Jim Mullen’s task as chief executive of Ladbrokes is to do better than his predecessor, the hapless but well-remunerated Richard Glynn. Two days into the job, he has started splendidly. Glynn signed the pro-Tory letter to the Daily Telegraph from business people. Mullen has disassociated himself and Ladbrokes from it.
“Our business is to take bets on the general election, not to tell people how to vote,” says Mullen. “There are many shades of political opinion in our workforce of 15,000, never mind ex-employees or our customer base of millions of people. My vote is worth the same as theirs and their choice of vote is their business. So I won’t be signing any letters in this, or any other, general election that seek to tell people how to vote.”
Well said. Mullen has identified the unpleasant tone of self-importance that accompanies these pre-election letters from chairman and chief executives. The latest dispatch to the Telegraph boasted that “businesses like ours have created over 1.85m new jobs”. But, in almost all the cases, the businesses aren’t theirs at all. They are owned, formally, by the shareholders and they are sustained by the work of employees, most of whom (if the polls are an accurate guide) won’t share the boss’s political views.
As Mullen has grasped, the idea that the signatories are acting in “a personal capacity”, which is what they always say, is a veneer. The names of their employers are always printed by the newspaper – inevitably so, because 99% of Ladbrokes’ punters couldn’t name the chief executive.
Why do the signatories sign? They obviously believe what they are saying and think it might make a difference (let’s not be too cynical about seeking gongs). But does Bob Dudley at BP, say, stop to think about how the line about creating lots of employment will be received in Aberdeen? BP recently announced it was cutting 300 jobs in the city.
Lobbying on specific matters of public policy – from betting tax to North Sea oil taxes – is entirely legitimate, of course. But a confident guess says most serving chief executives and chairmen of public companies share Mullen’s view on the proper way to behave during general elections. They think it is presumptuous, and potentially commercially damaging, to lend the company’s name to a political party.
“We are apolitical,” said Marks & Spencer chief executive Marc Bolland yesterday. He is another who has got it right.
Don’t expect too much from M&S – just yet
In the false dawn stakes, nobody beats Marks & Spencer. Under Stuart Rose, the share price doubled, then halved, between 2004 and 2010. Under Marc Bolland, the undulations have been less wild, but almost every outbreak of optimism has been followed by disappointment.
So be wary of treating a return to like-for-like sales growth in clothing, after four long years, as the real deal. An increase of 0.7% ain’t much. Bolland, wisely, kept it cool and stuck to his “step by step” routine.
Investors, though, are more excitable – the share price stands at its highest level since 2008 and has improved 40% since last autumn. Why so much enthusiasm?
Two reasons, one suspects. First, the business doesn’t feel as if it would be blown backwards by the next consumer downturn. The elusive fashion edge may be reappearing, even if the much-hyped £199 suede skirt, for now, is merely a triumph for the publicity department since the punters can’t buy one for another week.
The second reason is that M&S will soon be attempting to live without the vast sums of investment that have been lavished on the business in the past decade, first in the stores, then in the behind-the-scenes infrastructure and logistics operations. If it can adapt to a leaner cash diet, goodies in the form of a higher dividend or share buyback should flow.
That shareholder-friendly script is intact after yesterday’s trading update. M&S seems to be sticking to its plan to refrain, as far as possible, from discounting and thus keep gross margins high. At the same time, it is chipping away at costs. An update on returns to shareholders is promised with the full-year results in May.
Jolly good, but a 555p share price suggests investors’ expectations have raced ahead of events. One better-than-expected quarter doesn’t mean M&S has acquired strong momentum. Given past experience, Bolland will surely want to be confident that M&S is properly out of woods before he throws serious cash to shareholders. Investors may be anticipating too much, too soon.
What does Alliance Trust’s silent trio have to say?
It’s not what Alliance Trust’s embattled chief executive Katherine Garrett-Cox wanted to hear: ShareSoc, which does fine work promoting the interests of private shareholders, is still backing Elliott Advisors, the New York hedge fund demanding a boardroom shake-up at the Dundee-based investment trust. That’s significant because 70% of Alliance’s shareholders are retail investors: ShareSoc’s constituency.
But the view here remains the same. Shareholders should wait to hear what the three non-executive directors proposed by Elliott – Anthony Brooke, Peter Chambers and Rory Macnamara – have to say.
The trio all have strong City reputations but they have been unaccountably silent so far. That’s a problem. Would-be independent directors should demonstrate their independence by speaking for themselves. The vote is the 29th, so there’s still time. But don’t leave it late, guys: the silence is already deafening.
