29/04/2016 BBC Business Live


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This is Business Live from BBC News with Victoria Fritz


Executive pay is in the spotlight again as the UK's second biggest


drugmaker, AstraZeneca holds its AGM.


But in the past few weeks have seen executives at oil majors,


mining firms and media giants have have their pay deals rejected


Live from London, that's our top story on Friday the 29th April.


Are the big bosses getting paid to much?


Can the advertising boss, Sir Martin Sorrell, justify his 100


Judging from the mood - as the AGM season gets underway -


Also in the programme...tens of thousands


of fans are flocking to Omaha in Nebraska this weekend.


Not for a festival or concert - but to the annual shareholder gig


held by the legendary investor and money maker Warren Buffett.


We'll have report on one of the world's savviest investors


you the latest from the financial markets where Europe is already


And we'll be getting the inside track on what the world's


top central bankers have been up to, the state of the auto industry


As always, we would love to hear from you. Just drop us a step --


just drop us a line. We are talking big bucks this Friday


- specifically the controversial Are top bosses worth


the money they earn? biggest companies hold their annual


shareholder meetings. More and more -


the answer seems to be no. Earlier this month, BP shareholders


revolted over a big pay rise for the boss Bob Dudley -


awarding him $20 million despite record losses


at the oil giant. Almost 60% of shareholders


voted against it. Just a week later, Anglo American


shareholders also revolted. The CEO was in line


for a $5 million payout - despite Anglo being the worst


performing company Today the boss of drug


company AstraZeneca - They're expected to cry foul


over the $12 million Mr Soriot rejected a takeover bid


from Pfizer two years ago. All


of these pale into insignificance Sir Martin Sorrell, of the world's


biggest advertising company WPP - is due for a $100 million pay


package - most of it in performance related share awards -


he could face a rocky ride They'd have you with us. We have


been about this 2012, we saw a shareholder spring. Is it that? It


looks like it. Given the fact that companies have been doing less well


in the financial markets, shareholders are up in Mark -- up in


arms. In particular, given the new cable regulations coming in, giving


shareholders a binding vote on executive pay, that has focused the


spotlight on shareholders voting on executive compensation. I would say


that basically, when it comes to that, shareholders need more


alignment of compensation with performance. Can I ask you that? For


our viewers around the world, you mentioned Vince Cable, the Business


Secretary in 2012. He implemented some rules. Is there a difference?


Between some of these CEOs? We cannot put them all into one basket.


Martin Sorrell said that he spent 31 year building it, and he is backing


the company. That is a different picture than Bob Darley who look


over the -- looked over the biggest failure in the history. CEOs can be


paid in terms of the value they add, or the what they would get


elsewhere. So insect -- so executive compensation could be in between the


two. It depends on market conditions. The market is looking


less attractive, and so shareholders are being more exacting on executive


compensation. That is why we are seeing more of a revolt on executive


pay. It is interesting, because many of the major shareholders in


companies are fun urgent -- managers. This poses some sort of


conflict of interest when they are investing themselves, but act --


particularly in financial institutions. I have done research


in this area, and what I found is that when fund companies vote on


other fund companies, they are more supportive of these companies than


they are of other companies outside of the financial sector. This might


be driven by social ties between these companies, so if I work for a


financial company, company one, then I might be concerned that I want to


get a job at company to, and so I am going to vote more favourably with


them. Tit-for-tat voting can be important. If company one owns


shares in company 2, they will be concerned that company 2 will vote


against it. A complete conflict of interest. At the end the day, the


financial crisis, and one of the reasons for the financial crisis, it


is being blamed on the poor governance of financial companies a


financial companies are the policeman of other financial


companies, what will be expecting terrapin we had to leave it there.


Shares of online retail giant Amazon have jumped in after hours trading -


after it said sales rose 28 per cent in the first three


months of the year - to more than 29 billion dollars.


Profits hit $513 million - both were better than


Amazon's been boosted by rising sales of its


It's also seeing strong growth in customers for its Prime service,


which includes free delivery and TV shows - as well as in its


Comcast has confirmed its NBCUniversal unit will buy


DreamWorks Animation for $3.8bn in cash.


DreamWorks is the studio behind a string of animated hits films


including Shrek and Kung Fu Panda - but has been losing


The deal will put Comcast in direct competition with Disney.


Dreamworks Animation shares surged 24 per cent on confirmation


My teeth have not been in all morning!


And the US car giant Ford has made record quarterly profits


of $3.8 billion - on strong sales in Europe -


and a revamped range of trucks in North America.


Ford shares were boosted further - after the Chief executive


Mark Fields confirmed Ford is working on an electric vehicle


with a 200 mile range to match rivals from Tesla


Are you going to help me with my teeth today? Not the scripts! Let's


have a look at the website. I AG, the airline group, the parent group


of British airways. A good first quarter. Pre-tax profits have jumped


to 124 million euros. About $140 million. This compares to the same


period a year ago, when they had an loss of 37 million euros.


Interesting, the comment about trading remaining the same, despite


attacks. They are keeping their eyes attacks. They are keeping their eyes


on the rest of the competition. Italian luxury goods maker Gucci has


sent warning letters to Hong Kong shops selling paper versions


of its products as Paper replicas of items


like mansions, cars, iPads and luxury bags are burnt


in the belief that deceased relatives can use them


in the afterlife. Juliana Liu is in Hong Kong and has


more on the story. I understand this is all about


keeping your relatives happy in the next life. Presumably, they are


going to be buried happy with Gucci handbags? Absolutely, especially


ones that were not able to afford these handbags when they were still


alive. I went to visit some of the shops, and I can tell you that Gucci


handbag and a pair of shoes costs just ?4 when they are made of paper!


This comes from a long try knees traditions -- Chinese tradition of


worshipping your ancestors. Their spirit remains somehow alive, and


they are able to influence what happens in the land the living. If


you want to avoid a run of bad luck, you have to keep your ancestors


happy. In the past, that done by burning paper notes, so fake money,


but these days, ancestors are much more demanding and they want iPads,


they want mentioned, they want Gucci! This is what their


descendants burn. Very demanding and since -- ancestors!


Let's have a quick look at the markets. The Japanese yen is going


strong. Let's have a look at the Nick Hayden. That is the second day


that we have seen falls of 3%. This is how it is across Europe. Spain


has defied expectations that GDP and economic growth would slow. Their


economy expanded by 0.8%. That is despite the recent political drama


there. Crossing over to the States. Let's hear from Michelle Fleury.


Inflation will be an investors' minds. The PCE price index is


released. It is expected to show prices rising below the Fed's target


of 2% a year. One factor in that is the very low price of oil. Possibly


good for consumers, but terrible for the big oil companies. The biggest


in America, Exxon, is expected to report a drop in profits after the


indignity of having it credit rating cut for the first time in 86 years.


But it is still in better shape than Chevron, who is expected to report a


loss for the fourth -- loss for the quarter.


Joining us is Bronwyn Curtis, Chair, Society of Business Economists.


You just got back from down under. It was sunny and warm! Let's talk


about the markets. We have seen a lot of movement on the currency. The


dollar is down, the Japanese in -- Japanese yet is up. It just seems


that the markets and investors are all waiting for something, I am not


sure what they are waiting for. It is the uneasy period. They are


waiting for the Central banks, they are waiting for government, probably


to do stimulus. When the Fed met this week, they talked about global


risk, and moved it down, but we expected the central bank of Japan


to do something and they did nothing. It is less risky than in


January, when everyone was worried about China. The numbers from China


are coming a bit better, but I am worried when we see big moves in


currencies, because it usually means that something is going to happen.


The worst big move is when the dollar goes up, and it is going down


at the moment. We should seek slightly positive numbers, but it is


the awful feeling that is it selling may and go away? So we have two or


three weeks before we sell in May and go away into -- until September?


Speaking of the dollar, you said it was coming down. The strong dollar


has been a real problem for America recently. We did have some figures


out from America when it came down to GDP in economic growth. They


weren't great, but we also did hear from the Federal reserve, and they


offer little is fairly bullish on the ballot for the American economy.


I wonder how significant those numbers are going to be? I think


everyone is watching those numbers, plus the GDP numbers, but the


inflation numbers, as we talked about earlier, really important


today, because we are seeing Germany back in deflation, we are seeing


Japan with deflation. That is going to be the key. I am still looking, I


still think there is a good chance that the federal reserve will hike


rates in June. So your money is on June. Bronwen, you are going to take


us through the papers. We will see very shortly.


Legendary money Warren Buffett hold his annual gig in Omaha,


Nebraska tomorrow - tens of thousands flock


to the annual shareholder meeting of Berkshire Hathaway.


We find out what the future holds for Mr Buffett and his company.


You're with Business Live from BBC News.


Part-nationalised Royal Bank of Scotland has reported a widening


first quarter loss on Friday as lower income, restructuring costs


and sluggish assetsales showed the scale of problems


RBS reported a loss of ?968 million, up from ?459


The losses were also driven by a one-off ?1.2 billion payment


to end the British government's priority over dividends.


Michael Hewson is Chief Market Analyst at CMC Markets Credit


We are seeing some interesting numbers coming out of RBS. We are


seeing losses more than double. ?238 million worth of restructuring


costs. Is this a bank that is actually on track when it comes to


restructuring and getting back into private hands or no? I think that is


a very difficult question to answer. These restructuring costs are coming


down very slowly but there is a long way to go and yesterday we heard


that RBS are likely to miss the deadline for spinning off those


particular branches as a result of the state aid rules. I am not overly


optimistic that we will get any good news from RBS at the moment, that


being said, I think the share price being down should be fairly limited.


We are still above the lows that we sure -- we saw earlier this year.


The upside is also likely to be limited though by the very


full-court environment RBS is operating in. How difficult do you


think the spin off of Williams and gain will be for RBS? It will be


very problematic because for every month they push that out, it will


increase their restructuring costs. They are already at ?1.5 billion and


it is estimated it will be ?50 million extra per additional month.


RBS will come back to us in respect of what that will cost going forward


but it is likely to be very problematic. We will leave it there.


The share price has been losing team in early trade.


Of course here, a lot of stories about the BHS sagas and Sir Philip


Green and the pension scheme, did it have enough assets when he flubbed


it. Yes, for just ?1 and now it have


gone bust the pension hole of ?575 million.


You are watching business live. -- You're -- watching Business Live -


Are the big bosses The boss of drug company AstraZeneca


- Pascal Soriot faces They're expected to protest


over the $12 million And judging from the recent mood


at a raft of recent AGMs, they are indeed. Not with mighty


though. I didn't have those in today.


And now let's get the inside track on stories making waves this week


with our Economics Editor, Kamal Ahmed.


It is good to see you. Let's start off with the general theme of the


global economy. The central banks we were just talking about. The Bank of


Japan, so much expectation, the Federal Reserve did nothing. New


Zealand did nothing. What does that tell us? New Zealand central bank,


interest rates still at 2.5%. The key point here is that we are now


seeing reflected in the great figures the turmoil that we were all


reporting on in the first three months of the year which was around


China's slowdown, market falls and also very low commodity prices. We


are looking now at a picture, slightly in the rear-view mirror, of


January to March. In America overnight they have announced graph


-- great figures that are the slowest in two years. That is over


company investment, in particular over the low oil price. In the UK,


we announced to hear that our growth was slowing as well and as you say,


Aaron, even Japan, the central bank governor decided not to do anything


on rates, not wanting to drive them all into negative territory, because


there has been little response to what he did earlier this year. The


yen has actually strengthened despite him putting in negative


rates. That has meant that people are not sure what this very odd


monetary world we now live in has on the markets. The reason you touched


on volatility, I think, is because a lot of this is political. Markets


are looking at central banks and not being quite sure where they are


going to go and are therefore reacting very strongly to quite


slight signals. Nobody seems to know what is coming around the corner, it


does seem. It certainly appears much more dovish now from the Fed, I


would say. I know Bronwen said let's go for June, but some are saying not


to until December. They did hint they might raise rates by four times


this year. No one expects that any more. We have heard from Twitter,


Apple and Facebook this year. A different story that seems to be


emerging when it comes to the social media giants of the world. Take us


through those. Apple, its revenues well for the first time in 13 years.


That has created an issue around its share price which has fallen by 10%.


We have heard the news that one billionaire investor has withdrawn


all of his stake from Apple. Let's not forget they are an extremely


profitable business though. A business that in the smartphone


business still leads the world. There is some slowing in that but in


terms of the actual business, doesn't seem to be a problem.


Facebook doing incredibly well on smartphones in particular.


Advertisers flowing to Facebook. It has started using video, Instagram


and messenger, so growing and Berry, very powerful figures. Its share


price is now four times what it was at the original offering. Then you


come to twitter. A social media company that is struggling to find


new uses and is really struggling to prove to its investors that it has a


revenue model, and advertising model. So the three stories are very


different but tell us a lot about how the market is working.


To the US, where tens of thousands of investors are flocking to Omaha,


Nebraska for the annual shareholder meeting of Berkshire Hathaway.


Through half a century, three the ups and downs of the stock market,


there is one ambassador that everyone has followed - Warren


Buffett. His strategies appear to be quite simple. He buys stocks and


goods that we use everyday. His investment empire includes close 90


companies with many household names like Walmart and Coca-Cola. Since he


started buying shares in the 1960s, the company has had an average


annual growth of over 19%. That is nearly double of the assembly by the


hundred. Its shares have riven -- risen 2000% in the last 25 years


alone. But as shareholders of Berkshire Hathaway gather, there is


one concern. Warren Buffett is getting old and his number two is


even older. He will be the beach of the company? Given the unique nature


of Berkshire Hathaway, my sense is that a successor will emerge from


within the company. Another thing to consider is that an argument could


be made for breaking up Berkshire Hathaway and that "Another list of


speculations. On Saturday, tens of thousands of shareholders will


gather to cheer yet another year of Warren Buffett's unparalleled


success. But one question on their minds will be, how much longer can


he continue? Let's get back into it. Why did one


billionaire investor drop all of his investment in Apple? If I had made


$2 billion from my investment, I might take some money out as well.


He only had it for three years? Yes. He got them to do some things with


his cash and had some things changed. He feels that Tim Cook is


doing a good job and wanted his money back. Really it is about


China. The Chinese have stopped iTunes movies and books being sold


in China and he is worried that a lot more revenue is coming from


those apps rather than from the actual phones which, as we said a


moment ago, are going down. We have only got about 15 seconds left, so I


don't think will get to the other paper, but they are worried that


China is Apple's future growth market but China is a problem.


Sorry, short but sweet. Great is the youth.


There will be more business news throughout the day on the BBC Live


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