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Hand-outs to Sir Philip Watts and Walter van de Vijver a disgrace

The Scotsman: Comment: “Walter van de Vijver, head of exploration at Shell, got £2.5m and his boss Sir Philip Watts £1.1m. These hand-outs are a disgrace. They undermine popular capitalism. They throw goodwill down the drain.”: “Little wonder small investors are turning away in droves from the stock market.”

Posted 20 Sept 04

JUST when – if ever – will the boardroom pay bonanza come to an end?

Case after case of huge pay-outs to directors sparks shareholder fury. But the gilded, rotten caravan rolls on.

Now come two fresh cases that will stir controversy. Yesterday it emerged that Abbey National chief executive Luqman Arnold is set to make £5.1 million through Banco Santander’s likely £8.8 billion offer.

He stands to get up to £3.5m from share options. And he is also due to receive a £1.6m termination payment when he quits next June.

Arnold has not been in the job two years. He has had limited success in turning around the bank after huge losses in wholesale banking under the previous management.

Arnold’s pay-off is not as offensive as others. It could be justified on the grounds that he has turned round Abbey sufficiently to attract a suitor.

But why should performance pay be swollen by a bid? And how much of a turnround has really been achieved? Back in 2002 Abbey shares changed hands at well over £10. Now, even with a bid in the offing, they stand at 571p.

News also came yesterday that the ousted ex-chairman of Sainsbury, Sir Peter Davis, has been awarded a £2.6m cash payout despite loss of market share and a plunge in earnings. Sir Peter left in July and has been locked in a legal battle over the revised terms of his payoff.

A shareholder revolt forced the board to withdraw its original deal. Now the company says the £2.6m is a “significant reduction” from Sir Peter’s original “entitlement”.

Lord Simpson walked away from Marconi with £1.5m after the group’s market value had collapsed by £30bn. Walter van de Vijver, head of exploration at Shell, got £2.5m and his boss Sir Philip Watts £1.1m. These hand-outs are a disgrace. They undermine popular capitalism. They throw goodwill down the drain. And they arm the enemies of free enterprise with arguments for swingeing taxes.

Little wonder small investors are turning away in droves from the stock market.

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