Make bosses pay for help, says Nat Rothschild: City scion demands that fat cats give up the benefits for bailouts
Bosses who have squeezed money out of their businesses and now want taxpayers’ help should be forced to give up part of their salary, said a high-ranking member of the Rothschild banking dynasty.
In a scathing intervention, Nat Rothschild told The Mail on Sunday that “there must be a price” to be caught by the crisis and “a reward for conservatism” if companies had put money aside for lean times.
Baron Rothschild’s eldest son and heir to his father’s title and business interests, said bosses and owners who have benefited from risk-taking should be forced to sacrifice their share awards and ‘a percentage of salary’ if they use making state aid schemes.
Strong words: Nat Rothschild said there must be ‘a price’ to be caught by the crisis and ‘a reward for conservatism’ if companies had reserved money for lean times
His call to reckless executives to dive into their own pockets is supported today by a major poll from The Mail on Sunday.
An overwhelming 61 percent of the public believes that profit-making owners and bosses should be “ forced to contribute money to state aid. ”
Just under half – 49 percent – said they generally favored using taxpayers’ money to save businesses from collapse. Only 25 percent did not support bailouts.
Rothschild, who is also chairman of the London-listed manufacturer Volex who makes electric car charging cables, said: ‘What is going to annoy people is that some of these companies, despite the risks they took and the rich rewards that would have followed , now gets a get-out-of-jail-free card while firing employees. This is a repetition of the financial crisis. ‘
His comments came after public anger was directed at people like JD Wetherspoon founder Tim Martin, who sent staff home unpaid a week ago, expecting the taxpayer to pay his company’s paycheck.
There are fears that some companies, such as heavily indebted Intu, £ 4.5 billion in debt and an impasse with retailers, will struggle to survive.
Dozens of restaurant chains are struggling just days after a government shutdown, and chain store casualties are set to increase rapidly in a matter of weeks.
The airline industry has been criticized for massive payouts for years after companies, including Richard Branson’s Virgin Atlantic, went into an immediate crisis after planes were grounded.
Last week, The Mail on Sunday revealed that airline bosses have paid £ 12 billion in dividends over the past five years.
Research for The Mail on Sunday by stockbroker AJ Bell this weekend shows that the FTSE 100 debt has risen rapidly over the past three years while dividends have skyrocketed. Over that period, debt to FTSE 100 companies has risen to a record £ 75 billion – twice the 2009 level after the financial crash.
But that coincided with a record dividend payments at those companies, which reached £ 78.3 billion last year.
Russ Mold of AJ Bell, who excluded banks from the analysis for drastically cutting debt since 2009, said the figures would suggest ‘that the debt would be used to finance dividends as the economy slowed somewhat and coverage tightened. “.
Rothschild’s Volex company has sales of $ 400 million and $ 30 million in cash on the balance sheet. It also has an undrawn $ 40 million bank facility. The board calculates that it would make a profit even if annual sales were to drop by $ 100 million.
Rothschild contrasted the balance with the ailing car maker Aston Martin, which borrowed seven times its income. He said many companies, especially private equity firms, had only eight weeks in cash in reserve.
He said: “It is absolutely extraordinary that such companies are put in a financial position that they cannot survive for even a few weeks with little or no
income without going bankrupt. ‘
Rothschild strongly urged the government to avoid a repeat of the 2008 crisis, when bankers retained all of their stock options and were “essentially saved.”
He suggested that any private equity firm should be asked to withhold a ‘dry powder’ fund to ‘meet its social obligations’ if their companies got into trouble.
He added, “It would make sense to demand that access [Bank of England emergency coronavirus funding] should depend on senior managers waiving stock options and a percentage of the remuneration.
“There has to be a price for using too much leverage and a reward for conservatism in these times.”
He said the government – currently in talks about a Virgin Atlantic bailout – and UK banks should carefully consider who gets help and what fines to pay, “so that the Michael O’Leary’s corporate” has put money aside because more difficult times are treated fairly.
Rothschild said, “[Ryanair] has £ 4 billion in cash and marketable securities on its balance sheet and does not need a bailout or at least survive for months. It is essentially penalized for taking risks or incompetence by others. ‘
The Mail on Sunday survey was conducted by Deltapoll, who interviewed 1,545 British adults online between March 26 and 27.
The data is weighted to be representative of the UK adult population as a whole.
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