Chief Executives should be tougher when negotiating City professional fees, says Ted Tuppen, CEO of Enterprise Inns.
In the MarchApril 2005 edition of S&I Review, the membership magazine of the Securities & Investment Institute, Tuppen examines the relationship between value and City professional fees.
“Chief Executives need to take their responsibilities in the area of professional fees fairly seriously – particularly when dealing with the City. Fees can be pretty high and there have been times at some companies when value has not been achieved,” he says.
Tuppen, whose FTSE 100 Enterprise Inns is now Britain’s biggest pub owner with nearly 9,000 outlets, explains that he has been a regular consumer of financial services over the years but expects the same value from the City as when he is negotiating with brewers or builders. “If they say ‘we always charge this’ that doesn’t mean much to me,” he says.
“If someone in the City brings you a deal you have not even thought of, they deserve their money. But if they just fill in a few forms, their fee should reflect that. We’re always happy that we have sought value for money.”
In the interview Tuppen goes on to make some interesting observations on trust in the City. Of his own business, he says, “You have responsibilities to shareholders which have become rather more proscribed in recent years but I think we’re perceived as a highly moral business and our word is as good as our bond.”
Tuppen explains that trust is an important part of his philosophy and a quality he believes still exists in the City. He says, “I’ve asked people to look me in the eye and say they’d sign the papers when they arrive. That is far better than lawyers with complicated 10-page documents. Honesty and pragmatism still count for a lot. Very few people look you in the eye and lie.”