This leaves the markets as the only practical fiscal vigilante

This leaves the markets as the only practical fiscal vigilante.”. The rising level of the national minimum wage is forcing up businesses’ pay bills for the first time, the Governor of the Bank of England said yesterday. A necessary condition for successful monetary union is collective fiscal discipline. And whatever word you might use to describe those changes to the pact, it isn’t discipline.”The strength of his comments surprised the committee’s chairman, John McFall, who jokingly asked: “Could you be a bit clearer?” Mr King replied: “I don’t think I could be clearer.”Last Sunday, finance ministers ended three years of bitter debate with a deal allowing countries such as France and Germany to run deficits without being punished.Ministers of the 25-nation bloc agreed that the pact’s deficit ceiling of 3 per cent of GDP would be interpreted far more flexibly than in the past.Yves Mersch, a member of the ECB’s governing council, said on Sunday he feared a “fire sale” of stability. He is understood to be willing to consider an “at will” clause because he has so much wealth tied up in WPP that he would never willingly walk away from the company.As part of the new employment arrangements, JMS has also transferred 1,459,010 shares, worth £8.9m, into Sir Martin’s pension fund, the JMS Retirement Benefit Scheme.. Sir Martin and his family are now left with 15,639,437 shares, which at yesterday’s closing price were worth £95.4m.Sir Martin used to have a rolling three-year notice period, which was reduced to two years, renewable on an annual basis. However, the last time the contract was renewed was in August 2003, meaning it will expire this summer.

To meet the liability Sir Martin has sold shares in the company for the first time in its 20-year history. Sir Martin Sorrell, the chief executive of WPP, has been hit by a £9m tax bill as a result of changes to his employment status with the global advertising and marketing group. He cashed in shares worth €2.1m from long-term incentive plans.. Mr Cescau, who is to become the group’s first chief executive, after its annual meeting in May, was co-chairman for only the last four months of the year. But he added: “He takes the blame for not executing the strategy better because he was too attached to the financial targets.”Unilever’s annual report showed that Patrick Cescau, Mr FitzGerald’s replacement, saw his total pay packet rise to €1.8m from €1.4m last year. This view was echoed by the National Association of Pension Funds, whose spokesman said: “We and the Association of British Insurers have jointly published guidelines on how to get contracts right in the first place.”One analyst said the payout was “unlikely to be massively resented”, pointing out the immense transformation wrought by Mr FitzGerald.

The group barely lifted sales of its leading brands last year, missing the 5 to 6 per cent target it set under Mr FitzGerald’s five-year restructuring plan.One shareholder said the payout to Mr FitzGerald reflected the importance of “getting contracts right at the start”. The lump sum comprised one year’s worth of compensation for his salary, benefits and possible bonus entitlements, according to the terms of his contract. Mr FitzGerald’s total salary would have been higher last year, had his annual bonus not shrunk to €158,000 – the consequence of a poor year for the maker of Dove soap, Lipton tea and Hellmann’s mayonnaise. Once the shares he cashed in from his long-term incentive plan are included, his total emoluments hit €5.5m.A spokesman for the company admitted Mr FitzGerald had received the €1.8m to compensate him for retiring early. Unilever paid Niall FitzGerald, its former co-chairman, €1.8m (£1.2m) to quit earlier than he had planned, the Anglo-Dutch consumer goods giant revealed yesterday.
Mr FitzGerald, whose 37-year tenure at Unilever was marred by a collapse in sales during his final 18 months, was the company’s highest paid director last year, according to its annual report.The former co-chairman’s pay soared to €3.4m last year, from €2m the previous year. In 2003, it rejected a £594m bid from John Lovering and Bob Mackenzie, the retail entrepreneurs Three years ago, J Sainsbury consideredacquiring the group..

The group recently bought 140 Texaco forecourt stores in an attempt to bolster its position in the lucrative “top-up” shopping market.This is the second time in two years that Somerfield has been the subject of bid interest. Its board will meet after the Easter weekend to discuss its response. The supermarket chain rejected Baugur’s approach, which was subject to conditions including successful due diligence, funding and agreement with its target’s pension scheme trustees, because it was not confident that a formal offer would follow “at an appropriate level”.Somerfield said it had not sought the consent of the prospective bidders to issue its statement, adding: “There can be no certainty that an offer will be made or as to the terms on which any offer would be made.”Steve Back, Somerfield’s chief executive, is keen to pursue his own strategy for the group, which has focused on the convenience store market. The property tycoon began a relationship with Somerfield in October, via a deal in which he acquired 51 former Safeway stores from Wm Morrison and leased them to Somerfield.

He formed a joint venture with Barclays Capital to buy the properties.In a surprise move, the Office of Fair Trading ordered an inquiry into the deal because it felt Somerfield’s purchase of the store package raised competition issues in 22 instances. The Competition Commission has until September to report back but it is thought that Mr Tchenguiz’s consortium will press ahead with a conditional proposal before the outcome of the competition investigation is known.The Livingstones, who are worth about £180m, are thought to have offered 190p a share for Somerfield. They have teamed up with Nomura, the Japanese investment bank.Somerfield declined to comment yesterday, beyond the statement it issued confirming it had “recently received further proposals regarding possible cash offers for the company”. Shares in Somerfield jumped yesterday at the prospect of a £1.5bn bidding war after the supermarket group revealed suitors were queuing up to buy the company. James Collins, at ABN Amro, said: “I think the store estate could be worth up to three pounds per share, and that is what is driving interest.” Somerfield’s shares rose 6 per cent to 207p.Mr Tchenguiz, who heads Rotch Property Group, has teamed up with Apax Partners, a private equity house which specialises in retail, and Barclays Capital. Deflation was 1.6 per cent.Yesterday Sainsbury’s announced details of a management incentive plan that could hand Mr King a bonus of more than £5m if the group hits its turnaround targets..