08/06/2016 BBC Business Live


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This is Business Live from BBC News with Ben Thompson and Sally Bundock.


Will shareholders take on Sir Martin Sorrell?


He is the boss of the world s biggest ad firm WPP -


Live from London, that's our top story on Wednesday, 8th June.


How much is too much - that's the question facing


The company's boss Sir Martin Sorrell is the highest paid


He says he deserves over $100 million.


Also in the programme, the world's second-largest


shipbuilder Daewoo has had is offices raided in South Korea


as part of an investigation into alleged accounting irregularities.


The markets look like this. Not a great start for the markets


across-the-board. Is this profit taking? Is there something more


sinister going on? We will explain. We'll be getting the inside


track with the boss Founded in 2003 in a spare room it's


now worth more than $1.5 billion. We'll explain why the boss prefers


to be called a rabbit, As one Harvard professor says


we shouldn t love our flaws He says it can prevent


you from succeeding. So is it time we ditched


the self-confidence and learned to admit


our weaknesses at work? Let us know, use the


hashtag BBCBizLive. My weaknesses are displayed in a


public way on this programme! Executive pay is once again


in the headlines as shareholders seek to vent their frustrations


at bumper pay packets Today it's the turn


of Sir Martin Sorrell, the Chief Executive of the world's


largest advertising agency, WPP. He'll face investors at the firm's


annual general meeting. Mr Sorrell is the highest paid


Chief Executive in the FTSE 100 and is in line for a total payout


of around $102 million. He argues that his compensation


packet is heavily weighted towards the company's share price


and that "if WPP does well, WPP announced in March


that its annual pre-tax profits rose 2.8%


to $2.2 billion. But despite this the Shareholder


advisory group ShareSoc has recommended its members to reject


the package saying that they "don't think it will make him


work any harder." Not all bosses believe


in performance-related pay though. The Chief Executive


of Alphabet, the parent company of Google, accepts


an annual salary of just $1. Although it should be said


that his 6.5% stake in the firm does With me now is Oliver Parry,


head of corporate governance Oliver welcome to Business Live. The


first question, is he worth it? If you look at what happened with


respect to the shares over the last five years, they have more than


doubled. Profit in that time is up at ?10 billion. The FTSE has only


risen by 5.8%, shareholder are receiving significant returns. When


he bought that company up, he lives and breathes the brand, I think he


probably is, but the quantum is extremely We talk about large. The


shareholder activism. We have seen a big upswing in the number of


shareholders who are getting vocal about the pay to top bosses, the


question is whether they have the power to change anything? They do,


when it is a vote. I think it is really crucial that the board and


the shareholders engage with one another. So yes, it is great when


there is a majority shareholder vote against such as we saw at BP, but


there needs to be regular engagement between the board and the


shareholders. A lot of this is paid in shares to Sir Martin. As he said


when the firm does well, he does well and clearly there is a


correlation between the two, but is there a danger though that we see


top bosses earning so much, that gap between what the normal worker is


being paid and what the top boss is being paid gets ever bigger and


actually this becomes a moral issue, not necessarily a financial issue?


Well, there is a moral and ethical dimension. It is very much down to


the shareholders. So you have seen local authority pension scheme this


morning recommending votes against and that's right because they see it


as a moral imperative to do so. The power lies with the showeders. It is


crucial that the shareholders exercise their views as we saw with


the Church of England and BP several weeks ago. Is there a brand or a


potential damage to the brand as a result of this? Because yes, rightly


or wrongly, Sir Martin sorle says he deserves the money, but does it come


down to the reputation of the firm? Again, it is that issue, isn't it,


the boss is being seen to be paid a lot, whether he is worth it or not,


many people who are looking at the company will not get into that. They


will see he is earning this bumper pay packet and everyone else isn't.


How do they prevent that from being damaging to the brand? If


performance doesn't match, you saw poor performance with BP and the


Chief Executive is paid a large amount of money there, but for me,


it can have an effect on British businesses as a hell and that's the


real damaging aspect. Our average member earnings ?100,000 a year, and


it affects them, the reputation of British business can be affected.


That's the worrying concern. Oliver, it is really good to hear your


thoughts. An Egyptian passenger plane en route from Cairo to Beijing


has made an emergency landing. It landed in Uzbekistan and this was


because, it is reported, there was a bomb threat. Now, Uzbekistan Airways


said everybody has been evacuated. They are safe. It is not known yet


which airliner it was, but Russian news agencies are saying it was an


Egypt Aeroplane. That's what we know at the moment. We shall keep you


up-to-date with any developments on that. We're told, more information


coming through, 118 passengers on board. 17 crew, all evacuated


safely. Security Services are currently examining that plane. As


soon as we have anymore details, we will bring it to you right here.


New Chinese trade data shows the world's second-largest economy


Exports fell by 4.1% from a year earlier to $181.1 billion.


That's more than double April's 1.8% fall.


Imports meanwhile edged down 0.4% to $131.1 billion,


an improvement over the previous month's 10.9% fall.


Japan's economy is growing faster than we first thought.


The official growth rate for the first-quarter of the year


has been revised upwards to an annual 1.9%.


But market in Tokyo fell in early trading because the higher GDP


number could reduce the chance of more economic stimulus measures


The FBI is warning banks about potential cyber attacks linked


to an interbank messaging system called Swift.


In February, hackers stole $81 million from Bangladesh's


central bank account with the Federal Reserve


The FBI message warned of a malicious cyber group that


You may have been following the story of British Home Stores, and


its demise. 11,000 jobs at risk. 164 stores potentially closing across


the country. Today, the new boss is in the firing line. He will be


facing MPs and they will be asking him about what happened, what went


wrong and why he bought it for just ?1 last year? You'll know that it


entered administration and liquidation after failing to find a


buyer for the business as a going concern. That on the live page and


full details across the BBC as Dominic Chapel gives evidence.


South Korean prosecutors have stormed the offices of the world's


second largest shipbuilder, Daewoo, as part of an investigation


What do we know about the raid? 150 officials from the prosecutors


offices went to Daowoo. An audit committee asked for a probe


into the committee. Twonchts former CEOs are being investigated over


potential mismanagement at the companiment Daewoo had a really


rough time. They posted its biggest net loss last year of $3 billion. .


This investigation is not going to help. They are affected by the fall


in oil prices and the global slowdown meaning people aren't


buying their tanker and container ships anymore.


A mixed picture was emerging during the Asian trading session. Japan up


by 1%. Japan's first quarter growth figure was revised upwards.


We saw the market fall off the back of that news, but in general, it has


been a mixed day and you can see the Dow, the night before, ending


higher. Let's look at Europe right now. We have a sense of how things


are going. You can see London down just a little bit, but let's not


forget last night it closed at its highest since April, 6th.


Across-the-board, we have losses today, maybe some profit taking


going on, but there is a lot of concern about what is happening in


the near future. The markets are jittery. Talking of which in terms


of the things that might make markets nervous. The US Presidential


elections. Last night, primaries, Hillary Clinton cementing her hold


on the Democratic knoll nation. She will be racing ahead with Donald


Trump for the big job at the House. With the economy expected to


dominate this election period, we asked Samira to sum rise where


voters stand. Investors are starting to pay close attention to what the


presidential candidates plan to do in economic policy. There are some


huge differences between Hillary Clinton's economic agenda and Donald


Trump's. Mrs Clinton seeks to raise the minimum wage while closing tax


loopholes for the wealthiest. Mr Trump see as need to abolish the


national minimum wage altogether and wants the lower tax rates for all.


On immigration, Clinton clearly supports reforms that would let


illegal immigrants become citizens. Trump infamously wants to build a


wall between the US and Mexico and deport 11 million illegal


immigrants, but one area on which the two candidates may actually have


some common ground is international trade. Mr Trump claims he would


renegotiate all of the US' existing by lateral trade deals. Mrs Clinton


makes no such claim, but notably is not a supporter of the two trade


deals that are currently being worked on.


Joining us is James Quinn, Group Business Editor


James nice to see you. Samira running through the US elections and


the politics and that's going to dominate the agenda as is the Fed.


There is a lot of other stuff sort of in the mix. It is not really


getting the attention that maybe it would otherwise? That's right, we


have Spanish elections at the end of this month. Potentially,


destabilising the eurozone and the rest of Europe. As you mentioned,


the referendum, the Fed, the election in the US. We've got the


oil price back above 50 suggesting some certainty about price following


the Opec meeting last week. We had World Bank estimates for world


growth out last night suggesting a retraction. From 2.6% was an


original estimate for this year, now down to 2.4%, solid growth, but not


as strong. What's your take on all of this? You know if you are an


investor right now, what are you going to do? Are you going to head


straight for a safe haven, is that your thinking? That's right. There


is a lot of jitters and concern. People don't seem to know. There was


data out yesterday suggesting a capital flight suggesting ?66


billion left the UK. Bank of England insiders would point to the fact


that the da is volatile and can change from month to month. But


also, you know, the FTSE ended at its highest since 6th April.


Investors are not sure. There is a lot of concern. There is a


suggestion this month very much investors will stay out of the


market. One that we will watch closely, it is hard if you are an


investor or a normal person like all of us! What to concentrate on


because there is so many conflicting things and it strikes me that one


thing cancels out something else. Is there a thought by the end of it, we


could be where we are now, the status quo maintains? There is a lot


of variables, clearly the US elections and what happens there and


what happens the Fed and the rate rise and whether it happens this


month or next month is clearly key, the world's biggest economy and


China. You can never second-guess these things? I think so in the same


way we can't second-guess a referendum. It looks too close to


call in the UK now. No one can second-guess what is going to happen


in the US election. As investors, whether you're focussing on money or


companies, you have to try and focus on what you know and put the unknown


variables that you can't control almost to one side. All about a


steady nerve, clearly? Yeah. Hold your nerve through most of this. You


learn something every day! You do. Especially on this show.


We are going to meet the boss of Skyscanner later on today. We have


also been asking you for your weaknesses at work.


I am showing all mine today. We meet the boss of billion dollar


travel site Skyscanner and ask why he prefers to be called a rabbit


and not a unicorn. You're with Business


Live from BBC News. BHS is back in the headlines this


morning as MPs prepare to question the man who bought the retailer


for just ?1 last year. Dominic Chappell is being blamed


by BHS' management for the firm's demise, leaving 11,000 jobs at risk


and former staff facing Rob Young is in our


business newsroom. What are MPs going to be asking


Mr Chappell about today? MPs will be talking to the boss of


retail acquisitions, the company that bought BHS for ?1 last year, a


former racing driver, a man who had been bankrupt three times and who


had no retail experience. The MPs will be asking him why he thought he


could turn around BHS when the retail tycoon Sir Philip Green had


not been able to. They will also look at the way he managed the


company as well. The management of BHS wrote to staff yesterday saying


there view was that the reason BHS went under was because it needed


massive investment, but Mr Chappell had not done that whilst he was


taking out money from the company. Sir Philip Green, the previous owner


of BHS had pulled the sale of the retailer to Mr Chappell on the same


day he had discovered he had been bankrupt. The MPs who will be


questioning Mr Chappell today will be talking to his financial backers


and one of those described him as, not the person I would ever consider


lending money to. This is important for the historical record, but also


because this is the biggest retail failure in Britain for the best part


of a decade and up to 11,000 jobs are at risk.


We will stay across that story on BBC News.


BHS and WPP to watch. WHSmith have given us an update. Travel sales at


airports and railway stations are up by 9%. That helped offset a 4% fall


in the high street. A familiar picture once again. Like-for-like


sales were pretty flat. Doing well in travel, but not so well on the


high Street. Our top story: The highest-paid CEO


in the FTSE 100, Sir Martin Sorrell, will today find out if shareholders


have accepted or rejected his $102 The CEO of WPP, the world's


largest advertising group, says that he deserves the money


because of how the company has been performing,


but others disagree, He built up the company from


scratch. Send us your thoughts on that because it is a very hot


Now, these days chances are if you book a flight,


you do it online and that soaring demand for online bookings has been


One of the market's largest players is Skyscanner.


It was founded back in 2003 in a spare room and began life as


Earlier this year five investor funds backed the tech


firm with $186 million, which gives the company a valuation


of over $1.5 billion and making it a unicorn,


that's a start-up company valued at over $1 billion.


The funding will be used to expand Skyscanner overseas and to sign up


more customers to the more than 50 million who already use


Skyscanner Chief Executive Gareth Williams joins us.


Welcome. In terms of your company, there are many companies that do


what you do, but you have been around for quite some time. Do you


think that is why you are either success that you are? First mover


advantage? I am not sure it is first mover, the trick we have pulled off


is to still care about travel. Often you do a up and become a business


person first. We, throughout the company, care about travel and the


traveller and concentrate on the quality of the results. We do that


worldwide. And we have kept doing that same thing. It has also come


down to the technology. It is one thing to be able to search travel


sites and find flights, you have technology you built up over a long


time which makes it different? The single biggest role in the company


is software and as an example with processing over 3 billion


itineraries every day and storing that data and reusing it and making


it useful, inferring things from that data. How do you make it really


user-friendly in the sense that if you go on your site and search for a


flight you are not put off by the hundreds of options that might be


irrelevant to what you want. That is what puts me off. I start with great


intentions of finding the best deal, but I go to an airline websites


because it is easier. We put a lot of effort into that and it seems to


pay off, but there is still a lot further to go. In an ideal world we


would show you the three best results. The fastest, the cheapest


and the best value of the two. We have to strike a balance because we


want to make sure that people who use us occasionally trust the


results we are giving. At the moment we show them in price ranking order.


In the future and for regular users we will offer filtered results that


are purely chosen on the basis of traveller convenience. We talked to


a lot of bosses of tech firms on this programme and Sally mentioned


that have done particularly well in that have done particularly well in


their industry. You do not like that term. You preferred the term rabbit.


Just explain that for me. You do not want to be a unicorn, you want to be


a rabbit. The problem I have got with a unicorn is it is all about


funding invents, investment and selling shares. That is not at the


core of entrepreneurial growth, about building a sustainable


business that delivers value and in particular to travellers. And what


can go up in a hype cycle can go down. The interesting one, when I


heard the term rabbit, and it stands for real actual business building


interest technology, and it betrays my software engineer background. But


that is what we are doing and that is how we can add value and make


online travel a bit less of a leg ache for millions of travellers. I


collectively hear everyone watching going, oh, yes. Thank you, really


nice to see you, Gareth Williams, chief Executive of Skyscanner.


So, rabbits in a bunny market. In a moment we'll take a look


through the Business Pages but first here's a quick reminder of how


to get in touch with us. We will keep you up with all the


latest details with insight and analysis from the BBC's team of


editors around the world. We want to hear from you as well. Get involved


in our web page. You can contact us on Twitter and Facebook.


We have got a lot of tweets from you. Many of you have sent us


messages about the story in the Independent. A Harvard philosophy


professor said you should embrace your failings. Clearly we are


proving that this morning! This is because it holds you back in


business apparently. He teaches at Harvard and he says


there should be a constant re-evaluation of yourself, do not


think you are perfect because you think you are, you should try and


evolve and think of others. I wonder how backlashes or compliments


Silicon Valley type philosophy? That is all about the power of oneself


and belief. But not necessarily navel gazing at your weaknesses?


Yes, that is right. To have an entrepreneurial spirit you have to


have some drive and in America the focus on business is very much to


look at those failures and build on it. There are so many tweets to get


through. Phil says, if you do not acknowledge and admit it, how can


you improve? Ian says it should all be in your appraisal. That is all


from us. Have a really good day. Goodbye.


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