the times | Wednesday April 13 2022 39
Business
The FTSE 100 fund management
group M&G has cut a share bonus for
its former finance chief to avert a
potential investor rebellion over the
payout.
Clare Bousfield, 53, had been due to
receive a long-term incentive award
worth £656,000 but M&G said in a
stock exchange filing yesterday that it
had been reduced to £318,000.
It is understood that M&G reduced
the award after it became clear that
some institutional shareholders could
not support the payout and might as a
result vote against the company’s
remuneration report at its annual
meeting next month.
Investor concerns centred on the
decision by the M&G board’s remuner-
ation committee to use its discretion to
retrospectively change the profit target
used to measure Bousfield’s perform-
ance for the long-term plan it granted
her in 2019. M&G is the former British
EasyJet struggles to
avoid bumpy ride
L
og on to easyJet’s website
and there it is: “Where’s
your next ‘you’ time?” Well,
home, actually, given all the
cancelled flights. The
airline spent the pandemic in a
tailspin over the lack of passengers.
Now? It’s turning them away.
Yes, the post-Covid return to
flying was always going to be
bumpy. But chief executive Johan
Lundgren probably wasn’t expecting
this: having to axe more than 100
flights a day, mainly due to cabin
crew and pilots being off sick. True,
easyJet is not the only culprit, even
if only British Airways seems as
reliably expert at cancelling planes.
Still, operational hiccups are the
last thing investors need after two
corona refuellings: £419 million at
703p in June 2020 and £1.2 billion
last September via a rights issue at
410p. And despite a 2 per cent rise
to 552½p on the latest six-month
update, the shares still lag the 638p
ex-rights price, which adjusts for all
the new stock (report, page 42).
So, did easyJet chop too many
staff during the pandemic?
Lundgren insists not. In the UK, he
says, “about 1,100 people were let go
and we’re recruiting back to those
levels”. By the summer he expects to
have the full pre-Covid complement
of 8,100 cabin crew and 4,300 pilots.
And even now, only 100 frontline
workers have been held up by the
government’s laborious vetting
process.
The issue is more prosaic.
Typically 6 per cent of workers are
off sick but thanks to positive Covid
tests, some days that figure’s topped
20 per cent. The result? As many as
“120 to 130” axed flights from the
1,500 daily roster. The good news?
Cancellations are falling — 58
yesterday — with easyJet better at
programming them in early. Most
travellers can now rebook a same-
day alternative flight.
Even so, it highlights the risks in
Lundgren’s plans to be back to “near
2019 flying levels for this summer”.
And not least with him also dealing
with problems outside his control:
interminable airport security
queues, say, or Italian air traffic
control strikes. In its second quarter,
spanning January to March, easyJet
flew only 67 per cent of 2019
capacity, with passengers up from
1.2 million to 11.5 million. So there’s
a ramp-up to come, even if demand
is clearly there. Summer bookings
are “tracking ahead” of 2019 levels.
Lundgren needs some smooth
flying, too, after two years of losses
topping £1 billion and now a new
chairman in the cockpit: Stephen
Hester of British Land, RBS and
RSA Insurance fame. Lundgren’s
poised to deliver lower seasonal half-
year losses than analysts expected:
£535 million to £565 million versus
£618 million forecasts. But Hester
still won’t have missed how, since
February 2020, easyJet shares have
underperformed Ryanair by about
60 per cent and Wizz Air by more
than 20 per cent, even allowing for
the latter’s Ukraine war hit.
Yes, there are reasons for that.
EasyJet was more exposed to the
government’s disco ball traffic lights
travel system. And it also has to lug
around a giant tantrum-throwing
toddler in the shape of Sir SteliosHaji-Ioannou, now thankfully
diluted to 15.3 per cent and eerily
quiet lately. Is he feeling all right?
Still, Lundgren knows that plenty is
riding on this summer. He’s got to
stop the self-inflicted turbulence.Off the rails
A
uditors don’t break many
records. So congrats to the
crew from Deloitte. They’ve
landed a Financial Reporting
Council investigation spanning six
years of accounts, back to 2016: the
longest ever period for one of its
inquiries. The accounts in question?
Go-Ahead’s (report, page 43).
Remember that farrago? The bus
and rail group’s full-year figures, due
on September 9 last year, turned up
even later than the trains, pulling in
on February 24. The reason? A
bust-up with transport secretary
Grant Shapps, who stripped Go-
Ahead of its Southeastern rail
franchise after it had been breezily
pocketing overpayments from the
taxpayer that it should have given
back. Go-Ahead’s ex-finance chief
Elodie Brian fell off the train, the
shares were suspended and the
group was fined £23.5 million.
Anyway, when the 2021 accounts
finally arrived, they were chocka
with “prior year restatements”,
“presentational corrections and
reclassification errors” and restated
“onerous contract provisions”. And
not just over Southeastern, either:
all a bit embarrassing for
Christopher Powell, “lead audit
partner” since 2015. No shock to see
him replaced by Scott Bayne for the
delayed 2021 figures, for which
Deloitte’s fees rose from £1.3 million
to £2.9 million. True, how much of
the fiasco was down to Deloitte
remains to be seen. And it’s odd that
the FRC review doesn’t go back to
2014: the start of Southeastern’s
misdemeanours, when EY was at
the audit wheel. Still, a six-year
inquiry is probably enough for now.Smoking gun
F
ags aren’t what they used to be.
Vaping is the go-to gasper for
some people nowadays, as Big
Tobacco tries to wean itself and its
coughing customers off the weed.
So a ruling from the US Food and
Drug Administration, banning
Imperial Brands’ myblu device, may
have wider ramifications.
It found that myblu had failed to
“demonstrate” that the potential
benefit to smokers who switch or
cut down on the ciggies “would
outweigh the risk to youth”. It’s a
stance backed by the US Centers for
Disease Control and Prevention,
which states that “the use of
e-cigarettes is unsafe for kids, teens,
and young adults” and may also
make them “more likely to smoke
cigarettes in the future”. Imperial,
which will appeal against the FDA
verdict, has only £56 million sales of
such products in the US, while its
boss Stefan Bomhard seems mainly
focused on old-style cancer sticks
anyway. But could vaping earnings
be about to go up in smoke?[email protected]business commentary Alistair Osborne
Fund manager cuts bonus to avert revolt
and European business of Prudential,
which the insurance giant spun off into
a separately listed company in October
2019.
It disclosed in its latest annual report
last month that the committee, which is
led by non-executive director Clare
Chapman, had decided to adjust the
long-term plan’s profit target down by
£171.6 million to £2.5 billion to account
for “a number of additional costs” that
arose from the demerger from the Pru.
These costs were not anticipated in
the business plan on which the target
was based and the committee believed
the incentive plan adjustment was
“reasonable”, M&G had said in the
report.
This meant the bonus plan for Bous-
field was due to pay out this month at
41.3 per cent of its maximum level,
rather than at 20 per cent. It is under-
stood the committee reversed its
decision after some shareholders sig-
nalled they could not back the move.
It means Bousfield’s total pay for lastyear falls to about £1.46 million from al-
most £1.8 million.
M&G said the long-term bonus plan
will vest at 20 per cent “notwithstand-
ing Clare Bousfield’s valued contribu-
tion to the performance of the busi-
ness” and that investors would be asked
to vote on its remuneration report “on
this basis” at the meeting on May 25.
Bousfield stepped down as M&G’s
finance chief to take on the newly
created job of leading its savings
division at the start of October. The
2019 long-term plan for John Foley, the
M&G chief executive, did not include a
profit measure.
The change of direction by M&G is
potentially embarrassing because it is
itself an institutional investor that
scrutinises pay at the companies in
which it holds stakes. It sometimes
votes against remuneration reports at
businesses if it objects to executive pay.
Shares in M&G closed up 0.4 per
cent at 213½p, valuing the group at
£5.5 billion.Ben Martin, Louisa Clarence-Smith
Bigger sales
for Hornby’s
little models
Ashley Armstrong Retail EditorMiniature model enthusiasts have
continued to lift sales at Hornby
although the company said that growth
had been held back by shortages and
supply chain delays.
The maker of Scalextric and Airfix
models said its fourth-quarter sales
were “very encouraging” and ahead of
last year. As a result, it reiterated that it
will report a profit this year, having
protected its margins by raising prices.
Shares in Hornby were up 1½p, or
4.5 per cent, at 34½p. The company was
founded by Frank Hornby, who patent-
ed Meccano construction toys and
created his first clockwork train in 1920.
Lyndon Davies, chief executive, ad-
mitted that supply chain challenges
were still causing issues and products
that were meant to have arrived at the
start of January had only just reached
stores. He said the business had been
hit by delays at factories in China,
longer shipping times and then a short-
age of drivers in the UK which meant
that containers were sitting at ports.
The brand’s Hornby train sets also re-
quire electronic components, of which
there is currently a global shortage.
Demand from car manufacturers and
electronics giants means the £57 mil-
lion business is often behind larger
companies in the queue for supplies.
“Who is going to give Hornby 1,000
diodes when Tesla has 1,000 on one car
alone?” Davies said. “We’ll get our
items eventually but we aren’t big
enough to throw our weight around.”
He said that he was “disappointed,
because our sales could have been
higher” if there had been enough train
sets available before Christmas.
However, he added that hobbyists still
bought throughout the year, particu-
larly when there was a limited edition
model. “If a price goes from £180 to £190
it’s not the end of the world... if you
want a limited edition product then
you’ve got to buy it or it’ll go.”
Davies said the group’s Corgi diecast
replica Aston Martin DB5, issued to
coincide with the James Bond film No
Time to Die, had proved popular, while
he had high hopes for the launch of a
1:24 Spitfire Mk.IXC model, which was
being manufactured in the UK again.
“It’s a model with 300 components, so if
a wife buys that for her husband it’s
because she doesn’t want to see him.”ASOSlockdown comfort, return rates are up as customers try more colours and sizes