12 May 1998
Survey puts prices on industry ‘fat cats’
By Boyd Champness
SOME agri-machinery firms pay their directors big money – but this doesnt necessarily mean better results, according to a recent survey.
A report by financial book publishers Plimsoll reveals that the average fee paid to directors in the agri-machinery industry is a conservative £28,100. However, directors of the highest-paying 25% of companies within the industry earn on average £81,400.
Of the companies paying their directors the most, 49% were rated strong or good in terms of their financial strength, while 34% were advised to make changes in order to ensure their future viability.
Examining the sales growth of companies with highly paid directors revealed that 32.1% exceeded the industry average, while 67.2% performed worse than the average.
The average sales growth for the agri-machinery industry last year was 9.1%, with 22.4% of the highest-paid quartile of directors managing to generate sales growth of 15% or better, while 38.8% reported no growth or an actual contraction in sales.
Profit margins also showed considerable variations. Of the companies paying directors the most, 50% managed to return pre-tax profits better than the industry average of 2.3%, while 16.4% of these companies recorded a loss.
However, profit margins are a harder variable to judge because some companies may have embarked on ambitious expansion programmes during the year which would show up as an extraordinary loss.