Thank you and it's wonderful I can
say it's wonderful to be back in Dublin
and I've actually seen some old friends here.
So a preliminary I must tell you that my
remarks are my own and they're not those
of the Commission or any of my fellow
commissioners. Dan was fond of saying a
little more than that, he said but I sure
wish they were. I don't want to
steal his line but I will give I'll give
you credit. One more preliminary before
we get to the interview and it goes
to something that we're working on at
the Commission. One of our tasks
is to provide fairly rigorous guidance
to public companies as to what they need
to disclose or at least the areas they
need to think about when they're
crafting their disclosure to investors.
For some time that guidance has been
fairly static. If you look at that
guidance it focuses on an economy of I
would say the mid-60s to late 70s.
Particular items your suggested to
think about include plant property and
equipment. What kind of factories do you
have? How much money do you have invested
in real estate and the like? What's not
there and the reason I bring this up in
this audience will become apparent but
what's not there is guidance on how to
disclose your human assets, your human
capital. How businesses think about the
people they have. That's a mistake and
it's a mistake because if you look at
balance sheets today balance sheets
today have roughly a third of the assets
you can easily tie to human capital as
compared to less than 10 percent 20
years ago. So we've proposed modernizing
and we're looking for comments on how to
best disclose human capital and I'll
make two comments on that. The best
companies that I've seen in private
practice are the ones that track their
human capital very well. When you go into
the board room or into the management suite and you
think about what drives the value of
this company it can be intellectual
property it can be their equipment
the modernization of their factories but
the very best managers that I've seen
over the years think about their people,
the number of engineers they have,
the turnover they have, those types of
metrics. It varies from business to
business. In the financial services
sector people are fond of saying that
all of your assets leave the building at
the end of the day, and we want to
encourage people to disclose how that
human capital drives the value of their
business. So why do I bring that up today?
First I think it's an important
modernization. Second, I'm somewhat of a I
call myself a dime-store economist. As I
travel the world both in private
practice and now in this job when I
land in a city or a new country I tend to
look at what's going on. Indelible images
in my mind include cranes in Istanbul in
the early 2000s watching a
city grow from 10 million people to 25
million people in the space of 10 years
and what was driving the economy there.
I visited Dublin many times and it takes me
back to human capital. This is an
economy that is clearly driven by the
talent of the individuals who live here.
You have an incredibly highly educated
population and to look at it the other
way, there aren't a lot of other natural
resources that Ireland and Dublin have
but you do have this incredible talent
pool and watching the development of
Dublin and around Ireland over the years
it really has been from my economics
perspective a study and how important
human capital is. The companies that have
international companies that have
brought their businesses here can take
them anywhere and yes there are tax
advantages and there are other things
but they wouldn't locate in a place that
they couldn't attract great human
capital. So for that I compliment you
and I want to you to think about how
best to disclose that with I would
say in your consultation with your EU
colleagues around how companies should
disclose their value to their investors,
and with those introductory remarks I'm
going to let Commissioner Gallagher grill
me. Thank you.
