David Prosser: William Hill investors on a losing streak over executive pay

Outlook: It is difficult to see how Labour's leader might deliver greater responsibility on executive pay without a more interventionist mindset
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The Independent Online

The politics of envy? Well, if the swipe by Ed Miliband at excessive executive pay yesterday was designed to appeal to his trade union supporters, he should have gone further. The Labour leader's calls for greater disclosure and accountability fell short of the sort of intervention on executive pay for which many union bosses have been calling.

In practice, what Mr Miliband wants is a requirement for companies to publish how much their top earners get compared to staff on average pay. He doesn't think there should be a legal cap on the ratio.

One sees his point: as Mr Miliband says, it is not the role of government to impose pay restrictions on private enterprise. Still, if the Labour leader thinks greater transparency will enable shareholders to hold executives to account, he has another thing coming. Our largest companies appear to be unmoved by shareholders' views about what they pay their executives.

Take William Hill. A month ago, the bookmaker suffered public embarrassment when almost 40 per cent of its investors refused to back its remuneration report, so disgruntled were they about levels of pay at a company where their shares had fallen by getting on for 10 per cent over the previous year.

What has been the bookmaker's response? Indifference, if the announcement it made yesterday is anything to go by. It has handed chief executive Ralph Topping a large pay rise plus a bonus of shares worth £1.2m at today's price in return for his agreeing to continue running the company until at least the end of 2013.

In defending the award, William Hill's chairman, Gareth Davies, not only chose to ignore shareholders' concerns about the bookmakers' pay policy, but effectively thumbed his nose at their revolt – he did mention that fractious annual general meeting a month ago but only to say it showed investors wanted the company to be "well-led".

Is Mr Topping worth it? Well, let's be fair. So far, William Hill shares have not performed well during his term in the chief executive's office, but nor has the wider sector. The bookmaker's results have been much better and he is highly regarded in the City.

Still, that's not the point. This is a company that believes the right way to respond when four in 10 shareholders signal they believe executive pay is too high in relation to performance is to increase the rewards on offer. That certainly doesn't look like "the real accountability to shareholders" of which Ed Miliband speaks – and it isdifficult to see how the Labour leader might deliver greater responsibility without a more interventionist mindset.



Getting it right at last on payment protection

There was some criticism yesterday of the Financial Services Authority's decision to extend the time the banks have to respond to complaints about the mis-selling of payment protection insurance, with the consumer group Which? leading the chorus of complaints.

But while this is a scandal that has been going on for far too long, mostly because of the rearguard action that the banks had until recently been fighting, it surely makes sense for the banks to be given time to ensure complaints can be dealt with properly.

If the FSA believes that forcing the banks to stick to the eight-week time limit that usually applies in these cases might not see the interests of justice properly served, then offering an extension is the right thing to do.

As for Barclays' decision to pay up, no questions asked, on all PPI complaints made before 20 April, that looks sensible too, both from the bank's perspective – investigating these cases is time-consuming and costly – and that of its customers. It will be interesting to see what view it takes on complaints received after that date, with the publicity then over the banks' loss of a judicial review of the FSA's behaviour likely to have prompted another spike in claims.

In the meantime, Lloyds and Royal Bank of Scotland should follow Barclays' lead. The sooner the banking industry puts the seemingly never-ending saga of PPI behind it once and for all thebetter. And it ill behoves too banks that are substantially in public ownership to be seen as lagging a private-sector rival on consumer protection.



ENRC is the wrong buy for Glencore

Investors in ENRC, the Kazakh mining group, are currently on a roller-coaster. Having seen their shares dump last week as rather too much corporate governance-related dirty washing was done in public, the stock finished top of the Footsie leader board last night amid reports that Glencore is about to pay £12bn for the company.

Still, those who expect good news on this score from Glencore today when it provides its first trading update since its colossal IPO are likely to be disappointed. For it seems clear that Glencore can't buy ENRC, or at least not in the next six months – because under the terms of its IPO it promised not to issue more shares for that period after its listing and it does not have the resources for a £12bn takeover without offering at least some paper.

Even after the six-month period comes to an end, will Glencore want to hand over a chunk of itself to ENRC's biggest shareholders, the government of Kazakhstan and a trio of Kazakh billionaires? Glencore, after all, has had its own reputational issues to deal with – the corporate governance baggage with which ENRC comes would only add to them.

All the more so since it is quite possible that by then ENRC will find itself under investigation by the Financial Services Authority. Such has been the outcry over its governance standards over the past few days that the FSA ought to heed calls for another look at the flotation even if it thinks no rules have been broken.

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