Outlook: For once, a fat cat who deserves his helping of cream

Rolf Stahel's is a fat cat story with a difference. The £5.9m pay-off he collected yesterday for his untimely exit from Shire Pharmaceuticals is a vast amount of money by anybody's standards. What it is not is another example of payment for failure.

The Swiss scientist took a risk when he left the warm and ample bosom of Wellcome nine years ago to join a start-up drugs company with lots of promise but little in the pipeline. He went on to build it into a FTSE 100 company through a string of acquisitions.

One of these deals brought Shire the wonder drug Adderall, which today is fed to a generation of hyper-active children with their cornflakes and remains the engine of its sales success, accounting for some 40 per cent of the company's turnover.

Unfortunately for Mr Stahel, those acquisitions also brought with them an increasingly hostile gaggle of North American non-executives, who joined the board as their companies were snapped up by Shire.

Mr Stahel fell out terminally with the rest of the board last autumn and finally left a few weeks ago. The reason for the bust-up remains unclear to this day and the company itself has been less than illuminating, leaving outsiders to speculate that it was a disagreement over future acquisition strategy.

It has had to come clean, however, about the terms of his severance package. Of the £5.9m Shire is paying out, some £4.3m is a payment into Mr Stahel's pension pot. Even with that sum of money, Mr Stahel's pension will only just stagger into six figures – a salutary reminder of how many working people in decent jobs face poverty in their old age unless investment returns start to buck up.

The remaining £1.6m is a cash payment to compensate Mr Stahel for loss of office, bonus and long-term incentive shares. As for his package of share options, Mr Stahel has pledged to hang on to the 600,000 he exercised a few weeks ago and the 500,000 he still has left, although a lot of these options are, admittedly, under water.

All in all, Shire's former chief executive is hardly a thin cat. He is still only 59 and he could, if he wanted, easily spin out his retirement in the Swiss Alps. But he is not a fat cat either, whatever the huge headline number might suggest.

Dog's life at ICI

Rationalisation was the dog that did not bark at ICI yesterday except, oddly enough, at the home of man's best friend, Dulux paints. Analysts had got it into their heads that ICI's new broom, John McAdam, would kitchen sink the first quarter results by slashing thousands of jobs and disposing of the troubled flavourings and fragrances business Quest.

As it happened, the only news item was 700 redundancies spread over two years, the bulk of them in paints where Mr McAdam had already been planning a round of cutbacks before he was picked to fill the hot seat vacated by Brendan O'Neill.

ICI admittedly has its operational problems and an uncomfortably high level of debt, but selling Quest, or any other of ICI's speciality chemicals businesses, would have been dumb when Mr McAdam is only three weeks into the job.

Quest may be a basket case at present and National Starch not much better but they are ICI's best hope for growth when markets start to pick up. Selling Quest now at the bottom of the cycle and with all its well-ventilated customer supply problems would have guaranteed ICI a rock bottom price. Furthermore, it would have made a nonsense of the group's expensive transformation from bulk chemicals producer into a touchy-feely consumer orientated business dedicated to making the world smell, look and taste a better place.

In any event, the two short-term priorities for speciality chemicals are to restore customer confidence in Quest's European food business and push through price rises at National Starch. A wholesale restructuring or sale of the two businesses would have resulted in the management gazing at their own navels rather than communicating better with the outside world.

That is not to say Mr McAdam won't be trimming the portfolio of speciality chemicals businesses, but we are likely to see bolt-off disposals to match the bolt-on acquisitions undertaken in the last few years.

Unlike his predecessor, Mr McAdam has the advantage of understanding most of the new-look ICI inside out, having worked in three of its four businesses, and he knows where the flab can be cut.

Unlike the clubbable and thoughtful Mr O'Neill, Mr McAdam is not going to win any popularity contests and he has a point to prove to those who suspect he got the job mainly because he was there already and could start at a moment's notice.

The jury will remain out until at least July when the "radical and rigorous" cost reduction plan Mr McAdam is drafting sees the light of day. It will not make him flavour of the month but it could be the best hope of stemming the cash outflow from ICI and putting the business back on course to profitable growth.

Chunnel vision

The Channel Tunnel Rail Link is an interesting test case in railway financing. Its promoters, London & Continental Railways, insist it will open on time in 2007 and on budget at £5.2bn even though the difficult bit of tunnelling under London to St Pancras is only just beginning.

It is an extraordinary financial outlay for a project which, in the end, cuts only 35 minutes off the three-hour journey time from London to Paris. When LCR went to the private sector in 1998 for the funding, not surprisingly it turned up its nose, leaving John Prescott with no option but to stump up £3bn in direct grants and a further £4bn in bond guarantees or else look like a bad European.

Mr Prescott threw everything into the cost benefit analysis, including how much it would improve the lot of long-suffering Kent commuters.

He also went along with LCR's forecasts estimating that 9 million passengers a year would be using Eurostar services by now and 12 million by the time the link opens. Those forecasts have been missed by a country mile. Last year 6.6 million people travelled by Eurostar and in the first three months of this year passenger numbers were actually down by 8 per cent.

This is where the economics begin to unravel. Eurostar, which is also part owned by LCR, needs more passengers to pay the access charges for use of the link. If the passengers aren't there, the alternative is to blackmail the Government into doling out more subsidy with the threat of abandoning international rail services altogether.

When the National Audit Office last estimated the potential exposure to the taxpayer in 2000 it put the figure at anything up to £1bn. In light of Eurostar's deteriorating position, it has decided to carry out a fresh investigation. Given that financing for the link is spread over the next 47 years, there is time enough to get the Eurostar business running properly. But it would be a brave man who bet that the taxpayer won't shovel a great deal more money into this hole in the ground.

m.harrison@independent.co.uk