The reign of King Des draws to a close

The chairman of United Utilities is fighting shareholders to keep his job, writes Chris Godsmark

Sir Desmond Pitcher, the chairman of United Utilities, is expected to fight to save his job at a specially convened board meeting in London this lunchtime. With big shareholders massing in the wings to force his early retirement before the official date in 2000, even his most loyal supporters inside the company are suggesting his days at the helm must soon be numbered.

Though the board meeting may not decide the issue today, the level of shareholder concern is such that Sir Desmond's tenure as executive chairman looks almost certain to end before Christmas. Soundings of City investors were taken last week by Sir Peter Middleton, chairman of BZW and a United non-executive director. Sir Peter was left in no doubt about the unhappiness over Sir Desmond's role in the shock ousting last month of Brian Staples as chief executive.

As one institution put it yesterday: "We'd prefer it if he left now. But you have got to be pragmatic about these things. If he goes in three months' time it's still a lot better than 2000." United is also under intense pressure to replace Sir Desmond with a non-executive chairman, avoiding future conflicts between the chairman and chief executive.

For Sir Desmond the loss of shareholder confidence so soon after the sacking of Mr Staples has a bitter irony. Though Mr Staples' reputation in the City was somewhat mixed, it was the exposure of the machiavellian goings on inside United's Warrington and Mayfair headquarters which cast doubt of Sir Desmond's own position.

His proud championing of United's "Progress with Responsibility" initiative at the group's results earlier this summer took on a hollow ring as stories of frequent rows between the two executives became public. The news that Mr Staples had left his partner to live with Anne-Marie Smith, Sir Desmond's secretary, did little improve matters.

With hindsight the reign of King Des, former head of Littlewoods and perhaps the most influential figure in affluent North-west business circles, began to falter more than a year ago. United launched a controversial long-term share bonus plan which could give executives payouts worth up to 87 per cent of salary. At the same time Sir Desmond received a 21 per cent basic pay rise, taking his salary to pounds 310,000. Even the normally relaxed Association of British Insurers came out publicly against the scheme, suggesting several big investors thought it was "over generous and over complex".

"You could say Des did more to highlight the executive pay problem than anyone else, except perhaps Cedric Brown at British Gas. He single-handedly exposed the issue of long-term share bonuses and showed the lack of teeth in the Greenbury proposals," said one big shareholder yesterday. It was also the last thing the utility companies needed as they stepped up their fight against Labour's proposed windfall tax.

By the group's annual shareholder meeting in July 1996 Sir Desmond had been crowned "king of the fat cats," taking the accolade from a no doubt relieved Mr Brown. Ian McCartney, Labour's employment spokesman, even turned up to hold a mock coronation ceremony on a protester wearing a pantomime catsuit for, as he put it, "services to fat cattery".

Though executives lost the vote on a show of hands, reflecting the anger of small investors, they won the reluctant backing of City institutions. The scheme was eventually amended after intense shareholder disquiet, but the damage had been done.

The taunts took on a sinister complexion when, in June this year, Sir Desmond's Cheshire home was the subject of an arson attack, with the kitchen set alight. Sir Desmond and his wife were out at the time. An anonymous telephone call to police later claimed it was the first in a series against "fat cats".

Meanwhile Sir Desmond was forced on the defensive when the company announced the losses of pounds 90m on a municipal sewerage contract in the Thai capital, Bangkok. The whole board waived short-term cash bonuses for last year to reflect the difficulties.

Mr Staples, with his experience from construction group Tarmac, was handed the task of sorting out the mess, despite the fact that he had not joined United when the contract was first signed. Institutional investors again cited this as a sign of the apparent inability of senior executives to work together.

If Sir Desmond does agree to step down then he may look back on the formation of United Utilities at the start of last year as his major achievement. The pounds 1.8bn contested bid by North West Water for Norweb created a multi- utility leviathan which left King Des in control of water, sewerage and electricity across a huge chunk of the densely populated North-west.

Yet his bold pledge at the time - to boost shareholder returns through restructuring the combined operations - has a different tone 18 months on. Institutions and analysts alike now complain of United's "dramatic underperformance" and `lack of direction" questioning what Sir Desmond has done to justify his generous pay package.

This looks like being one battle King Des cannot win.

Suggested Topics
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
Tim Vine has won the funniest joke award at the Edinburgh Festival 2014
peopleTim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
News
people
Life and Style
techApp to start sending headlines, TV clips and ads to your phone
Arts and Entertainment
Taylor Swift crawls through the legs of twerking dancers in her 'Shake It Off' music video
musicEarl Sweatshirt thinks so
Life and Style
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Planning Manager (Training, Learning and Development) - London

£35000 - £38000 per annum + benefits: Ashdown Group: A highly successful, glob...

Asset Finance Solicitor

Highly Competitive Salary: Austen Lloyd: CITY - ASSET FINANCE - An outstanding...

HR Analyst - Banking - Bristol - £350-£400

£350 - £400 per day: Orgtel: HR Analyst - Banking - Bristol - £350 - £400 per ...

Techincal Accountant-Insurance-Bank-£550/day

£475 - £550 per day + competitive: Orgtel: Senior Technical Accountant-Insuran...

Day In a Page

Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

Lauded therapist still in limbo as battle to stay in Britain drags on

Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law
Lewis Fry Richardson's weather forecasts changed the world. But could his predictions of war do the same?

Lewis Fry Richardson's weather forecasts changed the world...

But could his predictions of war do the same?
Kate Bush asks fans not to take photos at her London gigs: 'I want to have contact with the audience, not iPhones'

'I want to have contact with the audience, not iPhones'

Kate Bush asks fans not to take photos at her London gigs
Under-35s have rated gardening in their top five favourite leisure activities, but why?

Young at hort

Under-35s have rated gardening in their top five favourite leisure activities. But why are so many people are swapping sweaty clubs for leafy shrubs?
Tim Vine, winner of the Funniest Joke of the Fringe award: 'making a quip as funny as possible is an art'

Beyond a joke

Tim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

Sadly though, the Lawrence of Arabia star is not around to lend his own critique
Wicken Fen in Cambridgeshire: The joy of camping in a wetland nature reserve and sleeping under the stars

A wild night out

Wicken Fen in Cambridgeshire offers a rare chance to camp in a wetland nature reserve
Comic Sans for Cancer exhibition: It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans

Comic Sans for Cancer exhibition

It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans
Besiktas vs Arsenal: Five things we learnt from the Champions League first-leg tie

Besiktas vs Arsenal

Five things we learnt from the Champions League first-leg tie
Rory McIlroy a smash hit on the US talk show circuit

Rory McIlroy a smash hit on the US talk show circuit

As the Northern Irishman prepares for the Barclays, he finds time to appear on TV in the States, where he’s now such a global superstar that he needs no introduction
Boy racer Max Verstappen stays relaxed over step up to Formula One

Boy racer Max Verstappen stays relaxed over step up to F1

The 16-year-old will become the sport’s youngest-ever driver when he makes his debut for Toro Rosso next season
Fear brings the enemies of Isis together at last

Fear brings the enemies of Isis together at last

But belated attempts to unite will be to no avail if the Sunni caliphate remains strong in Syria, says Patrick Cockburn
Charlie Gilmour: 'I wondered if I would end up killing myself in jail'

Charlie Gilmour: 'I wondered if I'd end up killing myself in jail'

Following last week's report on prison suicides, the former inmate asks how much progress we have made in the 50 years since the abolition of capital punishment