It’s not hard to predict how big business will react to the proposal that a representative of the workers be appointed to remuneration committees. Corporate titans will declare the business select committee’s idea to be unworkable. They will seek to kick the recommendation into the long grass, a tactic that worked when Theresa May, in those half-forgotten days when she possessed some political capital, flirted with the notion of putting employees on main boards, and not just on pay committees.
But before companies reach for their lobbyists, some self-awareness would be in order. There have been two big blow-ups over pay in the past year. Both, it is possible to think, could have been avoided if the pay committees had been exposed to some frank views from the ranks.
At Persimmon, where the housebuilder’s chief executive trousered £75m, the chairman and remuneration chief resigned out of shame for their failure to put a cap on a ludicrous 2012 incentive scheme. Would a workers’ champion have saved them from their own stupidity at the outset? Possibly, possibly not. But it is surely reasonable to believe an employee might have argued that a scheme with the potential to produce life-changing sums should extend to everyone on the payroll. As it is, it was only last month – after 150 senior managers had collectively scooped £500m – that Persimmon committed to ensuring all its lower-paid staff at least earn the full living wage.
The other pay row has been about pensions. Remuneration committees had convinced themselves the bosses deserved pension contributions worth 25%-30% of salary, whereas 10%-ish would do for everybody else. There have been several high-profile and panicky retreats from that position in recent days, and more will surely follow as the basic unfairness over pensions is finally confronted.
The point, though, is that such thinking is less likely to go unchallenged in the first place if you change the makeup of the people making decisions. Inviting a single worker on to remuneration committees is merely a way to introduce some fresh air. Companies should give the idea a fair hearing.
Inmarsat sell-off at this price is no satellite of love
Sadly, the government probably isn’t going to intervene to stop the sale of the satellite communications firm Inmarsat. The company may provide part of our national emergency infrastructure but a few reassuring commitments from the would-be new owners – the private equity firms Apax and Warburg Pincus plus a brace of Canadian pension funds – will probably do the trick. That’s how the game is usually played. Besides, if it was unsafe to expose Inmarsat to the public markets, the mistake was the original privatisation in 1999.
One can, though, bemoan this proposed $3.4bn (£2.6bn) offer for other reasons. The main one is the feebleness of Inmarsat’s board in accepting such low-orbit takeover terms. Everybody understands the offer is different in kind from the one that was rejected last year. This time 546p-a-share in pure cash is available (or, more precisely, $7.21-a-share since nobody trusts sterling during the Brexit pantomime) whereas rival EchoStart was pitching a portion of second-class non-voting stock within its nominal 535p last year.
But even 546p doesn’t look great: Inmarsat was trading at £10-a-pop only a few years ago. Much has happened since then, including the arrival of stiffer competition in maritime communications plus the rise of Elon Musk and his SpaceX business. Yet Inmarsat’s directors still say they believe their strategy, which includes investing in broadband systems for commercial aircraft (clearly a growth area) would generate “significant value” for shareholders.
If that’s what they think, why not make a stronger argument for independence?
The short explanations are the usual ones: quoted companies are pressured to produce short-term results; a capital-heavy long-term strategy is tricky to sell; the biggest shareholder, the hedge fund Lansdowne, wants to take the cash; thus the board feels obliged to recommend the deal.
Inmarsat’s chairman Andrew Sukawaty will upset almost nobody by taking this approach. His stance is completely conventional. It also feels supine. Selling up to private equity at this so-so price is a miserable way to sign off.
Sports Direct minority shareholders must brace themselves
At least Mike Ashley is now being serious. A cash offer for Debenhams is the only way he is likely to derail the department store group’s looming restructuring plan. Spare a thought, though, for minority shareholders in his Sports Direct business. Buying House of Fraser was a trip into the unknown that cannot be said to be working well yet. Now Debenhams could be thrown the mix. Do not call it a case of “buy one, get one free”. Debs, if bought outright, would arrive with a very large pile of debt.