Coxless Railtrack heads slowly for the sidings

Railtrack; Wonder of Woolies; Shac attack
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The Independent Online

Railtrack might not be any good at running a railway but it is becoming ruthlessly efficient at sacking directors. Yesterday it got rid of the hapless Jonson Cox, who had been there less than a year and becomes the second executive board director to be thrown off the train in the last two months. For the record, Railtrack has now had two chairman, two chief executives and three finance directors in the space of the last 10 months. That is what some people would call a company in crisis.

Plainly Mr Cox, who arrived at Railtrack from Yorkshire Water, was out of his depth almost from the start. He had been in the place for just 11 weeks when he was promoted to the job of chief operating officer after Gerald Corbett was thrown from the footplate following the Hatfield crash and the board had to pretend it had a coherent management succession plan in place.

Needless to say, Mr Cox's share options are many leagues under the water. The sting in the tail is that, unlike Mr Corbett, he does not receive a fat pay-off but will continue to draw a monthly salary only until such time as he finds gainful employment elsewhere.

His responsibilities for running the network now pass to the latest chief executive Steve Marshall, who also took over direct control of projects such as the west coast mainline and Thameslink 2000 (better make that Thameslink 2008) after the board asked Simon Murray to walk the plank.

At least the rail unions and rent-a-quote Labour backbenchers cannot complain that Mr Marshall is not working for his £450,000 salary. He now seems to be doing everything round at Railtrack House apart from printing the timetables

So is Mr Marshall spreading his talents too thinly? John Robinson (he's this month's chairman) says not. He is there to run the shop while the chairman is being barbequed on the Today programme by Jim Naughtie.

In any case, it will become academic if Tony Blair presses ahead with the plan to wrest day-to-day control of the network from Railtrack and hand it to Richard Branson and the other train operators. When Sir Alastair Morton's shiny new fleet of "special purpose vehicles" get their hands on the upgrade work, there will be even less to do at Railtrack which will finally be shrunk to fit its share price.

Wonder of Woolies

Gerald Corbett may have torn up his season ticket but his new berth at Woolworths scarcely looks any more comfortable. Having failed to unseat Mr Corbett in the run-up to the Woolies demerger, Kingfisher's Sir Geoff Mulcahy has done the next best thing and left him with a miserable legacy and a king-sized mess to clear up.

Not too many listing documents contain a profit warning but there is a humdinger of a one from Woolworths. After absorbing the losses from its previous owner's forays into e-commerce and new store formats and conducting a firesale of the stock mountain carelessly left behind by Sir Geoff, Woolies will be lucky to make half last year's £95m operating profit

There is more bad news. The sale and leaseback of 155 of Woolies' biggest stores on the eve of the demerger may have netted Kingfisher £600m. But the rental terms bequeathed to Mr Corbett will eat a £130m hole in his cash flow on top of the cost of servicing the £200m in debt. To add to his woes, he will have to start hunting sooner or later for a new out-of-town headquarters and a heavyweight non-executive to take the spot due to have been filled by Jonathan Fry until he paid the price for publicly backing Mr Corbett in his scrap with Sir Geoff.

Woolworths has been allowed to run to seed in the last couple of years. For the next two, shareholders will have to forget about growth and content themselves with a fat dividend yield as the new management team tries to fix the core business.

But on the plus side Woolies is a solid brand with some good market positions in sweets, toys and entertainment even if it can't decide whether it is W H Smith without the books or Argos with the catalogues.

The aim is to take on Boots in health and beauty products, which looks like a high-risk strategy even with the advantage of the 18-month supply deal it has struck with Superdrug, the other ex-Kingfisher stablemate. Woolies is not the first place most of us think of shopping in for fragrances yet, in some high streets, it remains the only big store in town.

Mr Corbett has given himself a year to find a chief executive. In the meantime he will be paid an annual salary of £440,000 in addition to the £500,000 bonus he is collecting for bringing Woolies to market. There is a fashionable view that executives like Mr Corbett should work for nothing and then hand back their pensions when they leave. But if Mr Corbett can bring back the wonder of Woolies, shareholders should not begrudge him a penny.

Shac attack

Stop Huntingdon Animal Cruelty (Shac) have shown themselves to be a particularly determined and creative bunch of activists. The animal rights group, which has waged a two-year campaign against Huntingdon Life Sciences, a firm which tests drugs on animals, has been almost universally condemned by liberal opinion in this country. But it seems to have have friends in the unlikeliest of places.

Having frightened every UK bank, broker and investment institution to shun Huntingdon with some unpleasant tactics, it has now targeted the firm's financial supporters on the other side of the Atlantic.

Shac boasted yesterday that it had breached the Bank of New York's security with the aid of a mole to obtain information on its clients. Bank of New York's "crime" is to provide a service to hold Huntingdon's American depository receipts in nominee accounts. Although the bank said the information was low-grade, it is clearly worrying that Shac can get hold of internal documents at all.

In this country, no financial institution will loan Huntingdon money, hold its shares or make a market in them. The British government has condemned Shac and has been forced to step in and allow the company to use the Bank of England to continue to trade in a remotely normal way.

Shac says their number one target now is Bank of New York. They are also after JP Morgan and Morgan Stanley for holding Huntingdon shares in nominee accounts. Let's hope the Americans shows more mettle than their British counterparts.

m.harrison@independent.co.uk

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