Inside Track: Co-op board spat highlights need for change
COMPANIES usually ban the use of social media sites to stop employees idling away work-time on frivolous gossip.
In the case of the Co-operative Group, it might have been better advised to put a filter on the internet access of Euan Sutherland, its now-former chief executive.
Sutherland took to Facebook on Sunday to denounce the board member who had leaked details of his proposed £3.6m pay package.
A sense of frustration might have been understandable, but his subsequent toy-throwing resignation was less so. After all, the chief executive’s £70,000-a-week package included a £1.5m retention award. That’s £30,000-a-week for deciding not to go and work elsewhere.
Hold on, though: Sutherland was plucked from the world of DIY retailing for a high-profile chief executive’s role.
And an organisation desperate to re-root itself in its founding values had clearly lost its bearings by deciding to fork out more than 60 times the average national wage just to make sure the boss doesn’t quit.
Such an award was justified, the Co-op argued, because its “executive agenda is possibly the most complex one facing a large business in the country today”.
Nonsense. The Co-op operates almost exclusively in one country; the bulk of its bank restructuring effort has already been agreed; and the remainder of the work will focus on overhauling systems, cutting out management flab, and selling a couple of non-core units.
Sure, nobody would argue that it is an overnight job; neither, though, is it analogous to running BP, HSBC or Vodafone. In the end, Mr Sutherland resigned anyway, arguing that the Co-op was “ungovernable”.
His successor should be as reform-minded, since the mutual’s decision-making structures are clearly unworkable. But he or she will also require a much thicker skin than Sutherland’s.
ALDERMORE’S TOUGH DEMANDS
METRO Bank, Santander UK, TSB, Virgin Money, OneSavings Bank: the list of forthcoming UK bank equity offerings is extensive.
It’s also a roll-call of the deals that I understand Aldermore, the fast-growing lender, is demanding that prospective advisers abandon hopes of working on.
Such client demands for exclusivity are not new: banks working on yesterday’s Pets At Home flotation, for example, were told before they pitched for the business that they could not assist with the initial public offering of Poundland.
Concerns about conflicts conventionally mean that banks are prohibited from marketing competing companies during relatively short windows.
Aldermore’s ultimatum is, however, causing some consternation among capital markets bankers, since it is said to be seeking a much broader prohibition on working for rivals.
Yet having sold stakes to external investors including Lansdowne Partners and Toscafund late last year, Aldermore’s float is unlikely to take place until the end of 2014 at the earliest.
Better to hold a bird in the hand? That’s the conundrum facing top City bankers.
BARCLAYS VERSUS THE BUDGET
George Osborne might face some competition for headlines next Wednesday, when he unveils his final Budget before the general election.
Unsurprisingly, it’s Barclays which could provide that competition. The bank is due to release share awards for top executives on Monday, and sources indicate that it will work to get the associated announcement out the following day.
You’ll remember last year that Barclays plunged itself into a row by releasing details of a £38.5m pay bonanza while the chancellor was speaking, so risking a repeat looks clumsy at best.
“The date for the share release is set more than a year in advance,” a Barclays spokesman says.
The bank might want to have a word with the Treasury to co-ordinate diaries in future.
Mark Kleinman is the City editor of Sky News @MarkKleinmanSky