ALEX BRUMMER: Greedy grocers under fire over fat cat pay

0
4
Out of step: Both Sainsbury


The heroics of the supermarkets, whose regiments of staff have kept us fed, watered and toilet papered in lockdown, deserves great applause.

Less appetising has been grasping behaviour at board level.

On Thursday, directors of Sainsbury’s will face questions at its annual meeting over the pay and bonus package for its incoming chief executive Simon Roberts. 

Out of step: Both Sainsbury’s and Tesco have come under fire from shareholders after issuing bumper executive pay packages during the pandemic

There is already outrage over the bonus paid to predecessor Mike Coupe over his role in the failed, aggrandising merger with Asda.

The governance failure at Tesco is equally disturbing. At last week’s AGM, investors delivered a withering blow to the board, with 67.3 per cent of votes cast against directors’ remuneration – including the £6.4million package for soon to depart chief executive Dave Lewis. 

The board shifted goal posts by removing Ocado from pay bench-marking, allowing Lewis and fellow executives to pass ‘Go’ on the monopoly board.

No one disputes the value that Lewis has created by rebuilding Tesco’s finances after an accounting scandal. 

Chairman John Allan, a denizen at the CBI, and remuneration chair Steve Golsby, who signed off on an unacceptable deal, have made an error which does huge disservice to Tesco’s reputation. 

It is hard to see how, after such a repudiation from investors, Allan and Golsby can survive in their roles for very long, even if the terms of the pay deal were to be redrawn.

At Sainsbury’s, most of the concern focuses on the awards made to Coupe. His successor potentially could receive a package worth up to 470 per cent of salary. 

Chairman Martin Scicluna should have seen a clash with investors coming and headed it off at the pass.

Instead, new chief executive Roberts and finance director Kevin O’Byrne find themselves in the line of fire.

It is terrific that food supplies have been maintained in the pandemic. But that is no justification for bonuses totally out of keeping with spirit of sacrifice of our times.

Changing the guard

Musical chairs in Whitehall has its parallel in the City. In quick succession, as the pandemic has raged, there are changes at the top at the Bank of England, Financial Conduct Authority (FCA), Office for Budget Responsibility, and most recently, at the Competition & Markets Authority where consumer champion and reformer Andrew Tyrie is on his way after a reported boardroom dispute.

Bailey’s return to the Bank came after a lengthy succession process and he turned out to be the safe choice in the teeth of the financial panic engendered by Covid-19. 

The new governor has quickly doubled down on quantitative easing, now up to £745billion, and lowered interest rates to 0.1 per cent without any perceptible change in the Bank’s standing on financial markets. 

It has not been all smooth. Bailey has had policy wobbles over negative interest rates (the flag was raised and then lowered) and there are questions over whether all that government debt sitting on the Bank’s books compromises independence.

There is no clear pattern in the personnel switches. 

At the FCA, the Chancellor Rishi Sunak opted for an outsider, but one with a Whitehall past, in Nikhil Rathi from the London Stock Exchange. 

His job is to rescue the reputation of a sluggish institution badly exposed by the implosion of Neil Woodford’s investment empire.

Under Tyrie, the CMA surprised competition lawyers with its blocking of the merger of Sainsbury’s-Asda, and most recently its intervention over the decision to take a look at Amazon’s funding of Deliveroo. 

That now has been mistakenly nodded through.

We should never underestimate the oligopolistic intentions of the digital giants. The CMA will have a big new agenda in policing takeovers, with national security or public health implications. So the choice after Tyrie will be critical.

Change at the top can be invigorating. However, spinning the door so fast in a pandemic is yet another layer of uncertainty for business and the Square Mile.

Money tree

Britons are not known for their propensity to save. So the latest Bank of England data showing household savings soared by £56.6billion in the three months of lockdown is truly remarkable in an era of near zero interest rates. 

It poses the big question as to where this wall of ‘rainy day’ funds will end up. It could help unleash a consumer boom later in the year.

Alternatively it could be directed to longer-term savings in pension funds and ISAs supporting investment.

What a nice dilemma.

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here