Outlook: Green's Carlton bows out on a shameful note

Still Shell shocked; Lloyds TSB
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Revenge from beyond the grave. The only person laughing about Michael Green's record breaking £15m reward for failure will be the man himself, who will be positively revelling in the outrage it has sparked among fund managers. For him, it's a wonderfully satisfying two fingers up at the City, just rewards, he would think, for the shabby way in which he was sacked as the chairman in waiting of the newly merged ITV.

Yet I doubt he'll be laughing for long. As far as any publicly listed company is concerned, he's now dog meat, a pariah figure whom no one in their right mind would touch. Worse, he's provided Granada with all the ammunition it needs finally to cleanse the new company of all remnants of Carlton's legacy. The Carlton directors who approved this bizarre package of windfalls have shown themselves to be men of straw, and it's hard to see how the ones who have moved up to become non executive directors of ITV - Sir Brian Pitman, Ettienne de Villiers, and John McGrath - can survive such self-evident error of judgement.

Sir Brian Pitman, chairman of the remuneration committee, makes out that the board had little option but to pay out under an equity participation plan which shareholders themselves had approved. Hogwash. Their response should have been: "see you in court".

Sir Brian's two sentence statement on the matter yesterday was an insultingly brief and completely inadequate account of what looks like one of the worst case of executive excess yet to grace these shores. It fails utterly to provide either justification or explanation for the humongous nature of the payments. Chuck in what the finance director and company secretary are getting, and the grand total comes to £28m, equal to nearly a third of the annual cost savings ITV expect to derive from the merger.

The degree of opprobrium felt in the City is all the more intense because, as chairman of Carlton, Mr Green would persistently make public relations capital out of the fact that he had no contract with the company. The fact that he could theoretically be sacked without compensation was repeatedly contrasted by the Carlton spin machine with the two-year rolling contract enjoyed by his opposite number at Granada, Charles Allen. The hypocrisy of it all is quite breathtaking.

Instead of allowing Mr Green to be hoisted on the petard of his own rhetoric, the Carlton board approved a straight cash severance package of £1.8m and then used its discretion to declare that the merger with Granada amounted to a change of control which crystallised the equity participation plan (EPP). "Friends" of Mr Green point out that the windfalls delivered by the EPP depended on Mr Green meeting some demanding performance targets on total return to shareholders. An examination of the terms of the plan show these benchmarks to be about as exacting as a stroll in the park.

In large measure Mr Green was only able to achieve them because of the merger itself, which put a rocket under the share price and turned a disastrous relative share price performance into a mediocre one. Ah, but shareholders approved this scheme as long ago as March 2001, Mr Green's supporters say. Only true up to a point. What they approved was performance measured over a much longer period. The board took the view that the period had been truncated by the change of control.

That Mr Green should emerge from the wreckage of ITV's near fatal roadcrash with such an offensively large package beggars belief. If Sir Brian Pitman was ever the brilliant banker of legend, he's quite plainly now lost the plot, and should be put out to grass as soon as possible. Granada's nil-premium takeover of Carlton, once billed as a "merger" of equals, is complete. Granada executives have taken nearly all the top jobs, and the Carlton directors have now in effect voted themselves out of office too. It's a shameful end for all concerned.

Still Shell shocked

As theatre, Sir Philip Watts' grovelling mea culpa a month ago to the City and the press for the reserves débâcle at Shell was hard to beat, but it was never likely to save him, and so it has proved. Out too goes Walter van de Vijver as chief executive of Shell's exploration and production business.

The only real mystery is that two of them have survived as long as they have. It's now more than two months since the company stunned the City with news that it had overestimated oil reserves by as much as fifth. Bizarrely, Sir Phil thought this an announcement of such little importance that he didn't bother to show up in person to explain it to the City.

Once he realised his mistake, he was deeply sorry, but he was determined to stay on to address the weaknesses the reserving fiasco had so forcefully highlighted. The cogs grind exceedingly slowly at Shell, but even the dunces charged with stewardship of this bureaucratic, double headed leviathan eventually figured out that the company would always have something of a credibility gap as long as Sir Phil remained as chairman. By firing him and his head of production, they hope to draw a line under the affair and move on.

Unfortunately, it's not going to be that easy. The City wants change at Shell as much as a scalp, and it doesn't seem likely that the new man at the helm, another Shell "lifer", Jeroen van der Veer, will deliver it. Mr Van der Veer is apparently highly thought of in his native Holland, but he's hardly the new broom the City hoped for, ready to sweep out the old, bring about a unified board and instill the organisation with the sense of urgency it so plainly needs.

A real difference of opinion is developing between the Dutch and the British halves of Shell about what ought to be done and how. For the Dutch - who through Royal Dutch Petroleum have a controlling interest in the assets - slow, incremental change seems a perfectly acceptable way of proceeding. For the Brits - who through Shell Transport and Trading Company have just 40 per cent of the assets - the solution lies in radical reform and an all embracing shake-up. If the appointment of Mr Van der Veer turns out to be an excuse for doing nothing, then the City might reasonably think it would have been better off with Sir Phil, who at least seemed galvanised into activity by his mistake.

We still don't know what lay behind the reserving fiasco. Was it cock-up, or deliberate misrepresentation that led the company so seriously to over-estimate how much untapped oil lay beneath the ground? Yesterday's Pravda-like statement from the company cast no further light on the darkness. In dead pan fashion, it details the management changes, but it fails to explain why they have been made or what they might lead to.

Shell insists it can say nothing as long as the Securities and Exchange Commission continues to investigate the company, for fear of compromising its position in the mountain of litigation which has already been filed against it. Like a rabbit held in the headlights of an oncoming car, the company seems incapable of meaningful movement. Total rigor mortis cannot be long in coming.

Lloyds TSB

Lloyds TSB is expected to confirm the appointment of Helen Weir as its new finance director with today's results. To the City, Kingfisher's former finance chief FD seems a less than brilliant choice, the more so as Lloyds TSB is these days widely thought of as a "problem" company and her predecessor, Philip Hampton, was so highly thought of. Even so, Lloyds believes it has won over enough to shareholders to risk going live with the appointment.

Eric Daniels, the newish chief executive, has been in the job nearly a year now, and he badly needs to say something positive. So far, he seems to have spent most of his time fire fighting legacy problems. Ms Weir is presumably perfectly competent, but the City was hoping for more.

jeremy.warner@independent.co.uk

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