Mark Kleinman: What’s next for BT and the City’s ugliest row of 2023
Mark Kleinman, City editor of Sky News, writes fortnightly for City PM
Germans could be on the line at Jansen-less BT
Hanging-up time is fast-approaching for Philip Jansen, whose plan to step down as CEO of BT Group next year – revealed by me last weekend – was confirmed on Monday.
Sources have told me that Jansen has been approached about several jobs with big US technology companies. The defection of another big corporate name across the Atlantic might underscore the point – made recently by Julia Hoggett, the London Stock Exchange chief – that British companies are falling behind their American counterparts on boardroom pay.
But it will also come as BT faces the biggest threat to its independence since it was privatised in 1984.
Friends of Jansen say he has been left frustrated at a share price which now stands at little more than half the 230p it traded at on February 1, 2019, his first day in the job.
Rightly, that serves as investors’ principal benchmark of any CEO’s tenure: so by that reckoning, his stint might be deemed a failure.
Yet the headwinds into which Jansen has faced – Covid-19 and soaring costs driven by inflation – and the foundations laid for the long-term health of the company suggest that BT’s share price performance masks the real value of
his legacy.
Cancelling the dividend for 18 months and rebasing it at half its previous level was a bold thing to do, and an act of corporate bravery that should ultimately be viewed as being in the national interest.
Jansen’s £15bn programme to build Britain’s digital infrastructure – “like fury”, in his words – while trying to improve BT’s shoddy customer service and investment in 5G has been a tough one to pull off in the public markets. Long-termism of this kind has become worryingly rare in FTSE-100 boardrooms, particularly since a pandemic which forced substantial balance sheet reinforcement and dividend cuts.
Couple that with Jansen’s growing disenchantment, fomented under the previous chair, Jan du Plessis, and culminating in the bizarre rebuke he received from Ofcom for predicting that the proliferation of altnets building fibre infrastructure “will end in tears”.
All this might explain why Deutsche Telekom, the German communications giant which owns a 12 per cent stake in BT, is reported to be circling its British peer.
Deutsche CEO Tim Hottges said earlier this year that his investment in the company – struck in 2015 as part of its sale of EE, the mobile operator, to BT – was his “biggest mistake”.
That statement was typically clever sophistry. Whether the government would allow any foreign takeover of BT is debatable, but don’t be surprised if Jansen’s departure opens a window for Hottges, or Altice’s Patrick Drahi, to try to prise open.
Unrest at the Palace over interim boss Owen’s 2023 pay bump
What is going on at Palace Capital, the AIM-listed property company which has seen fit to double its chairman’s salary even as net asset value has shrunk and the company has been hit by a boardroom exodus?
I understand its AGM later this month promises to be a heated affair, with restive shareholders keen to question Steven Owen, interim executive chairman, about alleged conflicts of interest, his financial incentives for the sale of the company’s assets and the logistics of the annual
meeting itself.
“He stands to earn an additional £1m in a role where as chairman he is already earning £221,000 in an underperforming company where shareholders are losing,” said one institutional investor.
Palace Capital’s market capitalisation stood yesterday at less than £100m. Its directors should abandon their delusions of grandeur and focus on delivering in the interests of its shareholders.
No make-up can disguise this ugly corporate row
It may not quite be applying lipstick to a pig, but the row consuming Revolution Beauty and Boohoo, its biggest shareholder, ranks among the City’s ugliest of 2023.
Revolution’s brazen attempts to ignore the wishes of its largest shareholder, after a protracted period in which its shares were suspended amid concerns about accounting irregularities, might win awards for the most audacious boardroom behaviour of the year.
Boohoo has accused Revolution’s bosses of greed, arguing that recent actions were motivated largely by the desire to hand directors millions of pounds in share awards.
Now, having reinstated chief executive Bob Holt within hours of him being resoundingly voted out of a job at last month’s annual meeting, Revolution seems to have decided that he should go after all. As I reported this week, Holt’s scalp is part of a compromise deal being thrashed out between the two companies that would avoid the rigmarole of an EGM.
Further details of the truce are unclear ahead of a formal announcement, although it seems like Revolution has tied itself in knots to keep Boohoo’s nominees (who include the former New Look chief Alistair McGeorge) off its board. Even a rudimentary glance at their respective CVs would suggest that McGeorge’s corporate experience is more relevant to an online beauty products retailer than that of Holt.
Among Revolution’s brickbats fired at Boohoo was that it was itself no stranger to controversy about lavish pay awards. This is true, but the key difference is that the fashion retailer behind the Debenhams brand at least allows its shareholders a binding vote every three years on those awards. To hand millions of pounds out within moments of having its stock reinstated after a seven-month absence should have seemed a bridge too far.