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
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory