The Independent Newspapers annual report is always an interesting document - and not just for the usual state-of-the-world address from chairman Tony O'Reilly.
Needless to say, as a media company, Indo does not stint on the glossy illustrations of its worldwide empire and each of Indo's divisions gets a couple of pages to tell shareholders how well it has done.
One of the illustrations with the section on Indo's business in Britain has a terribly artistic picture of Brendan Hopkins with an associated caption stating how Indo's move to take full control of the London In- dependent "has enabled us to revitalise one of the great newspaper brands of the world".
A great brand, no doubt, but it might have been of more use to shareholders if Indo went into a bit more detail on how it intends to get the Indie into the black, never mind into a position where it might generate a return on the tens of millions that Indo has pumped into the titles. The Indie might be a trophy asset, but at some stage even trophy assets have to pay their way.
Still, enough of that incestuous media carping, the main interest to shareholders is how well their company is doing and how much they are getting in their dividend. Given that Indo's operating and pre-tax profits and earnings per share fell sharply last year - admittedly for the first time - shareholders might feel justified in feeling happy about the 15 per cent increase they got in their dividends.
But the real winners at Independent were the group's nine executive directors who saw their salaries and associated payments go through the roof when earnings per share - the key indicator of performance - headed in the opposite direction.
Stripping out once-off payments in 1997 - a £273,000 (€346,639) "termination payment" to retiring director John Featherstone and £834,000 paid to executive directors under Indo's triennially-paid longterm incentive scheme - Indo's nine executive directors last year shared almost £3.2 million - an average of £355,000 each, compared to the £2.34 million that 10 directors shared in 1997 - an average of £234,000.
In other words, executive directors' average remuneration jumped 51 per cent while earnings per share headed south. And to top that, the directors' remuneration package included an annual bonus of almost £1.1 million compared to £438,000 in 1997. That's an increase of almost 150 per cent in the bonus alone.
Maybe Tony O'Reilly will tell shareholders at the a.g.m. on May 26th exactly how this bonus is computed and what the performance criteria are that allows it to be hiked by nearly 150 per cent when profits fall. Perhaps there is an entirely satisfactory explanation. If so, then shareholders deserve to be told.
