Last chance for the fat cats

THERE will be a sigh of relief from big business when Patricia Hewitt, the Trade Secretary, delivers her verdict on payment for failure today. After some heavy lobbying from the CBI and investor groups, Hewitt is backing off from new legislation.

This does not mean the fat cats are off the hook. Hewitt has rightly decided that fresh laws now - so soon after votes on pay were added to annual general meetings - would be cumbersome.

In effect, she is putting the financial community on probation. If this year's company reports continue to show that greed has not been curbed and if activism at agms starts to fade, then the government stands ready to act.

Much reliance will be placed on proposals put up by the CBI, the Association of British Insurers and the National Association of Pension Funds.

Among the changes Hewitt wants to see are phased payments on departure, which end if the person is re-employed, a clearer description in the annual report on how severance pay was fixed, and pay-offs related only to basic pay and excluding bonus and benefits.

Damages for loss of office should be limited to three months or, at most, six months of the contract.

The TUC, for its part, is writing to all its trustee members, on funds representing £260bn of pension savings, urging that they vote against all pay reports which do not conform to governance rules. It also wants to see limits placed on enhancements to directors' pensions when they are forced from office.

Over the last financial year directors have been dropping like ninepins as investors and non-executives wield their new-found power. Among those who will feature in annual reports will be Michael Green of Carlton, Iain Lumsden of Standard Life and retailers Adrian Wright of Moss Bros, Roger Jennings of Austin Reed and David Norgrove of Marks & Spencer.

Plenty there for examiners at the DTI to get their teeth into.

Burtism triumphs

IT WILL be an all-Scottish team at the helm of ITV with the arrival of Sir Peter Burt as non-executive chairman. No one will miss the irony of this as the main part of the country missing from ITV's network will be Scotland.

Back in the City it was Sir Brian Pitman, another former banker, who was doing the footwork calling on leading shareholders, including Fidelity's Anthony Bolton, to ensure no Sir Ian Prosser-style mishaps.

This cannot be a task that Pitman undertook with a glad heart, given his acerbic views about the rise of shareholder power.

The biggest task ahead for Burt and the ITV board will be to assess the role of Charles Allen, the chief executive. Burt is aware of the part Allen played in securing the regulatory approvals for the new ITV, which added pots of immediate shareholder value.

But Burt and his fellow nonexecutives want to see the merger settled down, cost-reduction promises delivered, and revenues grown.

Plainly, Burt is fascinated by the challenge and seems unfazed by complaints that ITV may have overpaid for the Boat Race. He will need to make sure that the executives do not get carried away, as they did with the Football League.

A reason for appointing a Scottish banker to ITV is that they tend to be risk averse. But that was rarely the case during Burt's high-wire act at Bank of Scotland.

Bloomer cuts

THE LAST year was not easy for Jonathan Bloomer at the Pru. The combination of falling stock markets, Sars and the Iraq war took its toll on confidence.

It is against this background that Bloomer believes its latest profit figures of £794m are not quite as bad as the stock market initially thought.

But like all insurers the Pru, faced with tougher 'realistic' accounting requirements and the need to grow the business, needs capital. Some £200m is being recouped from shareholders through the dividend cut.

In this case investors, like policyholders who face bonus cuts, are sharing the pain. The big hope is that eventually the insurer will attract a bid of more than £1.3bn for its Egg banking offshoot.

But the Pru faces uncertainties. Here in Britain the final outcome of the Sandler review - which is seeking to cut the cost of savings products in exchange for lighter-touch regulation - is unknown.

The Pru believes that with-profits policies will remain at the core of its business because it is what the customer wants, despite endowment shortfalls and cut bonuses.

It is an old-fashioned view and one that will be tested now the consumer may be cooling on the High Street and looking at savings again.