. . . pay as you earn
I AM in the Hogg camp. I cannot think that boards or shareholders do themselves any good in turning their backs on reality. Facing it may well be, as it was at Courtaulds, the first step to doing some- thing about it. Sinking lower in the water with the dividend nailed to the mast is an empty gesture. The receiver Bill Mackey listed it, along with fountains and flag- poles, as a symptom of corporate failure. I suggest to Mr Linaker that he changes tack, and puts himself at the head of a campaign which would force directors to pay out every penny their company earned. If they wanted new money, they could come back to the shareholders and ask for it — explaining, of course, how they planned to spend it and what this investment would earn. It would be a salutary discipline on directors, who would have to think twice before going on spend- ing sprees. It would strengthen the share- holders' hand. Investors who want to be sure of their income could, as now, buy bonds or preference shares. The ordinary shareholder is there to run the risks and hope for reward, and his dividends should be governed by the basic business principle of payment by results.
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