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
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Day In a Page

John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

39.8 degrees recorded on Tube

There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

Computerised cooking is coming

From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

Jessie Cave's feminist cartoons

The Harry Potter star tells Alice Jones how a one-night stand changed her life
Football Beyond Borders: Even the most distruptive pupils score at homework club

Education: Football Beyond Borders

Add football to an after-school homework club, and even the naughtiest boys can score
10 best barbecue books

Fire up the barbie: 10 best barbecue books

We've got Bibles to get you grilling and smoking like a true south American pro
Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin