Chris Blackhurst: Juicy share carrots for top brass? Troubled Quindell must fall into line

Midweek View: Upmarket shoppers did not want to buy exotic fruit from the same store flogging cheap baked beans

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The Independent Online

Whatever they serve as water at Quindell must be worth bottling – because clearly it contains different properties from the plain stuff that is served elsewhere.

Fresh from the departure of founder and chairman Rob Terry, after it was revealed that he and two other directors had bought shares in the company using loans secured against their holdings, the insurance claims processor is at it again. The former stock market darling, which has seen its shares slump 87 per cent, has granted more than £25m in stock options to his successor as chairman, the deputy chairman and existing executives.

Richard Rose, a former Helphire executive and current chairman at Booker and AO World, is joining as non-executive chairman and will receive options on 8.7 million shares. This, despite the UK’s Corporate Governance Code stating clearly that non-executive directors should not receive share options.

There’s more. Jim Sutcliffe becomes deputy chairman and strategy director, and gets options on 10.9 million shares. They’re exercisable within 12 months. Sutcliffe chairs the standards committee of the Financial Reporting Council that writes the code. That code states that “options should not be exercisable in less than three years”.

The argument goes that Quindell had to act fast, and if it wanted to recruit people of the calibre of Rose and Sutcliffe it had to dangle large carrots in their direction. Better for investors to get them at a price than not get them at all. That, certainly, was the reaction, with the shares climbing 26 per cent. But, honestly, is this any way to behave?

There is a get-out in the code of “exceptional circumstances”. That’s the same excuse that has been wheeled out to defend directors taking multi-directorships, which is also contrary to the code.

The response to Quindell, which seems to relish testing the boundaries of acceptability, and the shameless behaviour of its new recruits, must be to close the loophole. Quindell is a relative minnow, stock market-wise. But there are plenty of giants who would love to be able to offer juicy inducements to persuade proven stars to join them.

By not acting against it, Quindell very quickly comes to be regarded as the norm rather than the exception – the phrase “exceptional circumstances” ceases to have any real meaning.

We’ve had too much of this lackadaisical approach in the City, too obviously a light touch. The code needs tightening, and Quindell must fall into line.

Philips had a vision, but it didn’t involve much growth

Damn. I never did get to try the purple potatoes and samphire from Morrisons. I didn’t buy vegetables laid out on beds of ice and sprayed with water.

Now, with Dalton Philips’ departure, I don’t suppose I ever will. He had something, did Dalton. Ideas? Energy? He had those in droves. Did he have a clear vision for how to grow Morrisons? Not really.

To be fair, he wasn’t alone. Old Sir Ken did, building up his eponymous chain across the north of England. But Ken could not resist the appeal of heading south and buying Safeway in 2004, and from then on, business has been a struggle.

While Morrisons’ management was struggling to absorb its new buy, the German discounters were making inroads, especially in its northern heartland. Londoners are not so conscious of the impact of Aldi and Lidl – the smart dinner party chat about the cheap but brilliant prosecco and the high-quality German skin creams is a recent phenomenon. But in parts of the North they’re established, major players.

Morrisons fell into the trap of not knowing what it was: a pile-it-high, sell-it-cheap merchant of branded goods to some; a purveyor of fresh salmon fillets and beef steaks, all sourced from its own farms, to others. Sir Ken was succeeded by Marc Bolland, a Dutchman who gave the impression of being more at home at the top of the market than the bottom (and so it has proved, with Bolland subsequently making a decent fist of Marks & Spencer’s food offering).

By the time Bolland moved on, Morrisons was dangerously exposed. It was not in the right areas, did not possess the cachet, and lacked the product range and specialisation to be a hit at the premium end. Upmarket shoppers did not want to buy, as Philips wished them to, exotic fruit and veg, including white beetroot and a dozen varieties of tomato, from the same store that was flogging mountains of cheap lager and baked beans. They stuck to Waitrose, and in the North-west, to Booths.

Neither did Morrisons have deep enough pockets to tackle Aldi and Lidl head-on at the budget end. It was one of the “Big Four”, with Tesco, Asda and Sainsbury, but the smallest player. They were all quicker to move into convenience stores and selling online.

Yesterday’s analysts’ call was pretty uncomfortable. For both Philips and Andy Higginson, Morrisons new chairman. They seemed to be saying the strategy was right. In which case, why remove its architect? A clearly unhappy Philips had to listen as the City was assured that the new chief executive will be a “fresh pair of eyes” and “won’t be anyone with L plates in food retail”.

Higginson was finance director at Tesco, and the betting has to be that he will have searched among that group’s alumni for a Morrisons boss. Presumably, that quest is nearing fruition because Philips goes in early March.

The market paid Philips the rudest of tributes by marking Morrisons shares up. But all the quoted major supermarkets have changed their chief executives in the past six months. Morrisons is not alone – it’s a sector in crisis. Will his successor really be able to do any better?

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