Berkeley’s looking solid now – but watch out, the roof could fall in

Outlook: Is it not worth seeing  if Vittorio Colao can create something  with what remains?

Happy days are here if you’re a shareholder in Berkeley, the home builder. The housing market is picking up. Rightmove’s identification of gathering momentum, with demand outstripping the supply of new properties, promises to make the going very smooth from here on out.

The group is well on track to meet City forecasts and, what’s more, it will return a truckload of cash to shareholders over the next few years.

Only one voting adviser raised any questions at the AGM and with the outlook so rosy, the view in the City was clearly that it would be churlish to make any fuss, with only a token rebellion against the group’s remuneration report recorded yesterday.

Unfortunately, this is a parade I’m about to rain on, and you should too if you have shares in the company, or if your pension fund does.

Take what it calls part A of the 2009 long-term incentive scheme, which pays out simply if an executive stays in post with no performance conditions. That might seem ok given that the company is doing well, even if the rosy outlook has as much to do with Government intervention in the housing market as it does with the work of Berkeley executives.

But what happens if things go awry? Take the example of Darty, which owned electrical retailer Comet in its earlier guise of Kesa. When it came to give the CEO the boot after performance cratered, it emerged that he was due a fortune simply for sticking around. His golden hello came with no performance conditions.

Investors kicked up a fearful fuss, throwing out the remuneration report and slamming shut the stable doors after the horse had swished its tail and headed off for a nice holiday in the sun. It was too late, however. When you allow schemes like this to slip through when things look rosy and jolly, they have a habit of biting back.

Of course, in Berkeley’s case that was the 2009 edition. The 2011 scheme has performance conditions, calling on executives to return cash to shareholders. Which is scarcely any more credible. Returning money to shareholders through the payment of dividends and the like is a very basic part of an executive’s job. Like turning up for work in the morning. It is what they are hired, and paid handsomely, to do. So why the extra?

Of course, the reason that there wasn’t much fuss about all this is that the AGM votes are controlled by fund managers whose own remuneration contracts tend to have similar sweeties. Meanwhile, most of the voting advisers prefer not to make too much of a fuss, because life’s simpler that way, and they like getting paid too.

The losers are those of us with generally meagre pensions, and other savings, invested in the stock market.

While the City would struggle mightily without us, we lack any meaningful way to influence the likes of Berkeley, whose non-executive directors will doubtless trot out the usual clichés about the importance of retaining “top talent” as the reason for waving through such corporate larceny.

The best of it is, Berkeley is a long way from being the worst offender. It’s merely at the tip of a very large iceberg.

It may be too soon to hang up on Vodafone

Christmas is coming earlier for some of those fund managers – if, that is, they have Vodafone in their stockings.

The telecoms giant is about to shrink dramatically, having finally resolved the tug of love over Verizon Wireless with Verizon, its US partner, which will pay $130bn (£84bn) to take full control of the operation. Vodafone deserves a lot of credit for playing the long game here. It has extracted a very good price at a time when the US mobile market looks like it is going to get tougher.

There has been speculation that the rump Vodafone – what will be  left after the divestment of its US joint venture – will now be a take-over target, composed as it is of some European and emerging market assets and capitalised at a size which a predator could (just about) contemplate swallowing.

But Vodafone’s shareholders should think very carefully before contemplating a second bite of a cherry that already looks set to leave their coffers fattened with a substantial windfall.

It’s true that Europe isn’t the most exciting part of the world in which to do business, while Vodafone’s record outside of it has been mixed at best.

But the chief executive Vittorio Colao has extracted an enormous slug of value from one part of the business. Is it not worth them seeing if he can create something with what remains?

That is a particularly pertinent question for UK-focused funds that invest in Vodafone.

They now have to find something to do with their share of an enormous Vodafone windfall, before they can even contemplate another.

Where’s that money going to go? More Kazakh miners, or other natural resources stocks, whose governance arrangements make Berkeley and its ilk look like paragons of virtue?

Or how about the UK banks which are set to come on to the market soon (and what’s the betting that UK Financial Investments seeks to test interest in Lloyds Banking Group shortly after the first tranche of the Verizon windfall is banked)?

Vodafone’s record when it comes to delivering shareholder value isn’t entirely unblemished, but compared with the likes Lloyds, and especially Royal Bank of Scotland, it’s had the touch of King Midas.

The top part of the UK stock market is dominated by miners, oil companies and banks, and that should give the people charged with stewarding our pensions pause for thought.

Vodafone actually has a multinational corps of investors, but those from these shores, whose success depends on British companies, might be well advised to be very careful before throwing the rest of this baby out with its American bath water.

News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
Sport
Romelu Lukaku puts pen to paper
sport
News
Robyn Lawley
people
Arts and Entertainment
Unhappy days: Resistance spy turned Nobel prize winner Samuel Beckett
books
PROMOTED VIDEO
News
people
Life and Style
Troy Baker and Ashley Johnson voice the show’s heroes
gamingOnce stilted and melodramatic, Hollywood is giving acting in video games a makeover
News
i100
Life and Style
Phones will be able to monitor your health, from blood pressure to heart rate, and even book a doctor’s appointment for you
techCould our smartphones soon be diagnosing diseases via Health Kit and Google Fit?
News
people
Extras
indybest
Travel
Ryan taming: the Celtic Tiger carrier has been trying to improve its image
travelRyanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Usain Bolt confirms he will run in both the heats and the finals of the men's relay at the Commonwealth Games
commonwealth games
Life and Style
Slim pickings: Spanx premium denim collection
fashionBillionaire founder of Spanx launches range of jeans that offers 'thigh-trimming construction'
News
Sabina Altynbekova has said she wants to be famous for playing volleyball, not her looks
people
News
i100
Life and Style
tech'World's first man-made leaves' could use photosynthesis to help astronauts breathe
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

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

Senior Analyst - ALM Data - Banking - Halifax

£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

Java developer - Banking - London - Up to £600/day

£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star