29/04/2016 World Business Report


29/04/2016

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Now for the latest financial news with Aaron Heslehurst and

:00:15.:00:17.

Is this man worth 12 million dollars a year?

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The boss of drugs giant Astrazeneca set to become the latest target

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Plus - paying homage to the Sage of Omaha.

:00:24.:00:36.

Warren Buffett gathers his investors once again for their annual meeting.

:00:37.:00:39.

But who is going to take over when he finally bows out?

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It is Friday. We have that Friday feeling and we are going to give you

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a fascinating snapshot of everything in the world of business and money.

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Also in the programme: The boom times are over

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Our Asia team will have that story for you shortly.

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We are talking big bucks this Friday,

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specifically the controversial issue of executive pay.

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Are top bosses worth the money they earn?

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It's a question many shareholders are asking, as many of the UK's

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biggest companies hold their annual shareholder meetings.

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More and more, the answer seems to be no.

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Earlier this month, BP shareholders revolted over a big

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pay rise for the boss Bob Dudley, awarding him $20 million despite

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Almost 60% of shareholders voted against it.

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Just a week later, Anglo American shareholders also revolted.

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CEO Mark Cutifani was in line for a $5 million pay-out, despite

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Anglo being the worst-performing company on the FTSE 100 last year.

:01:55.:01:57.

Today, it's the boss of drug company AstraZeneca, Pascal Soriot,

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They're expected to cry foul over the $12 million pay-out

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Mr Soriot rejected a takeover bid from Pfizer two years

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ago, which valued their shares at $22 more than they're worth now.

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All of these deals pale into insignificance when you look

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at what Britain's best paid boss is due to earn this year.

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Sir Martin Sorrell of the world's biggest advertising

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company WPP is due for a $100 million pay package - most of it in

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The shareholder lobby group PIRC has already called the deal "excessive,"

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and he could face a rocky ride at the company's AGM on June nine.

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I spoke to him yesterday and he was adamant he's worth the money.

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I am proud of the fact that we have come from nothing to being a world

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leader, 50% bigger than anyone else in the industry. The next biggest

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market cap is $20 billion, an American company based here. Are you

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worth $100 million? Do you think shareholders agree with you? What I

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have been doing is, over 31 years, investing in the company, never

:03:42.:03:46.

selling shares in the company. So, for example, what you refer to this

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year, the annual report is out tomorrow, it will confirm the

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numbers that you are talking about, I have reinvested, I have kept

:03:56.:03:59.

invested after tax all of the amount, so all of my wealth, such as

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it is, is invested in this company. Joining me now is Peter Parry,

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policy director at the Welcome to the programme and thank

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you for coming in. We will talk about Martin Sorrell in a moment. I

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know that you have some history. In 2012, we saw the shareholder

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revolt, anger and theory at the annual general meetings. Is it back?

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-- fury. I think it will keep coming back and I don't think we will see

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it end until we take steps to fix executive pay and I think it is the

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system which is the problem. They tried to fix it, at least putting in

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the coalition government, Vince Cable, Business Secretary, tried to

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implement awards, benefits, for performance, right? Absolutely, and

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we have seen Greenbury and other reports and measures taken to ensure

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people are rewarded for performance. The problem is, we have a system

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here whereby I think it is not always clear what the targets are.

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Shareholders don't know that. Don't they vote on it? The thing that is

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somewhat... They are told to vote on the targets and if the CEO reaches

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the targets, they are rewarded. How other shareholders...? There are two

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issues. There is a vote on the policy. The policy says, we aim to

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ensure we attract talent and retain it. Those measures we will use in

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terms of performance measures, earnings per share, other things as

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well. They are very broad and don't say what the specific targets will

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be. What shareholders have a vote on is the implementation of that, which

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is the pay the director has earned in that year. They only know that

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retrospectively. They don't know it in advance. What I am seeing is, if

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we will have effective governance, shareholders need to know specific

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targets on which leaders are being bonus. There is a difference

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comparing CEOs. Martin Sorrell says he built the company. 31 years, it

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was a $1.5 million, now it is $30 billion. All the money he is paid

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goes into the company. The CEO of BP, Bob Dudley, BT have the worst

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year on record and... There are differences -- BP. Martin Sorrell's

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pay comes up time after time, it back in 1995 we were talking

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specifically about his pay, even at that time. It has a long pedigree.

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The four in his argument is he might let you believe this hundred million

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dollars, ?70 million, he is paid this year is a final pay-out for

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years of achieving good results for this company -- fault. But actually

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he has been paid large amounts of money every year and I think

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shareholders are getting fed up and saying, come on, this bonus goes up

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every year, this is too much, and if you ask anyone, I don't think anyone

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is worth that amount of money. Indeed. I wish I have more time but

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I don't. Thank you for your thoughts. We are going to talk about

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Warren Buffett. Hey, we are also

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

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Nebraska for the annual shareholder For half a century, throughout the

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ups and downs of the stock market, there is one investor everyone has

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followed and that is Warren Buffett. He is considered to be the best

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stock pick up of all time, but his strategies appear to be quite

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simple. He purchases stocks in goods we use everyday. His investment

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empire includes close to 90 companies with many household names

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like Walmart and Coca-Cola. Since he has started buying shares for Burki

:08:23.:08:27.

Hathaway in the 1960s, the company has had an average annual growth of

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over 19%, almost double the S 500 -- Berkshire. And its shares have

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risen 2500% in the last quarter century alone. As shareholders of

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Berkshire Hathaway Ghaffar, there is a concern that Warren Buffett is

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getting old and his number two is even older, so who will be the

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future of the company? -- gather. Given the unique nature and culture

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at Burki -- Burke share Hathaway, I think it will emerge from within the

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company but there could be an argument for breaking up Berkshire

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Hathaway, opening up a list speculations -- Berkshire. On

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Saturday tens of thousands shareholders gather to cheer another

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year of Warren Buffett's unparalleled success, but one

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difficult question on the minds of investors will be how much longer it

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can continue. It is that time of the morning for a bit of Ali Moore in

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Singapore, it is good to see you. The Chinese economy is slowing down

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and that has an impact on companies like Baidu. Yes, you are right. It

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has been quite a good quarter at first glance. We refer to it as the

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Chinese version of Google with revenue up 24%. Earnings have fallen

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19%. That revenue growth is the slowest in seven years. It has been

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a long decline for Baidu with advertisers playing -- paying less

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than they do for elsewhere. So, Baidu's been putting money into

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diversifying away from this core business of search engine and also

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the revenue it gets from search advertising. It is spending on

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things like subsidies and discounts to try to get market share on what

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it calls transaction services, which means connecting online customers to

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bricks and mortar services like food delivery. Another great effort, it

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is in the race to develop autonomous cars. Everybody's in that race.

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Don't forget you can get in touch with me and some of

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I will be back with James to look at some of the newspapers from around

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the world, ta ta! School heads have attacked

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the government's testing regime for primary pupils as chaotic

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and distracting. The National Association of

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Head Teachers, meeting for its annual conference in Birmingham,

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says the current system ticks boxes for bureaucrats and politicians but

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doesn't work for pupils or teachers.

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