Benefits must be felt beyond the boardroom

AT last, there are signs that Sir Ian Prosser, chairman of Six Continents, is about to yield. He is not a man who gives in easily. But he has finally conceded that he may have to bow to shareholders asking for some of their money back.

They are not wild about the way Prosser has spent company cash in the past - buying the Inter-Continental hotels chain springs to mind. Now they would rather decide for themselves where the money should go than leave it all up to Prosser.

Hence he conceded last week that if the company, formerly Bass, can't find a hotels chain to buy before the year-end, around £1bn will go back to shareholders. Fine. But - and this is not confined to Six Continents - how to achieve this? In essence, companies can hand out special dividends, or they can buy back shares.

Which should it be? There are arguments both ways. But bear in mind one point. When directors of companies have share options (and how many don't?) they gain nothing from dividends paid today when they come to cash in options in years to come. But share buybacks? The effect should endure, so executives should reap the benefit in future. Which may explain why companies have a preference for buybacks.

Shareholders must be vigilant to ensure that schemes to return money to investors are designed to be as efficient as possible - not for the convenience and financial reward of directors.

Trouble on the waves

THE posturing has begun as the tortuous saga of the reshaping of the world cruise industry moves into its middle period. A brief recap. P&O Princess and Royal Caribbean said last year they wanted to join forces. Carnival said instead it wanted to bid for P&O Princess. P&O said that a deal with Royal Caribbean stood a better chance of being cleared by competition watchdogs, so shareholders should back the Royal Caribbean deal for a quick(ish), easy(ish) merger. Shareholders said no. They'd keep their options open.

Now, the European Commission says it may demand that Carnival sells its offshoot Cunard if Carnival is to have a crack at P&O. The word is being put around that Carnival will have none of it: Cunard will never be sold.

Really? That's not what Carnival's boss Mickey Arison was saying only a few months ago. Then, while trying to persuade P&O shareholders to keep the door open, he said clearly that the company would bend over backwards to devise a deal palatable to competition authorities - even if it meant selling Cunard.

Perhaps he was overstating Carnival's position then. Perhaps Carnival is doing the same now. The lesson is simple: to regard with a sceptical eye all murmured warnings and grumbles uttered by companies limbering up for a bid. Just wait and see whether Carnival's apparent determination to keep Cunard is quite so unbreakable if that is the only thing that stands between it and the chance of having a clear run at P&O.

Mothercare, the real story

NO, of course no one could accuse Mothercare of being desperate. Yes, the company stayed out of the red last year only because overseas earnings (just) exceeded the amount lost at home. And yes, its share price seems supported only by hopes that someone will put it out of its misery. But desperate? Surely not.

So how foolish of the company last week to issue a statement that was - how might one politely put this? - too easy to misinterpret. How foolish of the terribly likeable and sensible chief executive Chris Martin to open himself to the charge of trying to avoid admitting quite how awful things have become.

When retailers produce year-end results, they tell investors what sales have been since the year end. Mothercare did just that. It said: 'Total sales in the last eight weeks were up 1.4%. Like-for-like sales in the UK stores were down 2.1%.'

This statement was released last Thursday. The company's financial year ended on March 30. Think about it. Mothercare gave figures for eight weeks. In fact, there hadn't been eight weeks since the year-end. There had been only seven.

No, its 'current trading' figure had been arrived at only by including the final week of the last financial year. And, my oh my, that extra week happened to be Easter, when every retailer has a bumper time.

Mothercare admits - to anyone who troubles to ask - that this sleight of hand was only because Easter fell late in 2001, early in 2002. Otherwise, says the company, the comparison would have been unfair.

Maybe. But perhaps it might have taken the trouble to give a rather more transparent account of how its business has been performing (or underperforming) in the last couple of months. Just for the record, like-for-like sales since the turn of Mothercare's financial year were down 3.7%, not the 2.1% you might have foolishly believed.