Michael Harrison's Outlook: Money talks for Shell's singing director

Sky pay-off; Drained out
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The Independent Online

Shell is hardly a byword for good corporate governance, and yesterday it lived up to its reputation by producing another stonker of a pay-off for one of the directors caught up in its reserves reporting scandal.

Shell is hardly a byword for good corporate governance, and yesterday it lived up to its reputation by producing another stonker of a pay-off for one of the directors caught up in its reserves reporting scandal.

On this occasion, however, there is a twist in the tail. Walter van de Vijver is going to have to sing for his severance. In order to qualify for his full £2.5m package, the company's former head of exploration and production will have to co-operate with the "relevant authorities" as they conduct their various criminal inquiries into how Shell came to invent quite so many non-existent barrels.

Mr van de Vijver should have no problem in turning Queen's evidence. He has already protested his innocence from the rooftops and those famous emails complaining about being "sick and tired of lying" over the true state Shell's reserves suggest that, at the very least, he was indeed a reluctant accomplice.

The pay-off is two and a half times what his former chairman Sir Phil Watts got for walking the plank as well, which only goes to show that it pays to be Dutch if you are about to suffer a sudden loss of confidence among the rest of the board.

In addition to the £2.5m severance package, Mr van de Vijver can also start to collect a £258,000 pension when he reaches 60 and gets to keep 271,500 options, which may even be worth something one day. No wonder he could afford to forfeit his performance shares.

Things aren't looking quite so rosy for Sir Philip despite his own £1m severance deal. He has maintained a Trappist vow of silence since the day he was frogmarched out of Shell Centre but then he wasn't offered the same kind of plea-bargain deal as his former colleague appears to have got. The company's own report into the scandal was about as damning of the former chairman's behaviour as it was possible to be and now it looks like Sir Philip's former colleague is going to stitch him up like a kipper by singing to the authorities.

As usual, Shell is unable to cast any light in the darkness as to why the two men's severance arrangements are so different in size and nature. Perish the thought that one of them is being paid to grass up the other.

Sky pay-off

Corporate governance is not exactly BSkyB's strongest suit either and so it was that James Murdoch arrived with his wheelbarrow yesterday to collect the 450,000 free shares he was promised when he got the chief exec's job in May.

He can't cash them straight away, mind. Some of them are subject to "internal performance metrics being outperformed". What this means in layman's terms, Sky is not saying and any shareholder with the temerity to ask is likely to get a satellite dish over the head for their troubles. The rest depend on what happens to Sky's total shareholder return. Since Mr Murdoch's little profits warning last week, this isn't looking so healthy either. But again, because Sky is unable to say what hurdles the shares will have to jump in order for its chief executive to scoop the pool, it is all pretty unsatisfactory.

Does it mean he has to meet the subscriber targets Sky set out last week? By the way, that's 8 million homes by the end of next year and 10 million by 2010, a quarter of which will need to be plugged into Sky+. None of your business, old boy.

Or does it simply mean that the chief executive needs to have a surname beginning with M and finishing with an "h"? Now steady on, that's just plain gratuitous.

Sky's last chief exec, Tony Ball, left with a £10m "non-compete" payment in his back pocket which shareholders only found out about after the fact, so the lack of transparency about Mr Murdoch's incentive arrangements should not come as any surprise. Nor should the fact that Sky doesn't really care one way or another what shareholders think. After all, his father anointed James to the job without bothering to ask what anyone else felt.

James Murdoch may turn out to be an inspired choice for Sky and certainly his decision to launch a free-to-air digital service was a bold gambit. But his cause is not being helped by the disdain with which Sky treats its outside shareholders. In such circumstances, there is only one thing they can do and bale out. Judging by the continued spiral in the Sky share price, a lot of them have been doing just that.

Not funny, Harry

Harry Hill (the estate agent, not the comedian) hasn't had much to laugh about lately and yesterday was another glum day for the chief executive of Countrywide, Britain's biggest estate agent. His observation that sales volume went down by a quarter in July put the skids neatly under Countryside and the shares went down by the sort of percentage that most buyers look for off the selling price.

The words "estate agent" and "sympathy" don't often find their way into the same sentence, but you have to feel a little bit sorry for Countrywide. July and August are traditionally the slowest period of the year for the housing market so reading too much into one month's figures seems a touch premature.

But if Mr Hill, and most other estate agents around the country are right, then the housing market has indeed already come off the boil. Countrywide reckons it has not seen any price inflation for the last four months whatever the Nationwide and Halifax might say to the contrary, which means that last week's interest rate rise was unnecessary. If he is right, then the challenge for the policymakers is to engineer a nice soft landing, not the kind of precipitous plunge to earth Countrywide experienced yesterday.

The goods news for Mr Hill is that Mervyn King feels the same way about house prices and thinks, at last, that reality is beginning to catch up with the Bank of England's forecasts. At least that should put a little smile on Harry's face.

Drained out

Does Jim Zockoll really not care if the flotation of Dyno-Rod goes down the drain for the sake of £1m? Apparently not. There may yet been a face-saving deal to get the offer away but the former Pan-Am pilot looks intent on sticking to his guns. He wants £60.5m for the business and has been offered £59.5m. It hardly seems a large enough gap to worry about. But then again, the obstinacy of Dyno-Rod's founder perhaps explains why he has been trying to sell the business for 18 months without success.

At the ripe old age of 74, you might have thought that Mr Zockoll would be keen to cash in so he could enjoy the money while there is still time. Not a bit of it, seemingly. He could just as easily continue sending out the vans and collecting the dividends. As Dyno-Rod is run as a franchise, there is not too much management of the business to worry about either. Come to think of it, that sounds like a nice business to be in.