Jim Fifield is to get a pounds 12m 'golden parachute' to buy him out of his EMI contract. Nigel Cope counts the cost to the City of soaring pay-offs
IT'S a tough life being a senior manager in a major UK company these days, as Jim Fifield of EMI has just found out. A few weeks ago, the New York-based American thought he was in line to take over as chief executive of Britain's premier record company with its roster of artists such as The Verve and Spice Girls. Now, after a boardroom bust-up over the top job, he is on his way out.

But don't feel too sorry for him. Mr Fifield, who is known in the industry as "Lucky Jim" because of his lavish pay, will have his fall cushioned by a "golden parachute" of around pounds 12m as EMI buys him out of his lucrative contract. It is thought to be the biggest pay-off in UK corporate history.

But though the scale of Mr Fifield's golden goodbye is breathtaking, his experience is far from unusual.

Boardroom departures with lottery-winning pay settlements are becoming weekly events in the higher echelons of British business these days. Top company bosses may be well-paid, but they are pushed out with ever-increasing frequency if their performance is not up to scratch. Pay-offs of pounds 500,000 are typical for a chief executive. A million or more is not uncommon.

Some have compared the merry-go-round to life as a football manager.

In football, a bad run of form on the pitch is often followed rapidly by that dreaded call from the chairman. In major British companies - or at least those with shares listed on the stock market - a couple of profits warnings and a nose-diving share price are usually enough these days to bring the ejector seat into action.

"I think the reason is that the stakes have got higher," says one senior fund manager. "The rewards for success are greater and the threats posed by failure are more obvious."

The biggest companies are getting bigger as a result of globalisation and a wave of mega-mergers and the sums involved are now enormous. A bit of bad news can now wipe billions of pounds off a company's value in stock market terms and people want someone to blame.

Normally the people pushing out the boss are the non-executive directors whose job it is to ensure that the board is operating effectively and in the best interests of shareholders.

As Peter Butler, corporate focus director at Hermes, the pension fund group points out: "A few years ago, the non- executives were often pals of the chairman. Now most are genuinely independent and they are prepared to be the catalysts of change."

There has been a string of high-profile boardroom casualties over the past few months and most have been thrown overboard by the non-executives. The Jim Fifield fall-out at EMI came after his nomination for the top job was blocked by the non-executives. Last week, Charles Bowen went as chief executive of Booker, the cash & carry group, after four profit warnings in 18 months.

Last summer, Martin Owen, the head of NatWest's investment banking division, fell on his sword after an pounds 80m "black hole" was discovered in the bank's accounts. And when Barclays decided to sell large chunks of its investment banking business last year after poor performance, Bill Harrison, the division's chief executive, resigned. He is reported to have earned more than pounds 5m in 13 months.

Others who have quit suddenly have included Ann Iverson, the pounds 1m-a-year American who ran Laura Ashley until last year. Richard Clothier left as chief executive of Dalgety, the Spiller's petfood company, after its financial performance turned into a dog's breakfast.

It is clear that being a chairman or chief executive of a major UK company is now a significantly less secure post than it was. Up until about 10 years ago, these jobs were, if not for life, then a good decade or more. As long as you didn't do something spectacularly awful, like take all your clothes off at the annual shareholders meeting, you were pretty much safe. Now the optimum length of service in these jobs is seen as five to seven years. After that a manager is considered stale, even past it.

A look back at some of the lengthy service of recent corporate history tells the story. Lord Weinstock was managing director of the GEC industrial group for more than 30 years but his successor, Lord Simpson, can only expect a fraction of that length of tenure.

And corporate dynasties are now frowned upon.

The Pilkington family ran the St Helens-based glass maker for more than a century. But the last family member stepped down some time ago and it is unlikely that a Pilkington will ever run the business again.

David Sainsbury, Lord Sainsbury of Turville, still runs the family supermarket empire, but there are no family successors in sight. The same is true at Cadbury Schweppes, where a family member is still chairman, but new blood has been brought in to take the business forward. Having the right surname is no longer enough.

If directors are under pressure from their non-executives, this last group is often responding to pressure from City fund managers which control large investments in big companies.

These shareholders are becoming increasingly vocal in their criticism of under-performing directors, a feature of business life long established in the United States.

All this will not worry top managers too much whose skills are in such demand that they can negotiate lucrative contracts.

So if they succeed they receive generous bonuses and if they fail they pocket large pay-offs.

And even if a chief executive does get the boot he or she can often get an equally senior job elsewhere before too long.

This is assuming that their performance was not too dire and even then they can always try to argue that their strategy was affected by circumstances outside their control - like financial turmoil in the Far East, or the strong pound.

And even if that does not work, they can go West and get a job on a board of an overseas company.

Additional research by Kerry Benefield and Lea Paterson