Pride and prejudice

CommunicationsWeek International, July 16, 2001 by David Molony

When Jose Collazo, chief executive of Infonet Services Corporation, stood up to webcast his company's latest trading figures last month, he did it in front of a huge poster of the Best Carrier trophy won at the World Communication Awards 2000.

That award has featured in the California-based service provider's global advertising since November last. It has appeared in business magazines and in airports, waymarking what has turned out to be a good year's business for the operator.

The year before, the same award went to Global One, which collected at the Telecom 99 exhibition and proudly displayed the trophy on its stand. For Global One, stuck in the middle of a shareholder tug-of-war, it marked a turning point. Like Infonet, Global One carried the WCA award on its marketing material for a whole year. Eighteen months on and the company is revamped and rebranded with Equant, under the direction of one owner--France Telecom.

This year's World Communication Awards 2001 event, being held in London on 1 October, is the third in the series, and we hope the industry will turn up in force.

That's not just because CWI is one of the host titles for the WCA. It's because this year is so critical for the telecoms industry. Stocks are crashing all around us, the debt mountain won't go away, and financial pages just don't have the time and space for telecoms that they used to.

Every industry needs to listen to its own good news; it needs to remind itself that it still does things well, that new talent is developing in the business, and to renew its self-confidence.

Business telecoms users are maybe more confidential about their network services than consumer groups, for obvious commercial reasons. So it's great to have the chance to recognize some of the best examples of service delivery and technical innovation by carriers and service providers.

This year also, we think it's right that corporate users have their moment. So there will be awards for enterprise users and managers who can show best use of mobile and fixed services in support of their own companies' businesses, as well as an award for most innovative use of service. And that's another opportunity for telecoms providers to prove what they can do for business users.

We hope you are among the entrants. We look forward to seeing you on 1 October.

* Now here's the bad news. Award for bad practice of the week goes to those well-placed executives who are already celebrating new winnings on re-priced stock options. It seems they are guaranteed bonuses--even for losing their shareholders and employees' money and jobs. What are the remuneration and options committees thinking?

We spotted this one coming (CWI, 19 March 2001.) Now, Marconi is leading a rush to protect the best-paid--and in some cases worst-performing--managers in the business (People & Management, p. 27).

All right, public companies have a point. The financial markets are dropping share prices so far down that it seems they are disowning even their own previous valuations and projections. If the investment banks are going to play hard-ball in an apparent effort to bring buying activity back into the market, why shouldn't the companies in the firing line adjust accordingly?

The danger is not that the boards of public companies no longer are tying their fortunes to their companies', but that the companies' fortunes are tied to them. Annual reports include pages of details of stock option schemes, but little about operating performance.

The risk is that there no longer will be a visible and long-term association between management and shareholders' returns--and remember they often include employees. In these conditions, the investor finds it hard to work out what he can expect from a company. And that makes it harder for the company to get back to the top of the stock market performance table.