Camelot bosses are not fat cats after all

IN A short space of time, it has become a vast business - a licence to print money that has indelibly imprinted itself on the national psyche while in the process promoting a host of mini-celebrities.

Yet Camelot, the operator of the National Lottery, is a major target of criticism for excess profits and accusations of fat cattery against its directors.

Research prepared by the Monks Partnership, a leading executive pay consultancy, sheds some light on the situation, while suggesting that broadly speaking, the executives may be being paid a fair going rate for their services in terms of how senior directors of quoted companies are rewarded.

The problem lies in trying to find a suitable benchmark for such a peculiar beast as Camelot. Sales of over pounds 5bn suggest an enormous behemoth, but in reality the company achieves that on negligible assets of a mere pounds 70m, and a staff of just over 600. Shareholders' funds are a paltry pounds 145m. Any businessman in Britain would give their eye teeth for such massive returns from this tiny base.

For these achievements chief executive Tim Holley was paid pounds 284,000 in salary, a pounds 126,000 bonus, and was granted another pounds 202,000 from a long- term incentive plan, which with other payments make a total of of pounds 636,000, up from pounds 590,000 the previous year.

His colleague, Peter Murphy, the finance director and director of business operations, earned pounds 429,000, which included pounds 175,000 in salary, pounds 79,000 as a performance-related bonus and pounds 127,000 from a long-term incentive plan.

The regulated utilities can boast similar sales to Camelot. They also have in common remarkable natural monopolies, which have required the appointment of a tough regulatory regime to prevent exploitation of the consumer. However, any comparison ignores the massive infrastructure in which the utilities operate, as well as the substantial capital investment programmes they run to maintain and upgrade assets.

In this category The Energy Group, National Power, PowerGen, Scottish Power and United Utilities are all likely candidates for comparison.

The average earnings for the chief executive or executive chairman in this group came in at pounds 331,000, with a bonus on top worth 32 per cent of base salary.

On base salaries, the Monks Partnership finds that Camelot is not overpaying - both the chief executive and the finance director's base salaries are around 85 per cent of the utility bosses' wages. That, however, ignores the effect of the controversial long-term incentive plan run by Camelot for its senior executives. This was to compensate for the absence of shares in the business, while the directors recruited to run Camelot had to forfeit share option schemes at their previous employers.

The scheme has now been dropped, and last year's contribution was the final payment to be made from it. It has been replaced by a long-term loyalty scheme, which kicks in during the year 2001 if Camelot retains its licence when it comes up for renewal.

Finally, one can look at stock-market companies whose pre-tax profits are broadly in line with Camelot's. Last year, Camelot made pre-tax profits of pounds 80.9m.

The Monks Partnership found 11 companies with pre-tax profits ranging from pounds 70m to pounds 90m - from house builder The Berkeley Group to construction company Taylor Woodrow.

In this group, the chief executive's base salary is on average pounds 275,000, which is further topped up by a performance-linked bonus worth 31.7 per cent of salary, taking total earnings to pounds 372,300. David Atkins, of the Monks Partnership, says the figures show a remarkable similarity with those of Camelot.

While these findings may provide some small comfort for the board of Camelot, they are unlikely to appease its critics.

Neil Moister, of the independent Labour Research, says that there are too few guidelines as to how top directors should be remunerated. "Directors still seem to find new ways of lining their pockets," he said.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee