Age has proved to be the key theme of this year's Financial Director FTSE-100 annual reports and accounts survey. Last year, we revealed the truly unremarkable finding that the average age of the top FDs had increased by one year over that of our 1997 survey - from 49 to 50. But now, on the eve of the millennium, time has not only stood still, it has gone backwards. Like policemen, FTSE-100 FDs are getting younger: their average age has fallen back to 49. As for the dates that the accounts in our list were ratified, there were eight FDs in their 30s and just four in their 60s. In our 1997 survey there were just five thirty-somethings. But there have been several retirements since the annual reports in our survey were signed off by directors and auditors. Six of the oldest FDs - including two of the four who were in their 60s - have stepped down to be replaced by much younger men. In fact, David Morris, FD of P&O and the oldest FD in our list, made way for Nicholas Luff who, at a youthful 32, is barely half Morris's age - and will be pushing Dixons FD Ian Livingston, 35, out of the youngest FD slot. Anthony Trigg at Allied Domecq, Hugh Collum at SmithKline Beecham and Bob Spiers at Royal Bank of Scotland have also retired, to be replaced by men in their 30s and 40s. Christopher Pearce, FD of Rentokil Initial, will be making way at the end of this year for 50-year-old Roger Payne. The net effect of these retirements is to lower the average age of the UK's top FDs to just 48 today - and to take the number of FTSE-100 FDs who are in their 30s, to ten. For the average age of (almost) 100 people to fall by about two years in the space of just over 12 months reveals a lot about the numbers of men in FTSE-100 boardrooms. (Forgive the apparent gender bias but, with the departure of Rosemary Thorne from Sainsbury, to be replaced by one-time Compass FD Roger Matthews, the number of women FDs in the top 100 has fallen by half: BTR-cum-Invensys FD Kathleen O'Donovan is the one remaining female in this list.) But whatever their age, FTSE-100 FDs have been through a lot, giving them a wealth of experience. BP has merged with Amoco; BAT Industries has demerged its financial services arm and merged it with a continental European group to create a massive business which is jointly owned by two separate, confusingly named quoted companies, the UK spin-off Allied Zurich plc (43%) and the Swiss group Zurich Allied AG (57%); FTSE-100 constituents BTR and Siebe came together earlier this year, but with BTR's O'Donovan getting the FD chair even though it was Siebe that was in the driving seat. Zeneca's merger with Astra doesn't quite take it up the pharmaceutical league tables as fast as it takes it up the alphabetical listing. British Steel will never have the same feel now that it has merged with Dutch group Hoogovens and changed its name to Corus Group. The newcomers to the FTSE list include some new companies - Energis, Colt Telecom, Telewest Communications - and some old - Anglo American, South African Breweries, Old Mutual - that have come from the gold republic. The accounts of the latter companies reveal how far we have come in the UK along the disclosure route. Typically, these accounts were issued before the companies secured their London listing and so do not fully comply with UK legislation or Stock Exchange corporate governance requirements. We have been unable, for example, to find some key directors' pay data. Then again, Royal Dutch/Shell group accounts and the Allied Zurich accounts seem to have chosen not to reveal auditors' fees. A shame, since the Shell fee was one of the juiciest on the market. Last year it was £7.5m, split between Price Waterhouse in London and KPMG in Holland. Corporate governance disclosure rules are guaranteed to make FDs wince. So we decided to count the pages. It seemed a good idea given the DTI's current examination of executive remuneration policies and disclosure, and their interest in ensuring transparent linkages with corporate performance. We have made no qualitative assessment here but, on the assumption that the narrative bits of annual reports aren't a waste of time, it seemed sensible to look at the amount of space devoted to remuneration, the operating and financial review and the accounts themselves. Not surprisingly, 'the numbers' take up around 31 pages in a typical 80-odd page annual report, while the OFR takes up around 16 pages. Remuneration usually occupies just six pages. Of course, that isn't to say those six pages are not time consuming, nor do we make any comment on their value. But the more extreme suggestions that directors' pay disclosure requirements are crowding out discussion of the real issues that face the business - and which enable shareholders to assess performance and prospects - are overstating the case. Time for the interesting stuff: the money. The best-paid FD in the FTSE-100 this year is, for the second year, Robert McCullough of fund management group AMVESCAP. He pulled in £974,000. He also tops the scales for having the pay packet with the largest bonus. His £724,000 end-of-year goodie-bag was equivalent to 299% of his basic salary. For most FDs, the bonus typically accounts for an extra 41% on top of basic. John Mayo of GEC is in the number 2 slot with £877,000 in his first full year as FD, helped by a benefits package worth £140,000 on top of his £487,000 salary and £250,000 bonus. The 43-year-old - who is already on to his second FTSE-100 company, having switched from Zeneca in 1997 - also scores as the 'highflyer' of the year, earning £20,395 for every year of his age. This particular ratio is our rough-and-ready guide that works out the trade-off between age and experience and reveals that the youthful Mayo's experience with two of the more complicated FTSE-100 companies is indeed highly valued. The bulk of FTSE-100 FDs earn between £5,000 and £10,000 for every year of their age. The average FTSE-100 FD salary, in fact, was £272,961, with a £112,283 bonus adding an extra 41% on top, plus benefits worth £21,377. The total package of £406,621 is 3.1% more than last year: bonuses were virtually unchanged from last year, but benefits were up about 15%. Privatised utility FDs were still pretty much in the bottom quartile, giving the lie to fat cat claims. In a world where things seem to happen at an ever-faster pace, it may be a little surprising that there has been no improvement in audit sign-off times this year. It still takes an average of 64 days to ratify a set of accounts. There have been some notable improvements, with 3i cutting the audit time from 64 days to 56, while Abbey National shaved a week off from 56 days to 49. Allied Domecq was clearly motivated by being one of the slowest ten audits last year and has cut the bean reconciliation work from 88 days to 74. We're sure that it is entirely a coincidence that the slowest audit is that of Securicor, the only FTSE-100 company to retain a non-Big Five audit firm, Baker Tilly. And so to audit fees. Last year the average FTSE-100 audit fee fell by about 6% over 1997. This year the auditors have fought back, securing fee increases of around 3%. The biggest fee again went to HSBC, which shelled out over £10m to have its books checked over. British Energy was again the lowest payer, at just £180,000. Don't feel sorry for audit firms, though: they secured a 45% increase in the amount of non-audit work from FTSE-100 clients. In fact, these services make up two-thirds of the fee income they derive from these companies. Perhaps it's because these youthful FDs need more external advice than their older, more experienced colleagues. - This is an edited version of an article appearing in the November issue of Financial Director.
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