Exporters gain a month's breathing space

Homeowners can relax for another month, after the Bank of England decided against pulling the interest rate trigger yesterday.

We have to wait a fortnight to find out whether there were hawkish dissenters from the consensus, but it seems certain that the respite from chunkier mortgage repayments will be temporary.

Aside from the arguments about whether government statistics under-estimate economic growth in the first three months of the year (they say there wasn't any), the monetary policy committee can't have failed to notice that its long-standing fear of a depreciation in sterling is finally being realised.

The pound was being hammered on foreign exchange markets again yesterday, following the battered dollar down to fresh two-and-a-half-year lows against the euro. Which is great news for exporters, but not so positive for inflation.

At the heart of the well-aired disagreements between hawks and doves on the MPC has been whether the Bank should pre-empt a likely depreciation with higher rates. So it will surely respond with a rise, if the downward pressure on sterling is maintained.

But - as the chorus of strongly-worded warnings from industry this week have made clear - it will take time for any fillip from cheaper exports to filter through to manufacturers. So far this year, they have continued slashing output and investment, and laying off workers, leaving optimistic readings in the forward-looking business surveys looking rather premature.

With house prices racing ahead, and consumers showing little sign of throw ing in the towel, however, the best that manufacturers can hope for is that the MPC gives them enough time to get back on their feet.

Bonuses therefore


Over to the latest jaw-dropping news on corporate pay. Today it is Thus, the old Scottish Telecom business which rebranded as an adverb during the dot.com madness.

Some of us thought Thus was a disaster. It was a leading internet service provider in the UK before being overtaken by just about all of its rivals, while as an alternative telecoms business it appears to have gone about as far as the rest of the alternative telcos industry, which is nowhere.

But forget all that. In reflection of "the outstanding performance of the company during the year", all executive directors have been awarded maximum bonuses for the past 12 months.

That "performance" may have seen the shares fall from 54p to 15p during the financial year (compared with a high of 368p). Old-fashioned pre-tax losses may have ballooned from £70m to £104m and a rescue refinancing may have become necessary for Thus to stay in business.

Yet when it comes to the bonuses at the company, performance is measured in terms of earnings before interest, tax, depreciation and amortisation, which came in at an heroic £3.1m for the year.

So chief executive Bill Allan pockets an extra £178,000, taking his package to £447,000, followed by operations boss Philip Male with a total of £360,000 and then chief financial officer John Maguire, with £321,000. Of course these are not vast headline numbers for a company like Thus. After all, the business still turns over £268m and has just had £275m of new money pumped into it, which needs spending wisely.

But if this is what passes for outstanding performance, where might the incentive be to actually make the business work?

For example, one stated goal of Thus's remuneration policy is to specifically "encourage executives to align their interests more closely with those of shareholders by building up significant shareholdings in the company". And if we turn to the finance boss, Mr Maguire, we find that he owns all of 6,666 shares in the company, which he bought yesterday for £1,000. Clearly, not much in the way of alignment there.

Now, the remuneration committee at Thus is chaired by a non-executive called Michael de Kare-Silver. He is the head of "eBusiness development services" at PA Consulting and used to be group e-commerce director at Great Universal Stores. Mr de Kare-Silver is also the author of two internet-related books: "e-shock" and "streamlining".

With all due respect, we would suggest the wrong man is in the job.

Lawyers happy


It is difficult to predict where we are heading after the deep wound inflicted on the credibility of the European commission's competition regulators yesterday, other than to state the obvious - namely, that the profession of competition lawyer (already a growth business) will now go super-growth.

A taster came in the UK last year, with the competition commission's defeat at the hands of Interbrew, which didn't like its ruling on Bass. Clearly, regulators, with limited resources, are no match for determined corporates ready to pay top advisory fees to get the right result.

Mario Monti's department in Brussels will try to speed through legislative changes which make their regulatory decisions more difficult to challenge. But for now the regulators are on a back foot. There is a dubious window of opportunity here for merger-hungry companies to take advantage of.