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| The fat cats are back in business | The fat cats are back in business |
| (6 months later) | |
| Normal service is restored. Normal, that is, for members of FTSE 100 chief executive club. They enjoyed a collective 11% pay rise in 2017, having suffered a shocking 12% fall in 2016, according to the annual tally from the High Pay Centre and personnel body CIPD. The average big-company boss got £3.9m. | Normal service is restored. Normal, that is, for members of FTSE 100 chief executive club. They enjoyed a collective 11% pay rise in 2017, having suffered a shocking 12% fall in 2016, according to the annual tally from the High Pay Centre and personnel body CIPD. The average big-company boss got £3.9m. |
| The compilers talk about “significant government and regulatory developments” in the past year and how “we might have expected greater downward pressure to be exerted on top by remuneration committees and shareholders.” They sound surprised by their numbers, but shouldn’t be. | The compilers talk about “significant government and regulatory developments” in the past year and how “we might have expected greater downward pressure to be exerted on top by remuneration committees and shareholders.” They sound surprised by their numbers, but shouldn’t be. |
| Any real government pressure evaporated as soon as Theresa May abandoned her tough talk about putting workers on boards. The mandatory publication of pay ratios, to show the difference between the rewards of the boss and the average worker, looms from 2020 but remuneration committees may merely see another opportunity to baffle outsiders by adding complexity to their already-dense reports. | Any real government pressure evaporated as soon as Theresa May abandoned her tough talk about putting workers on boards. The mandatory publication of pay ratios, to show the difference between the rewards of the boss and the average worker, looms from 2020 but remuneration committees may merely see another opportunity to baffle outsiders by adding complexity to their already-dense reports. |
| That leaves shareholders to apply the brake. The Investment Association, the fund management trade body, these days keeps a “name and shame” list of offenders who have suffered a 20%-plus revolt against a pay report. The tactic is worth a try but it remains to be seen whether any company can, in practice, be shamed. | That leaves shareholders to apply the brake. The Investment Association, the fund management trade body, these days keeps a “name and shame” list of offenders who have suffered a 20%-plus revolt against a pay report. The tactic is worth a try but it remains to be seen whether any company can, in practice, be shamed. |
| Rachel Reeves, Labour MP and chair of the business select committee, is nevertheless looking for shareholders to hold boards to account. She should summon a few to understand what she’s up against. | Rachel Reeves, Labour MP and chair of the business select committee, is nevertheless looking for shareholders to hold boards to account. She should summon a few to understand what she’s up against. |
| Don’t choose the virtuous and more vocal crew who protest against the most egregious packages. Pick on some of the 51% of Persimmon investors who thought chief executive Jeff Fairburn deserved his £75m help-to-buy bonus. It is that silent majority of supine fund managers, resistant to scrutiny of their own rewards, who set the underlying tone. | Don’t choose the virtuous and more vocal crew who protest against the most egregious packages. Pick on some of the 51% of Persimmon investors who thought chief executive Jeff Fairburn deserved his £75m help-to-buy bonus. It is that silent majority of supine fund managers, resistant to scrutiny of their own rewards, who set the underlying tone. |
| Is private ownership the only way for long-term interests? | Is private ownership the only way for long-term interests? |
| It’s not quite Elon Musk and Tesla, but esure founder Sir Peter Wood will indeed be staying with the business after the proposed £1.2bn, or 280p-a-share, sale to private equity group Bain Capital. He will roll over £50m of his £360m stake into the new privately owned structure. If all goes well, he’ll probably make another fortune. | It’s not quite Elon Musk and Tesla, but esure founder Sir Peter Wood will indeed be staying with the business after the proposed £1.2bn, or 280p-a-share, sale to private equity group Bain Capital. He will roll over £50m of his £360m stake into the new privately owned structure. If all goes well, he’ll probably make another fortune. |
| From Bain’s point of view, it makes solid sense to keep Wood. As the man says himself, he’s launched seven insurance companies over the years (Direct Line being the other big one) and the new owner probably doesn’t want him to open an eighth. Wood will be locked in for five years. | From Bain’s point of view, it makes solid sense to keep Wood. As the man says himself, he’s launched seven insurance companies over the years (Direct Line being the other big one) and the new owner probably doesn’t want him to open an eighth. Wood will be locked in for five years. |
| The interesting bit is why he wants to quit the public markets. “As a private company and with Bain Capital’s backing, esure will be able to invest behind the innovation required to fully realise the opportunities in this market,” he says. | The interesting bit is why he wants to quit the public markets. “As a private company and with Bain Capital’s backing, esure will be able to invest behind the innovation required to fully realise the opportunities in this market,” he says. |
| Why can’t the investment flow in quoted-company form? Wood’s answer is a Musk-like grumble about the demands of quarterly reporting and shareholders’ appetite for dividends. In his view, the insurance game is about to undergo a data and analytics revolution and the challenge is best tackled with the freedom that privacy allows. | Why can’t the investment flow in quoted-company form? Wood’s answer is a Musk-like grumble about the demands of quarterly reporting and shareholders’ appetite for dividends. In his view, the insurance game is about to undergo a data and analytics revolution and the challenge is best tackled with the freedom that privacy allows. |
| Esure’s investors can’t complain too much about the sale price of 280p. On a like-for-like basis that adjusts for the spin-off of price comparison website GoCompare, they are getting about a third more than the flotation price of 2013. But the take-private trend is depressing. Is the stock market now seen as so infected with short-termism that long-term risk-taking is impossible? Sadly, in too many cases, the answer seems to be yes. | Esure’s investors can’t complain too much about the sale price of 280p. On a like-for-like basis that adjusts for the spin-off of price comparison website GoCompare, they are getting about a third more than the flotation price of 2013. But the take-private trend is depressing. Is the stock market now seen as so infected with short-termism that long-term risk-taking is impossible? Sadly, in too many cases, the answer seems to be yes. |
| Royal Mail’s check is delayed in the post | Royal Mail’s check is delayed in the post |
| Royal Mail committed a serious breach of competition law, says regulator Ofcom, which has imposed a £50m fine for alleged dirty pricing tricks that it says were designed to see off competition in the delivery of bulk mail. The company says its hands are clean and it will appeal. | Royal Mail committed a serious breach of competition law, says regulator Ofcom, which has imposed a £50m fine for alleged dirty pricing tricks that it says were designed to see off competition in the delivery of bulk mail. The company says its hands are clean and it will appeal. |
| One side will eventually win this quarrel, but it has taken four and a half years to reach this point. Ofcom opened its investigation in February 2014 following a complaint from Whistl, which at the time was trying to break into the delivery market. Indeed, the regulator came to its preliminary judgment – confirmed in all major respects on Tuesday – in June 2015. Competition cases are complex, but that’s going some. | One side will eventually win this quarrel, but it has taken four and a half years to reach this point. Ofcom opened its investigation in February 2014 following a complaint from Whistl, which at the time was trying to break into the delivery market. Indeed, the regulator came to its preliminary judgment – confirmed in all major respects on Tuesday – in June 2015. Competition cases are complex, but that’s going some. |
| Delay may also have killed any prospect of competition in the “final mile” market, the very thing Ofcom supposedly wanted to encourage. Whistl withdrew at the time of the preliminary ruling and no other firm has stepped up. A £50m penalty may look like bold regulation, but the judgment has taken so long to arrive that it will probably make no practical difference. | Delay may also have killed any prospect of competition in the “final mile” market, the very thing Ofcom supposedly wanted to encourage. Whistl withdrew at the time of the preliminary ruling and no other firm has stepped up. A £50m penalty may look like bold regulation, but the judgment has taken so long to arrive that it will probably make no practical difference. |
| Executive pay and bonuses | Executive pay and bonuses |
| Nils Pratley on finance | Nils Pratley on finance |
| Insurance industry | Insurance industry |
| Royal Mail | Royal Mail |
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