Hornby back in the firing line
We should not be too surprised that Home Retail Group has taken a battering over pay from activist shareholders with 36% of the voters telling the board to rethink bonuses.
After all, the chairman of the remuneration committee is none other than failed HBOS chief executive Andy Hornby who is just starting work as chief executive of Boots at close to £800,000 a year.
Hornby drove HBOS to the brink of disaster and failed to blow the whistle on his renegade colleagues at the Bank of Scotland.
He would not recognise corporate excess if he fell over it.
The taxpayer will be paying for his gross errors at HBOS for decades to come, as will shareholders in old Lloyds TSB, who saw a great bank defenestrated.
What the revolt at the Argos-to-Homebase retailer tells us is that pay committees have become dysfunctional and are out of touch with the mood of the times.
We are living in a frugal age as exemplified by rising unemployment. But non-executives seem to live in a rarefied world where the little people do not matter.
Shareholder activists led by trade-union-backed PIRC and the Association of British Insurers - which owns about 15% of the FTSE 100 - deserve credit for a tough approach to unvarnished greed. Latest in the firing line are the executives of BT who have lost money hand over fist in global services.
Despite this, the ABI reckons that they have less than challenging targets for bonuses paid in cash not shares.
Investors are finally voting against excessive remuneration. Recent revolts included a 90% 'no vote' on pay at pre-Stephen Hester RBS, a 59% revolt at Shell (former home of BT's pay chairman Maarten van der Bergh) and a 59% vote against at Bellway.
This tells us that remuneration committees need tough heads able to withstand the bullying of chief executives and the false gods of global comparisons. Independent directors need to get real and end the back-scratching, soft-on-bonuses culture.
Social threat
The unexploded bomb in the current slump is unemployment. On both sides of the Atlantic the numbers are moving inexorably upwards. In the United States the jobless rate is regarded as something of a leading indicator as a result of liberal labour laws. So it is somewhat worrying that at this stage of the recession the nonfarm payrolls number climbed by 467,000 in June and now stand at a 26-year high of 9.5% of the work force - a level not reached since the Reagan recession of the early 1980s.
The data may have been inflated by school-leavers but that should largely be accounted for in seasonal adjustment. The same trend can be seen in Europe. Data from Brussels shows that the Euroland jobless rate climbed to 9.5% in May as a further 273,000 joined the dole queues. The unemployment rate may have come down slightly in Spain, but it still leads the field with 18.7% of the population without work.
The 15m of jobless across the EU is equivalent to the populations of Austria and Ireland added together. The European Commission is forecasting that the rate across the EU could rise to 11.5pc in 2010. Britain may be out on a limb in terms of the poor state of its public finances but the latest figures suggest that the nation is doing better in the jobless stakes with 7.2% without a job in April (the latest data on a comparable basis).
However, the CBI believes it will rise to 10% next year. With the exception of Spain, the jobless rate remains far below the 25% level seen in the US during the Great Depression, for which we can be truly thankful. Nevertheless, the number unemployed is still rising when one might have hoped - after massive assistance provided by governments - that the rate may have levelled off. At present social unrest has been minimal and confined to radioactive disputes such as that at the Lindsey oil refinery. But if the numbers keep rising that may no longer be the exception.
Uncultured Pearl
There is something undignified about Hugh Osmond's behaviour at zombie insurance firm Pearl. Having already taken the taxpayer, in the shape of Lloyds Banking Group and RBS, for a ride by failing to honour loans, he now wants to leave the bondholders high and dry. Pearl claims the £500m bond, which carries a 6.58% coupon, is the problem of Resolution (the previous owner) but not its own. That is a good try. But if Osmond wants to be rescued he would be advised to settle. After all, the bondholders include such City bastions as AXA, F&C and Fidelity. These are not enemies needed if seeking a Footsie refloat.
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