Time to sour the fat cats' cream

TELEWEST, the cable TV company, caused outrage a few weeks back when it became known that its directors had received almost £700,000 in bonuses in a year when the company's share price had fallen almost to zero and it became obvious it was unlikely to survive without a major capital reconstruction.

Today shareholders had the chance to say what they thought of such largesse at the company's annual meeting. They could have raised voices in protest or voted against the re-election of directors. But most did not bother to turn up.

Bonuses are always bad news because they look like a fiddle. Few companies have the nerve to say up front that they propose to pay the chief executive £1m a year. Instead, they say they will give him roughly half that but put up more if the performance is exceptional. This way they effectively leave it to the discretion of the chief's boardroom colleagues to apply some vague, opaque rules which determine whether or not he gets a bonus.

Most chief executives are exactly that - they say what is what within a company, so not surprisingly their colleagues usually decide to give them something massive for turning up and even more for turning up and doing the job.

There is also the hidden ratchet. Every bright idea gets a bonus but chief executives rarely, if ever, repay the cash when the idea goes pear-shaped. Instead, they enter the rewards-for-failure stakes and pick up a massive severance payment.

Boardroom pay is out of control in this country. Even a bear market is not curbing the excesses. Nor will it get any better until shareholders turn nasty and make it plain this legalised stealing has to stop. On the evidence of today's Telewest AGM, that day is as far away as ever. They should be ashamed of themselves.

Exchange wise

IT MAY BE fun for executives of the London Stock Exchange to slip across to New York. Even if they do not go on Concorde it beats travelling by Eurostar to Paris or Ryanair to Frankfurt. But beyond that it is hard to see why they should want to talk to Nasdaq, America's tech-orientated exchange, about a merger. Three years ago, at the height of the dotcom boom when Nasdaq looked invincible, it was a different story, but today it is much less attractive.

Indeed, the decision to merge taken on Monday by Instinet and Island, two firms that operate electronic trading networks in the US, makes it even less appealing. These firms and others like them allow customers to buy and sell Nasdaq-listed stocks at ferociously-competitive prices. Together they account for some two-fifths of business on Nasdaq and have moved closer and closer to what Nasdaq once thought of as its preserve.

It might be possible for London to merge with Virt-X, where Swiss shares with international appeal are to be found, but if it tries something more ambitious and opens its arms to Nasdaq, others will counterbid. Euronext, the amalgam of the Paris, Brussels and Amsterdam exchanges which already owns Liffe, the London futures market, would surely have a tilt. So would Frankfurt's Deutsche Borse. Both would rather avoid a bid battle but could not afford to stand aloof if one started because the prize is to be unchallenged as the dominant market organisation in Europe.

Having started from a massively strong position among Europe's exchanges 15 years ago, London is now strategically weak and vulnerable. Paris, in contrast, has moved from also-ran to the one most likely to succeed. Frankfurt, though apparently strong, is brittle and knows its next deal will make or break it. No one wants to make the first move. The London exchange, as prey rather than hunter, should do nothing to precipitate a showdown.