Michael Harrison's Outlook: A bad smell for Rose but surely nothing more

Still Shell-shocked; Electric shock
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It has been a bad week for Stuart Rose and, given the rate at which familiar names are appearing on the Marks & Spencer shareholders register, things could easily get worse for its chief executive before they get better.

It has been a bad week for Stuart Rose and, given the rate at which familiar names are appearing on the Marks & Spencer shareholders register, things could easily get worse for its chief executive before they get better.

There is no doubt that Mr Rose has been the author of much of his own misfortune. He was ill-advised, to say the least, to buy shares in the company in the first place when he had made it so painfully and so publicly obvious how keen he was to become its next chairman or chief executive and when the froth of takeover speculation was never too far away. Far better to have waited until he was installed and then buy some shares as a demonstration of faith in the business.

He was unfortunate that the share purchase should then take place through his brokers a matter of hours after he had taken a call from Philip Green inviting him to a meeting at which Mr Green's plan to bid for M&S was subsequently disclosed. It is doubly unfortunate that Michael Spencer of Icap then piled into M&S to the tune of £5.5m the day after having a drink with his old friend Mr Rose and the day before Mr Rose met Mr Green to be invited to chair his bid vehicle.

All this has generated a fearful volume of noise. But does it amount to anything more sinister? To a lot of people, the profits made on this flurry of share trading will look immense and the timing too coincidental for comfort. Mr Rose is better off by £86,000 and Mr Spencer by something closer to £2m. But these were wealthy men before they dabbled in M&S. Mr Rose was already worth £20m, thanks to the pay-off from his last job, and Mr Spencer is not called the City's richest man for nothing.

Before the share dealings came to light, the Green camp was trailing badly in the battle for hearts and minds. The appointment of Mr Rose as M&S chief executive seemed rather to knock the stuffing out of the Green machine, leaving the impression that it was flailing around for a strategy.

The taint of innuendo and the smear on Mr Rose's character left behind by the share deals has done the Green camp plenty of favours. It has enthusiastically gilded the lily by leaking the disputed account of what Mr Rose may or may not have told Bradford & Bingley's finance director, Rosemary Thorne, at the Chelsea Flower Show about fronting the Green bid company.

But it does not appear to have any more ammunition in its locker. The killer blow would be to demonstrate that Mr Rose was privy to Mr Green's bid plans before he acquired his shareholding. But, critically, the one thing that both camps agree on is that M&S was not discussed during that famous telephone conversation.

Unless the Financial Services Authority can prove otherwise, it looks as though the share dealings of Mr Rose and Mr Spencer were the acts of inveterate traders scenting a bargain and acting on their wits. To have acted with the benefit of inside information would have been not only illegal but stupendously stupid and that is not an attribute which applies to either man.

The heavy trading in M&S shares and the sharp rise in price in the 36 hours preceding the announcement of the Green bid is another matter. Getting to the bottom of whether the law was broken then could be a lengthy business for the FSA. But deciding whether to take any action against Mr Rose or Mr Spencer is another matter. The FSA owes it to both men, and to the shareholders of M&S, to come to a judgement speedily so that the battle for the business can be fought without distraction. Yes, Mr Rose's share dealings are an embarrassment. But at this stage they look no more than that.

Still Shell-shocked

They went to listen to Big Ron, but sadly, answers came there none. No one expected the chairman of Shell Transport & Trading, Lord Oxburgh (Ron, apparently, to his fellow directors) to have the mating habits of the grey whale at his fingertips or the precise geography of the Niger delta committed to memory. But it wasn't only the environmentalists who turned up at yesterday's annual meeting that found themselves entering an information-free zone. Ordinary investors seeking a glimpse of the new-look streamlined, simplified and transparent Shell also went away none the wiser.

Shell had promised investors an update on the progress of the review into its corporate structure. The mere fact that it had to hold separate AGM's in London's Docklands and the Hague in order to do that says about as much as needs to be said about what is wrong with the current set-up.

In the event, Big Ron was unable to deliver. He is a decent enough cove but he is clearly way out of his depth and he is chairing, in name if nothing else, a company which is obviously still in denial.

One shareholder asked why the annual report for 2003 failed to include biographical details of the three board directors who had been fired after the year-end for inventing oil and gas reserves. Ron gamely replied that Shell would rectify that omission should it ever find itself in a similar position again. Inspired stuff.

As to why the misreporting (please don't call it deceit) went on for so long, Ron said that he and his fellow non-executives could not have been expected to know earlier how far the wool was being pulled over their eyes because the directors in question had been "economical with the information".

No more economical, alas, than the new Shell management has proved to be since. The identity of those board members conducting the review of Shell's structure, and their terms of reference, had to be dragged from the company.

To take another example, when Sir Philip Watts was frogmarched out of the chairman's office one evening in early March, Shell said it was far too early to say if he would get a pay-off. Yesterday shareholders were let into the little secret that his severance terms had, in fact, been sown up inside three hours on the night in question. Quite why it then took Shell another three and a half months to announce the details of his pay-off, shareholders were not told.

If Shell cannot manage something as simple as paying the minimum amount legally required to a director who has presided over its worst crisis in the century it has existed, then it does not augur well for the much bigger job of dragging the company into the next one.

As usual, institutional shareholders were thin on the ground yesterday although the National Association of Pension Funds would probably argue that getting five of them to stand up and ask a question classed as an amazing turnout.

It was left therefore to the small shareholders to carry the baton. The one who suggested that Shell continues to inhabit a parallel universe got it just about right.

Electric shock

There was a nasty shock in store yesterday for the electricity industry, which had expected its regulator to allow companies to increase bills to pay for a £5.5bn investment programme. In the event, Ofgem has told them to cut prices and make up the difference by being more efficient. It is early days and the industry has time yet to change Ofgem's mind. EDF Energy, the owner of London, Eastern and Seeboard, has come off worst but it is owned by the French taxpayer. Surely the two could not be connected.