Any Other Business|Martin Vander Weyer
Bob’s worth more than his rivals put together,
but that doesn’t add up to £18 million
Should Bob Diamond of Barclays be paid a whole lot more than Stephen Hester of RBS,António Horta Osório of Lloyds or Stuart Gulliver of HSBC? Arguably he should, for reasons I’ll try to explain, but a group of institutions including Standard Life, Fidelity and Scottish Widows intend to vote against his £17.7 million haul for 2011 at the bank’s AGM in two weeks’ time, and one influential voice, Pensions & Investment Research Consultants, says performance has been so poor that Diamond deserves no bonus at all, ‘indeed the board should be considering clawbacks’.
It’s true that Barclays’ share price stands 20 per cent below where it was when he took the helm in 2011, its dividends are pathetic, and the £5.7 million ‘tax equalisation’ payment in Bob’s bundle, to compensate him for becoming a UK rather than US taxpayer, is especially provocative. But consider this: Diamond is the chief architect of Barclays as it is today, having driven its investment banking arm for many years before he became group chief executive. Being an American himself he has largely Americanised the way Barclays runs, and if he decides to look for another job, not only will every bank on Wall Street make him an offer but Barclays will probably have to head-hunt another expensive Yank to replace him, there being few people in British banking to match his calibre, experience and management grip.
In fact there’s no comparison between Diamond and the recently hired-in Hester and Horta Osório, who each took home a million plus in salary last year but declined their bonuses, and not much with the lowprofile HSBC lifer Gulliver, who collected £7.2 million. Bob is a more valuable commodity than the other three put together, and investors should recognise him as such.
The trouble is, however, that all these numbers are completely bonkers: everyone in Bob’s world is paid way more than the rest of us believe can conceivably be justified. Cancelling the £5.7 million tax wheeze would be a wave towards sanity, and would still leave him well ahead of the pack.
Dynastic moves The latest restructuring of the Rothschild empire completes a reunification begun by David de Rothschild when he took over from his cousin Sir Evelyn as chairman of N.M. Rothschild in London in 2004. Baron David has regrouped the London and Paris operations under a takeover-proof limited-partnership structure strong enough to satisfy ‘Basel III’ capital rules and with a majority of family votes despite the presence of other powerful shareholders such as Allianz of Germany and Jardine Matheson.
Rothschilds is the only surviving example of the dynastic banking model; and with his 70th birthday coming up, the baron can now focus on the issue of succession. Shuffling power between family-tree lines has been a key to success (along with, until not long ago, control of the gold bullion market) ever since the sons of Mayer Amschel Rothschild set up their counting houses in London, Frankfurt, Paris, Vienna and Naples in the early 19th century. But the clear favourite to take over this time is David’s own son Alexandre. Much longer odds are to be had on their oligarch-friendly English kinsman Nat, who has been busy falling out with his partners in a $3 billion Indonesian coalmining venture.
Nat is the son of Jacob, Lord Rothschild, who tussled with Sir Evelyn for leadership of the historic London firm in the 1970s: ‘The way they play tennis,’ observed one insider at the time, ‘the court just isn’t big enough.’ Jacob lost and left to make a new fortune on his own, but it’s interesting to speculate how things might have turned out if he had won and devoted his later career to running the bank rather than pursuing his passion for heritage conservation. Whereas Evelyn was a cautious custodian of the partnership tradition, the bolder Jacob was keen on outside mergers. He wanted to marry N.M. Rothschild with S.G.Warburg (the plan was codenamed ‘War and Peace’), and later merged his own business with Charterhouse and others, with mixed results. Given the dis-
astrous fate of most financial conglomerates created by multiple mergers from the 1980s onwards — Warburg disappeared without trace inside what is now UBS — there might not have been a recognisable house of Rothschild left for Jacob to hand on to Nat.
A night on the M62 In my own banking days, of which I reminisced at 20 years’ distance last week, I was a connoisseur of exotic grand hotels. The Bangkok Regent, the Taipei Ritz, the Jianguo at Beijing, these were my favourite haunts. How times change: last week I spent a £39.95 night in Days Inn at the M62 services near Bradford, and another in the Holiday Inn Express at Liverpool’s John Lennon Airport — shelling out £53 for the latter only because I failed to spot the £29 offering at the Premier Inn next door. Needs must, and I could also tell you tales of Travelodges on the A1 and the M42. All offer slick online booking, comfortable beds, clean bathrooms; since the smoking ban, they no longer smell rancid. And you’re not there to broaden your social life (at least I hope you’re not) but to grab some sleep en route from A to B, so why be snooty about the bland anonymity of the ‘budget’ formula?
Cheap hotel chains, like no-frills airlines, are a boon to the cost-conscious traveller. They seem to be springing up everywhere — and I’m intrigued to find out who’s investing in them. In two cases, the answer is former breweries: Premier Inns is a division of Whitbread, and the Holiday Inn brand belongs to the group that used to be Bass. Days Inn, founded by an evangelical Christian real-estate tycoon in Georgia, is part of a giant US hotel corporation called Wyndham; and Travelodge UK, launched by the Forte group before its demise, passed through private-equity hands to a sovereign wealth fund from Dubai. None of them offers a pure play for stock pickers, but this is surely a niche sector worth watching. And at £29 a night, it’s cheaper than staying at home with the heating on.
the spectator | 14 april 2012 | www.spectator.co.uk William Waldegrave finds swagger and excitement in Vasco da Gama’s voyage to China James Walton reads a poem for each of the last 60 years and enjoys most of them Penelope Lively discovers that our nearest are not always our dearest Marcus Berkmann wonders why the music industry disregards grown-ups with cash Virginia Ironside remembers her ludicrously well read and charming painter/writer uncle James Delingpole knows that his problem in life is that he only ever wanted to do what he wants to do
‘Landscape with Steeple’, 1960, by Keith Vaughan, Andrew Lambirth — p50
the spectator | 14 april 2012 | www.spectator.co.uk