the company would probably have remained viable.
Had he behaved as above he still would have been a very wealthy man,and good luck to him,and his reputation would be intact.
Now there is an argument to suggest that the best days of BHS and similar stores have past.
There is some truth in that, but only if they are allowed to stagnate and they do not have the adaquate management to take advantage of the changing retail environment.
If Green had kept the property portfolio on the BHS books he could have used them as collateral to borrow to invest and modernise BHS.
Or he could have sold them, if and when necessary,at proper market prices, rather than to his wife.
What about the large dividends he awarded himself.
If he had been less greedy and took more modest dividends the company would probably have remained viable.
Had he behaved as above he still would have been a very wealthy man,and good luck to him,and his reputation would be intact.
Now there is an argument to suggest that the best days of BHS and similar stores have past.
There is some truth in that, but only if they are allowed to stagnate and they do not have the adaquate management to take advantage of the changing retail environment.
green has flagged that in selling it for £1 he also gave £200million in cash so where has this gone? How have they burned through £200m of cash in a year ? In essence he gave back half of what he took out in dividends.
Lastly what did he buy BHS for?
How much did he take out in dividends
Then he sold for £1 but had to invest £200m as part of that deal.
I'm wondering if actually he gained anything from owning it at all/possibly loss making to him all up.
Lastly what did he buy BHS for?
How much did he take out in dividends
Then he sold for £1 but had to invest £200m as part of that deal.
I'm wondering if actually he gained anything from owning it at all/possibly loss making to him all up.
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