I don’t like the expression ‘skin in the game’ but I cannot think of another way of putting it.
Lord Rothschild, chairman of RIT, has plenty of skin in the game. His family only own 18% of the company but it is a big company – it’s worth more than £3 billion. He receives bonuses that are substantially in excess of anything I ever received when I worked in the City. In 2016 he was awarded £1 million and in 2017 £418,000, nice money if you can get it. Guess what he did with these windfalls. He stuck to the plan and reinvested in RIT shares.
Mark Sheppard is the fund manager at Manchester and London Investment Trust. He owns 55% of his company capitalised at about £130 million. So what did he do this week? He splashed out £3.8 million on some 762,000 more shares, as if he didn’t have enough already, but I like the way he’s thinking.
Caledonia Investments is the Cayzer family’s piggy bank. The company is worth £1.9 billion and they own more than 48% of the shares. You’d think that’s enough, especially at this time of economic uncertainty. Well, at the end of last month, three of the family topped up and bought 10,000 shares. It cost them just shy of £300,000. More skin in the game.
If I may be a bit preachy, I do not want a broker or financial adviser to pick companies for me to invest in – they have no skin in the game. It’s good to know that Jacob Rothschild, Mark Sheppard and Will Wyatt are highly incentivised to keep their eyes on their businesses. If they make a slip-up it will cost them a lot more than me.