LONDON (CU)_Bosses of companies which have squeezed their cash out and now want taxpayer support should be forced to give up a chunk of their pay, the eldest son of Baron Rothschild has said.
Nat Rothschild told The Mail on Sunday (Jan 10) that bosses and owners who have profited from risk-taking ‘have a price to pay’ for being caught out by the crisis. He noted that these individuals must therefore be forced to sacrifice their share awards and a percentage of pay, if they tap into taxpayer support.
These comments by a senior member of the Rothschild banking dynasty came following JD Wetherspoon founder Tim Martin’s decision to send staff home on no pay a week ago, and expecting state support schemes to foot his company’s wage bill.
According to Rothschild, who is also chairman of London-listed manufacturer Volex, taxpayers are going to be irritated by the fact that some firms which have taken risks and enjoyed rich rewards, being given a “get-out-of-jail-free card” while laying off workers.
Volex, which makes charging cables for electric cars, has a turnover of $400 million and $30 million cash on its balance sheet, along with a $40 million undrawn bank facility. This would mean the company would make a profit even if annual revenue dipped by $100 million.
Rothschild contrasted this with ailing car manufacturer Aston Martin, which has borrowed seven times its earnings.
Many firms, particularly those run by private equity, had just eight weeks of cash in reserve, he added. “It’s absolutely extraordinary that such companies should be placed in a financial position that they cannot survive for even a matter of weeks with little or no revenue without going bust,” Rothschild pointed out.
Accordingly, the British financier urged the Government and Britain’s banks to consider carefully which companies should get assistance and what penalties should be paid, so that those firms which have sensibly put money aside for tougher times are being treated fairly.
He referred to Ryanair, Irish Low-Cost Airline, which doesn’t need a bailout, or could at least survive for months, since it has £4 billion of cash and marketable securities on its balance sheet. Nonetheless, the firm is being penalised for other people’s risk taking or incompetence, Rothschild added.
These views of the financier were backed by a major poll conducted by The Mail on Sunday. The survey found that an overwhelming 61 per cent of the public believes owners and bosses of companies that have been making a profit should be ‘forced to contribute money to any Government bailout’, as opposed to a 49 per cent which support the use of taxpayer money to save companies from collapse.
