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Monday newspaper round-up: Iran, Tesco, boardroom pay

Date: Monday 23 Jan 2012

Monday newspaper round-up: Iran, Tesco, boardroom pay

Britain, America and France delivered a pointed signal to Iran, sending six warships led by a 100,000 ton aircraft carrier through the highly sensitive waters of the Strait of Hormuz. This deployment defied explicit Iranian threats to close the waterway. It coincided with an escalation in the West's confrontation with Iran over the country's nuclear ambitions. European Union foreign ministers are today expected to announce an embargo on Iranian oil exports, amounting to the most significant package of sanctions yet agreed. They are also likely to impose a partial freeze on assets held by the Iranian Central Bank in the EU. Tehran has threatened to block the Strait of Hormuz in retaliation. Tankers carrying 17 million barrels of oil pass through this waterway every day, accounting for 35% of the world's seaborne crude shipments. At its narrowest point, located between Iran and Oman, the Strait is only 21 miles wide, The Telegraph reports.

Tesco is poised to walk away from its standalone furnishing stores because of weak sales at the warehouse-style outlets in retail parks. Britain’s biggest grocer, whose share price plunged by 16% two weeks ago after revealing disappointing Christmas trading, is thought to be keen to exit from leases its holds on all 13 of its Home Plus stores. Although small in comparison with Tesco’s principal nationwide chain, the stores have been a thorn in the side of the chief executive Philip Clarke, who is under pressure from investors over the company’s faltering growth. He has promised a change in the company’s expansion strategy, with fewer openings of “battleship-sized” out-of-town superstores, The Times says.

A binding vote for shareholders on boardroom pay will win the approval of Vince Cable tomorrow, although the Government will resist calls for employees to play a role in setting rewards. In a written statement to Parliament, the Business Secretary intends to propose a legally enforceable veto on the structure of “forward-looking” pay arrangements for corporate bosses. Shareholders will not have the right to exercise hindsight by voting down bonuses that have already been awarded, however, and Dr Cable will risk the wrath of unions by stopping short of putting staff representatives on remuneration committees. Sean O’Hare, the head of pay consulting at PwC, said that the plan “could be the most radical change we’ve seen in many years”. He said that companies would have to set out the maximum and minimum sums payable under pay structures put to a vote — allowing investors to set an effective cap on remuneration, according to The Times.

Political leaders in Italy and Spain have called for a massive boost to the EU rescue fund and a blast of monetary stimulus by the European Central Bank (ECB), putting them on a collision course with Germany over the handling of the Eurozone crisis. Italy's premier Mario Monti has told Berlin that the new European Stability Mechanism (ESM) must be doubled to €1tn (£828bn) to restore investor confidence in southern European debt, according to Der Spiegel. The move comes days after Mr Monti warned German Chancellor Angela Merkel that austerity fatigue is growing in the debtor states and there will be a "powerful backlash" unless the creditor powers led by Germany do more to correct North-South imbalances and lower borrowing for the whole Eurozone. In what appears to be a coordinated move by the Latin bloc, Spanish foreign minister José Manuel García-Margallo y Marfil backed the plan for a bigger rescue fund. He called for an EMU debt union and sweeping changes to the structure of the Eurozone, The Telegraph writes.

Britain’s listed companies paid out record dividends in 2011, despite difficult economic conditions and recent evidence that more firms were struggling. Dividends hit a record £67.8bn, boosted by oil giant BP’s recovery and a number of special pay-outs, according to the latest dividend monitor from Capita Registrars. In the first annual increase since 2008, total gross dividends rose 19.4 per cent for the full year, even though Britain’s main share index lost ground during 2011. And payments soared 26% in the fourth quarter alone, compared with the same period in 2010. Capita said the surge reflected broad-based growth across almost all sectors, but is also flattered by some distorting factors, The Scotsman says.

AB

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