The secret 8.2 per cent shareholding in Yorkshire Electricity, worth about £130m, emerged after the company forced the bank to disclose its interest under Companies Act legislation.
Swiss Bank was yesterday also forced to reveal that it owned a 3.46 per cent stake in Northern Electric. SBC is advising Trafalgar House, owners of the Ritz Hotel in London and the QE2 , on its hostile takeover bid for Northern.
Any takeover is likely to lead to huge payoffs for senior executives. The disclosure of the secret stake in Yorkshire prompted immediate speculation in the City that Swiss Bank had built a near £1bn portfolio of investments in electricity companies to profit from the expected takeover wave.
Executive pay among the privatisied water, gas and electricity companies has moved to the centre of the political arena and yesterday the Labour Party sowed what it hopes are the seeds of a potential Tory revolt over privatised boardroom excesses. It re vealed plans for key legislative amendments and a pressure campaign targeted on MPs in marginal Conservative constituencies.
The attempt to win Tory rebel backing for new clauses in the Finance Bill, the Gas Bill and the House of Lords Pensions Bill was accompanied by a Labour analysis showing water company chiefs winning pay rises of between 108 and 571 per cent since privatisation.
Gordon Brown, the shadow Chancellor, said: "Anger is boiling over with water, gas and electricity companies over the extent to which they are exploiting monopoly positions, the salary rises that are being awarded, the perks that are added to them and theshare options which are making people into millionaires."
Top of the league, according to the figures, is Sir Desmond Pitcher, chairman of North West Water, whose pay is £315,000 excluding pension contributions - about 571 per cent higher than before privatisation. The lowest increase, at 108 per cent, is said to have gone to Sir Frederick Holliday at Northumbrian Water, whose salary rose from £40,000 to 383,000. The analysis puts the average rise at 221 per cent.
Labour wants to give regulators of privatised industries the power to cut prices if they see boardroom pay and perks as excessive; subject lucrative executive share options to income tax, or at least secure a government report on the topic; and compel companies to publish full details of top salaries and perks and encourage pension fund managers to vote on them at company meetings.
The precise shape of the amendments will depend, however, on advice next week from the Finance Bill committee clerk on what is technically possible.
Rearguard action from North West Water was swift yesterday. A spokesman put Sir Desmond's salary at £263,000 in 1993/4, not £315,000 as stated by Labour, and said: "Before privatisation, the then chairman of the North West Water Authority, Dennis Grove, was paid £47,000 for a part-time position.'' A considerable proportion of the chairman's salary, based on strict market rates, was tied t o company performance, he added.
A Labour spokesman said the company's accounts showed the difference between the two figures was fully accounted for by performance-related bonus.
Sir Desmond, originally the product of a council flat in Knotty Ash, Merseyside, said recently: `'You get what you are worth and I'm worth what I'm paid.''
The highly controversial £475,000 soon to be paid to Cedric Brown of British Gas, while cutting staff wages and numbers, prompted the Cabinet's industry sub-committee to discuss making executive pay packages subject to affirmative resolutions of shareholders.Reuse content