Business View: Even if he beats the bid, Rose will need the rub of the green

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The Independent Online

How much is Stuart Rose worth? Is it the generous £1.25m signing-on fee plus £850,000 salary awarded when he was hired three weeks ago to be chief executive of Marks & Spencer? No. How much is he really worth? The answer is a staggering £360m.

How much is Stuart Rose worth? Is it the generous £1.25m signing-on fee plus £850,000 salary awarded when he was hired three weeks ago to be chief executive of Marks & Spencer? No. How much is he really worth? The answer is a staggering £360m.

Here's how we get to that figure:

The chief executive and his board took all of an hour and a half on Wednesday afternoon to decide that the revised £8.38bn takeover proposal for M&S, from billionaire retailer Philip Green, was too low.

On the last day of trading before Mr Rose joined M&S, the group had a stock market valuation of £8.14bn - and this already included the expectation of a bid from Mr Green. So, let's for the moment assume that Mr Green doesn't buy M&S. Mr Rose's challenge over the next six months will be to prove to shareholders that he can grow M&S's share price above Mr Green's offer, priced at 370p a share.

And, if we are really to judge whether Mr Rose has been a success, we must a add a few pence per share to that price to take account of the anticipated growth in the stock market. Let's say an extra 7p per share. Therefore, Mr Rose must turn M&S into an £8.5bn business by Christmas.

This may seem a like a cold-hearted way of assessing the chief executive's performance; it doesn't take into account any improvements he may make to sales or M&S's cost base. But this is exactly the sort of calculation that Mr Green will himself be making.

What is absolutely certain is that any sign of weakness and the raider and his bankers will be back - trying to bang down the door to Mr Rose's office.

I am, of course, making some big assumptions here: that Mr Green's tilt at M&S is destined for failure; that any future bid won't be enough to convince M&S's shareholders to sell out; and that he won't go hostile.

Mr Green is a talented turnaround merchant with deep pockets. But he does not overpay. Nor do his backers, who would need a lot of convincing to stump up the necessary readies to make the offer attractive enough for M&S's shareholders to sell out.

Perhaps Mr Green has got an ace up his sleeve - and what a story that would be. If he does have, then he's doing a very good job at maintaining a poker face.

Certainly, the vast majority in the City have concluded that Mr Rose will be in charge of M&S for the time being. A flurry of notes from investment banks last week said that with Mr Green out of the way, M&S shares would quickly fall back to around 310p, valuing it at 7bn. This would make Mr Rose's task - of proving that he can beat Mr Green's 370p-a-share offer - even more of a slog.

Why so shy, Shell?

What a coincidence. Two of Shell's larger US shareholders, Calpers and Knight Vinke, wrote a pointed letter to the FT on Wednesday, criticising the troubled oil company for keeping them in the dark on the details of its wide-ranging review. Lo and behold, the next day Shell reveals details of its review and admits that it will do away with its so-called priority shares - which carry extra voting rights - controlled by the management of the group.

Shell should be applauded for scrapping this arcane tradition, but before we run away with the praise, two things must be borne in mind.

First, Shell had the audacity on Thursday to claim its disclosure had nothing to do with shareholder pressure. If you believe that, you believe Shell's 2002 oil reserves statement was spot on.

Second - and I am assuming you don't have a great deal of faith in the statement - why did it take weeks of nagging by shareholders and finally a threat of awkward questions at the AGM for Shell to open up?

Investors are worried that Shell still has something to hide. Being needlessly secretive and evasive will do nothing to convince the City that it can be trusted again.

Clayton.hirst@independent.co.uk

Jason Nissé is away

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