Review from The Director magazine, March 2004, by Carol Kennedy.

"If the Higgs report sparked annoyance in boardrooms, this book will cause apoplexy. Yet it should be read, because its arguments are well researched, more measured than the title suggests, and come from two authors with experience in companies as diverse as Unilever, Thorn EMI and Redland.
Its core criticism of top UK management goes far beyond excessive boardroom pay, though it is scathing of the 'brotherhood' of executives who sit on remuneration committees with a 'shared perception that generosity given may mean generosity received'.
The authors point out that highest-paid FTSE directors now receive 68 times the pay of the average employee - a bigger differential than in any developed country apart from the US.

But the book is more concerned that British industry is being weakened by an unhealthy symbiotic relationship with the financial markets and a relentlessly short-termist view of shareholder value. Young and Scott argue that 'top managers tend to be rewarded for creating a high share price, not a good company'.
Top UK management is among the world's most active in M&A, in selling and buying assets and in financial engineering. Many mergers and takeovers fail to create sustainable value, but the deal-making culture is so entrenched that fund managers and corporate managers are wedded to it.

This has led to a massive sale of British assets: over 50% of British exports now come from foreign-owned firms.

In the 1970's, say Young and Scott, managerial values were focused on stewardship (not correct, we said that this was a timeless virtue, only practised by the best in the 1970's, as today - authors) -handing on a company in better shape than before. To-day, the emphasis is on the creation of financial value for (predominantly institutional) shareholders in the shortest possible time.
'Today's top managers .....seem compelled to think of their enterprises as bundles of assets or activities that can be shuffled, bought and sold'.

Meanwhile, directors' and CEO's tenures are getting shorter whilst their rewards, tied to share value, are soaring; a combination that results in 'responding to the constant demands of sell-side analysts, and the media'.

In a devastating comparison, Young and Scott list factors favoured by institutional investors, such as 'biddable' companies and managers who engage in a high level of corporate activity, with the tenets of Warren Buffett, the world's most successful investment guru, who looks for long-term returns and companies with a consistent operating history.

The book's recommendations for restoring integrity to the 'system' rest on a change in investor behaviour (with more pro-active non-execs. This may be whistling in the wind, but this book deserves attention in every boardroom, not least for its chapter on management factors that get companies into difficulties'.

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