The Max Attacks: This month I'd fire the CEO of William Hill
Ralph Topping should be for the chopping, says LBC radio presenter James Max
Each month we grant LBC radio presenter James Max the power to fire the businessperson of his choice…
How can I possibly have a go at the senior management of William Hill? Their share price has risen in the last six months from a low point of 180 pence per share to just over 264 pence. That’s not a bad performance. Management should be supported and celebrated. Shouldn’t they?
Ralph Topping was appointed chief executive in February 2008 having worked for the company since 1973. On the 4 February 2008, the share price was 420 pence. It’s worth noting that just two months before Mr Topping’s appointment it was in excess of 520 pence a share.
Clearly something was wrong at the company and we all know world markets were in turmoil. Yet here is a man who was appointed from within. Did he really have no role in the company’s disastrous performance? Just saying.
Go back a decade and the share price was in excess of 400 pence a share. William Hill showed consistent performance and rising value towards the market high point at the end of 2007 when the share price hit over 620 pence a share. Then the slide began.
Cataclysmic can be the only way to describe the collapse in share price and corporate value until prices eventually settled at about 200 pence a share in 2009. Two thirds of the company’s value having been lost. Until the beginning of this year, that’s where the share price has remained. Sometimes at 180 pence and sometimes hitting 220 pence. Not very good.
Indeed, you might like to know that for every year since Mr Topping’s appointment, William Hill shares have underperformed the FTSE mid 250 return index by some considerable margin.
I am giving you this information because of the statement made by the company’s chairman, Gareth Davis: “Ralph Topping has been instrumental in revitalising the fortunes of William Hill since taking the chief executive job in difficult circumstances four years ago”.
This is obviously a new meaning to the word “revitalising” of which I was previously unaware. It is part of a statement used to justify Mr Topping’s rather excessive compensation package. A base salary, plus bonus payments, plus a catch-up, plus benefits and now a retention bonus. A what? Yes, you read correctly - a “retention bonus”.
£1.2 million just to stay in his job until 2013. In addition to his salary, bonus, benefits and pension.
According to the 2011 Report and Accounts, Mr Topping received a base salary of £600,000. For the job he does, that’s about right. It’s the extras that are so stark. Nearly £30,000 of benefits. £930,000 in annual bonus, £154,063 in lieu of pension. In 2011 he received a total pay package worth £1.7m.
That’s £1.1m in extras for a job not particularly well executed.
Did I mention nearly two million shares options he has been awarded with virtually no hurdle price? All of this with a backdrop of poor performance. Profit after tax fell from £156m in 2010 to £146.5m in 2011.
At a recent shareholders’ meeting, 49.9 per cent of shareholders voted against the £1.2m retention bonus to be paid to Mr Topping. I’m not surprised. A retention bonus for doing what exactly? Aren’t the basic pay, bonus and share awards along with all the extras enough? Particularly for a company that has declined in value and stature in a sector that has seen incredible growth and innovation. Even in difficult economic times.
Apparently Mr Topping is pensionable and could leave at any time. According to his chairman he’s “the best chief executive in the business”. Really? I don’t think so.
The brand is tired. The company is relatively slow in adopting new technology and the retail base is both expensive and backward-looking. This is not a sector that has suffered in the same way as other businesses. There’s plenty of competition and indeed innovation in the marketplace.
Normally I like to talk about crass advertising. I can’t even do that with William Hill. There’s hardly any. The online offering is distinctly clunky and compared to the other players in the market the decisions taken by senior management are clearly of a generation that’s past their best.
It’s time for the William Hill brand to be reinvented. The high street presence should be rationalised. Increased online and app offerings need development. Refreshing the image and engagement with a much younger and more vibrant customer base should be a priority.
For investors, I don’t think Mr Topping is worth the money he’s paid. Just look at the corporate strategy. It’s as tired and worn out as the management responsible for writing it.
Similarly, I don’t think the chairman who is on a base salary of £250,000 a year is doing a good job either. After all, he’s just supporting his CEO and reporting results and performance through rose tinted spectacles.
For shareholders, it’s time for a change at the top. Existing management is too expensive and more importantly won’t deliver the change and innovation that’s required. The company is a prime takeover target and it’s time to send Mr Topping and all of the senior management team of William Hill off to the knackers yard.
James Max presents Weekend Breakfast every Saturday and Sunday mornings on London’s Biggest Conversation, LBC 97.3 FM. He is a qualified surveyor and worked in property and finance for 15 years. After working for one of the country’s leading property advisory firms, he completed healthy stints in investment banking and private equity, before becoming a candidate on The Apprentice, which launched a career in broadcast media. Visit JamesMax.co.uk.