Pay awards that won’t help the Camelot cause

Camelot’s annual report for 2006 makes surprisingly interesting reading, if you know where to look.

For, nestling in the small print of its website is some rather sensitive information about executive remuneration. It seems that chief executive Dianne Thompson’s total payments have soared by 45% to nearly 1m; and commercial and operations director Phil Smith’s pay is up 40% to about 550,000, in line with a similar overall hike in total director remuneration to 2.8m. All this when, after a remarkable three-year sales surge at the Lottery, profits have stagnated.

Camelot’s discretion in bringing this news to a wider audience is well founded. There is, at first sight, an unfortunate reprise here of the so-called Fat Cats scandal, which first broke in this magazine back in 1997 and ultimately led to a number of high-profile executive departures.

However, just as lightening rarely strikes twice in the same place, so Camelot has little to fear from ‘d諠 vu all over again’ – in other words an outburst of spontaneous revulsion ascending all the way to Number 10 Downing Street. Thompson is a much more capable, and likeable, leader; she and her team have a remarkable record behind them, not only because of the feisty way in which they recaptured the licence in 2000, but owing to their efficient transformation of what, at best, appeared a stagnant business prospect.

Moreover, Thompson has never been an apologist for profit being at the core of what she does: "It is the profit motive that has made us so good," she said recently. In this light, applying commercial norms in order to retain the services of the executive team might seem only prudence. All the more so since the Lottery operator is now entering a very distracting and stressful prelude to the franchise repitch. Herein, though, lies the real problem with those discreetly hidden remuneration packages. Because they are ready ammunition for any detractors who might wish to deny Camelot a third term, should the opportunity arise.

Already, in Camelot’s eyes at least, the playing field has been tilted to its disadvantage. The regulator has unilaterally extended the deadline for bids from December 15 to January 26 next year. This might be because the National Lottery Commission is unconvinced that the two declared alternative contenders, Tattersalls and Sugal & Damani, will really give Camelot a run for its money. But adding spice are whispers of secret negotiations with twice-jilted People’s Lottery impresario Sir Richard Branson (despite his vigorous denial of any interest a third time round). If true, Camelot’s anger at being stigmatised as the incumbent would be entirely justified.

The fact is that, if the incumbent is effective at what it does (and Camelot is very effective, having raised nearly 19bn for good causes and created the backdrop to a massive programme of civic regeneration), it becomes harder and harder to displace on commercial grounds alone. Politically it is otherwise. The minute a credible alternative comes along, the mud-slinging can commence. And that’s where skyrocketing remuneration packages and putting Adam Crozier, the UK’s highest paid public servant at 2.7m last year, on Camelot’s remuneration committee start to be serious issues for Camelot.

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