A generous ‘one-off retention award’ for the top man at William Hill may irk shareholders
AND THE winner, by several lengths at least, is Ralph Topping, chief executive of William Hill. Just when you thought boardroom excess couldn’t get any worse, along comes a free-spending remuneration committee to prove you wrong.
Topping, who took over the top job at William Hill in 2008, has just been awarded £1.2 million worth of shares by the bookmaking firm as an incentive to stay in his post until 2013. All he has to do to cash in is turn up for work for the next 2½ years – there are no performance requirements attached to what the company terms “a special, one-off retention award”.
At the same time, Topping, who received a £1.65 million pay package last year, sees his basic salary rise by 11 per cent to £600,000 a year, backdated to the start of the year. This inflation-busting increase follows the 14 per cent rise he enjoyed the previous year. The chief executive’s “on-target bonus” is, admittedly, being cut from from 90 per cent to 80 per cent of salary, and maximum awards under the performance share plan go down from 150 per cent of salary to 100 per cent, but restraint it ain’t.
William Hill’s largesse with shareholders’ money is all the more surprising given that, little more than a month ago, the group suffered a serious slap on the wrist over boardroom pay at its annual meeting. In one of the biggest investor revolts this year, almost 40 per cent of shareholders refused to back pay awards to the board, either voting against them or abstaining.
At the time, William Hill defended its chief executive’s £1.65 million pay package by saying it needed to be more in line with other companies of similar size and complexity. This line was trotted out again by chairman Gareth Davis after news of Topping’s £1.2 million retention windfall. In a cringe-making statement, Davis lauded his chief executive’s “unique individual experience and profile” and what he termed his “criticality” to the group.
Topping, who turns 60 next month, has devoted his entire working career to William Hill – he started as a Saturday boy in a betting shop in Glasgow in the early 1970s, a job he returned to after dropping out of university.
Investors are unlikely to be impressed by the deal – the shares, at about 220p, are some way south of the 290p at which they were trading when Topping took over in 2008.
And what of William Hill’s Saturday boys and girls, who can only dream of an 11 per cent pay award, let alone a retention bonus? They can be certain of one thing – if shareholders stand for this, their boss is on to a winner.
Now someone who really does deserve a bonus is the person who came up with the idea that Majestic Wine should reduce its minimum purchase from 12 bottles to six.
When it opened its first store in 1980, Britain’s archaic licensing laws meant that, unlike high street off-licences, the store could stay open all day long, providing customers bought a minimum of 12 bottles at each purchase. The licensing laws were subsequently given an overhaul but Majestic, Britain’s largest wine specialist, stuck to its 12-bottle policy.
In autumn 2009, however, it halved the minimum purchase requirement, a bold move that could have trashed its margins but instead transformed its business.
As rivals, including Threshers and Oddbins, have collapsed, trade at Majestic is booming. The group has just reported a 27 per cent surge in profits to £20.3 million. Sales were up by 10 per cent to £257 million and Majestic chief executive Steve Lewis aims to double the chain from 160 to 330 over the coming years.
Despite the gloomy economic backdrop, wine-lovers seem willing to treat themselves to a decent bottle of plonk. Lewis says sales of fine wines costing £20 or more have rocketed by 24 per cent, although the average price is £6.94. A £20 bottle of wine tastes all the sweeter in your sitting room when you know you’d be paying double in a restaurant.
Fiona Walsh writes for the Guardianin London
