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Philip Green should do the honourable thing by Arcadia staff

Nils Pratley
·4-min read
<span>Photograph: Bloomberg/Getty Images</span>
Photograph: Bloomberg/Getty Images

Sir Philip Green is exiting with barely a whimper. There’s still time for him to fire a volley of abuse or two at his detractors, but at this stage it would feel like going through the motions. Green has been a diminished business figure for years and his failure to save Arcadia has surprised nobody.

His mistake was not selling the business a decade ago when the Topshop brand still had Kate Moss and co in tow. The arch-dealmaker never did that deal, though, seemingly not wanting to believe Arcadia was falling in value as he starved it of investment.

Now Mahmud Kamani at Boohoo and others wait in the wings, ready to reinvent Topshop for the online era, a task Green left too late. His old frenemy Mike Ashley may have been making mischief by offering to lend Arcadia £50m to keep the administrators from the door, but the gesture also made a point: some big beasts of retailing’s pre-online era still have energy and ideas, and some don’t.

Related: Philip Green's Arcadia Group collapses into administration

Yet there may be another reason why Green has fallen silent, or taken advice to shut up. After the debacle with BHS, nobody is interested in his reflections on the decline of the high street. Staff just want to know if, and how, he plans to fill the deficit in Arcadia’s pension schemes.

At BHS, Green – or, strictly speaking, his wife, Tina Green, as the controlling owner – eventually had to recognise a moral debt with hard cash. The process was absurdly slow, and required a sharp prod by MPs and the threat of legal action by the Pensions Regulator, but in the end £363m of family money arrived from Monaco.

Is the moral case at Arcadia any different? Not really. In fact, it’s clearer since Arcadia, unlike BHS, hasn’t been shuffled at the 11th hour to another owner. Critically, however, the legal situation may be different because Green agreed a pension deficit reduction schedule with regulators last year.

It will be up to him whether to argue that legal point, and say, in effect, that a workable plan has been foiled only by the pandemic. But it would be a grubby stance to adopt. The main reason why a deficit in the pension fund has persisted over years is that the Greens extracted their famous £1.2bn dividend from Arcadia in 2005. The payment weakened the company’s balance sheet and undermined its ability to make catch-up pension contributions in leaner trading years.

The good news, possibly, is that the gap may turn out to be smaller than the publicised £350m. The fund also has some claims on Arcadia’s properties and administrators may be able to raise a few quid for unsecured creditors. The financial arithmetic may not become clear for many months.

But it’s not too early for Green to announce his intentions. It’s impossible to know the precise state of his personal finances but anybody collecting £1.2bn in tax-free form in 2005 would be disappointed not to have doubled their capital over 15 years, especially if they stuck to familiar investment territory such as property assets. One must assume Green still has the ability to write very large cheques if he wishes.

Whatever the legal wrinkles, the honourable course should be clear: guarantee the retirement entitlements of 10,000 scheme members in full. Pensions are deferred wages, in effect. Arcadia’s owner for the past 18 years should not plead poverty from the deck of a large motor yacht.

Small change at Lloyds

It feels odd that António Horta-Osório, during almost a decade as chief executive of Lloyds Banking Group, never found time to develop an internal successor. For £56.4m, which is what he’s been paid in that time (not counting 2020’s still-to-be-disclosed sum), you’d think it would be part of the job description.

Still, Lloyds is keen for everyone to know that the new boss – Charlie Nunn, 49, plucked from HSBC’s executive ranks – will be paid less than Horta-Osório. To that, one can only say: one should bleedin’ well hope so.

The current boss’s outsized rewards, Lloyds used to argue, were justified on the grounds that a big hire required danger money to take the gig in the post-crash world of 2011. That argument felt woolly at the time, and even Lloyds had to give ground last year. Horta-Osório’s “maximum opportunity”, in the language of remuneration committees, was reduced from £9.8m to £7m.

Nunn will get a max of £5.6m, so 20% less than Horta-Osório’s current rate, which allows Lloyds to make its little boast about relative parsimony. Come on, though, £2.4m of Nunn’s package represents fixed pay, versus £2.6m for Horta-Osório. There’s a difference – but it’s really not one worth shouting about.