View from City Road: Kingfisher has the City worried

A growing number of investors have introduced a new rule of thumb when judging which companies should be in their portfolios - when the boss gets into the million-pound salary league, it is time to bail out.

For shareholders in Kingfisher, however, the revelation of the promotion of Sir Geoff Mulcahy, chairman, to the big league came too late. Kingfisher's shares had already dropped from a high of 774p at the start of the year to just 568p yesterday, underperforming the market by 25 per cent. Sir Geoff's 56 per cent pay rise - or 36 per cent if the pensions increase is excluded - merely added weight to the suspicion that all is not well within the retail empire.

There is no doubt that Kingfisher is partly a victim of its own enthusiasm for everyday low prices, which led the City to expect far greater results than the lacklustre Christmas trading produced. But, instead of going along with Sir Geoff's claim that the strategy was always intended to be long-term, the City worries about the decline in margins at B&Q, with little compensating rise in sales, and wonders whether it will work at all.