What ho! It looks like the fat cat hunting season may be coming to an end, with a narrow victory for HSBC. There are one or two little squabbles still (but if shareholders vote against Sir Terry Leahy's contract in numbers, you'll know that madness has set in). And then there is the small matter of the DTI's discussion paper on "payment for failure".
This will thump down from Patricia Hewitt's office on Tuesday, causing consternation and world-weariness in equal measure. Archie Norman might spot one or two proposals that look familiar from his proposals a few months ago. But now that the former Asda boss is off the Tory front bench, he will probably be supportive rather than grumpy.
What Archie wanted, and Patricia is leaving the door open for, is legislation. I've set out the case against laws in this area in the past (just look at how Bill Clinton's fat cat limiting proposals backfired in the 1990s), but if you really must legislate, this is how you do it.
1) You say that companies have the right to disregard all employment contracts of more than 12 months.
2) You say that companies must disclose what has been done to mitigate the "payment for failure".
3) You stagger severance payments so they are paid monthly and can be stopped by a vote of shareholders.
However, I fear that what the DTI wants is some sort of definition of failure so that, if a director has "failed", his or her payment can be slashed.
Ms Hewitt might want to apply this a little closer to home before she tries it in the City. Who out of these ministers "failed"? Ron Davies? Peter Mandelson? Stephen Byers? This proposal is patent lunacy which will only enrich the lawyers and make it even less attractive to join the board of a public company.
Faith, hope and C&W
Trust is a difficult thing to win. And it's even more difficult to maintain.
Ask Cable & Wireless. Only six months ago this was a complete basket case. The City hated the chief executive, Graham Wallace, who resolutely refused to bow to pressure and resign. It was also heartily sick of a ridiculous situation involving musical chairmen. In the end, Richard Lapthorne, the man who flogged the more cruddy bits of British Aerospace to Marconi, took the helm, persuaded Mr Wallace to walk the plank and won the admiration of the City.
The 100 per cent improvement in the share price is a testimony to this. But now C&W is at one of its periodic crossroads. Does it shrink back to its ex-growth utility roots or does it still pursue the long- term riches of international data transfer?
New chief executive Francesco Caio will go for the latter. But as the Italian lacks the profile and easy charm of Mr Lapthorne, he needs to tread carefully if investors are to keep the faith. But I spy something that might worry any doubting Thomases. The old C&W loved consultants, and the new C&W appears to have retained the passion. It is being advised by strategy experts LEK and a certain Bill Trent, who used to be finance director of Energis.
And we all know what happened to Energis.
What crisis? This crisis
Trust is also in short supply at another member of the financially strapped former blue chip club, Invensys. The affable Rick Haythornthwaite won some brownie points by cutting his contract from two years to one (something that could be more pertinent financially to him than to, say, Gerry Murphy at Kingfisher). But he lost quite a lot of credibility over Invensys' declaration of a massive pension fund deficit.
Last year we were admonished by Invensys for suggesting the group was facing a pension crisis. "We have transferred large amounts of the funds into bonds," it said. That may have been so, but it was not enough.
Now if you look closely, you will see that Invensys is planning to use some of the £1.8bn it hopes to get from disposals to plug the £931m pensions black hole. Allowing for a bit of tax planning and the inevitable bankers' fees, this would leave only about £1bn to reduce Invensys' debts, which currently stand at £1.6bn.
You will end up with a much smaller company, which still has a lot of debt. I doubt that is what Mr Haythornthwaite thought he'd end up running when he started this process.Reuse content