View from New York: A portrait of paintings as the next junk bonds

Anyone on Wall Street still looking for evidence that the bull market has hit a top need only show up at a midtown Manhattan hotel next Thursday for the official launch of '2001, a Stock Odyssey'.

Even in a year when new listings such as Boston Chicken have proved wildly successful, 2001 is an unusual public offering. For one thing, its five-page prospectus is far more frank than any that routinely crosses this desk.

'The company is a start-up and has no operating history upon which investors can base their investment decision,' it explains. 'Management of the company has no experience in offerings of this type and will devote limited time to the operations of the company,' says the offering, adding 'there can be no assurance that the company will be in existence' when its obligations fall due in seven years.

2001, a Stock Odyssey is in fact a painting, and while its creator, Robert Cenedella, admits there is some conceptual art involved here, his backers, Contemporary Art Shares, are perfectly serious about selling 200 'shares' at dollars 1,000 apiece. Half the notes - which give holders the right to any profit on the sale of the painting in 2001 - have already been placed privately, says Chris Concannon, the company's chief executive. Mr Concannon is, of all things, a banknote printer.

The offering is not for equity in Contemporary Art Shares, Mr Cenedella's studio, or even in the oil painting, but for the right to participate in its appreciation - a kind of commodity option. The painting, which measures five feet square, is a satirical depiction of the floor of the New York Stock Exchange at the height of the last bull market in early 1987 - the Dow Jones is shown hitting 2001. Wall Street executives such as Ace Greenberg of Bear Stearns and Sandy Weill of Smith Barney Shearson are recognisable in the churning crowd.

Mr Cenedella's none-too-original point is that art is an over-hyped commodity and may as well be marketed that way. 'We've come to the point where the first thing people ask about art is 'What is it worth?',' he told the New York Times.

Investment advisers, of course, complain about the illiquidity of this commodity, while gallery owners worry that selling shares in paintings will only increase the role of money in the contemporary art market.

Mr Concannon, who has plans to securitise other art if Thursday's offering is successful, argues that art dealers are no less mercenary than their Wall Street counterparts. Just as public debt markets are supplanting bank loans, selling shares in art offers the public an alternative to high gallery commissions, he says.

'At least with SEC rules, buyers get full disclosure about what they're buying,' says the artist, who was a protege of the German satirist George Grosz and whose prospectus claims Jacques Chirac, the former French prime minister, among his patrons. 'At least you know the quality of the paints used, the canvas, the background of the artist.'

In the interests of full disclosure, the private placement documents also warn that 'the art market is highly subject to continually fluctuating tastes, and the value may fluctuate dramatically, and may prove to be of little or no value'.

It is hard to imagine now that in the days before hedge funds, art was considered a reliable hedging instrument. It was Andy Warhol who explained that 'good art is good business, and good business is good art', and Sir Andrew Lloyd Webber who took him up on at least half the idea, floating the Really Useful Theatre Company (ie himself) shortly before the 1987 crash, only to engineer a controversial buyout in 1990.

And it was Charles Saatchi who was arguably the first to take painting into the derivatives market in the mid 1980s, offering to buy an exclusive option - futures, if you will - in three shows by Jon Kessler, the New York artist, that had not even reached the drawing board.

The collapse of the Saatchi empire pre-empted that deal, notes one veteran New York art dealer. 'But for some speculators out there, it seems art is destined to be the junk bond of the 1990s.'

WORKING FOR THE YANKEE DOLLAR

It is no secret that the chief executives of big UK firms earn less than their counterparts in the US, and that some Americans are seriously overpaid - an average of dollars 4m ( pounds 2.66m) a year in a comparable group surveyed by Graef Crystal, a compensation expert with the Haas School of Business in Berkeley, California. But does that mean UK chiefs are underpaid?

'Top American headhunters ought to be scouring England, because British CEOs are great bargains compared with their American counterparts,' Professor Crystal writes in the New York Observer. 'Dollar for dollar of sales, and per cent for per cent of total shareholders' return, they are a far better buy.'

American companies, he notes, don't think twice about moving plants in search of cheap labour, so why not bring the cheap labour back to head office?

The study - conducted in conjunction with a UK newspaper - compared salaries at a dozen UK firms with US companies of the same size in the same industry. On average, US chief executives took home more than three and a half times the pay of their UK colleagues.

The differentials were as wide as 12.9 and 11.3 times in banking, although Prof Crystal identified one UK pharmaceutical executive - Bob Bauman of SmithKline Beecham - who earned more than his peer in the US. Mr Bauman, of course, is an American - an exception, he says, that proves the rule.

Prof Crystal, however, fails to note that both his examples of glaring disparities in banking - Andrew Buxton of Barclays and Derek Wanless of NatWest - were compared with the same US chief executive, the head of JP Morgan Bank, who made a handy dollars 6.1m in 1992.

The head man at JP Morgan is Dennis Weatherstone. Factoring out Sir Dennis, the average differential was considerably narrower.