Ascot may face pounds 2m bill for Suter contracts

Click to follow
The Independent Online
Ascot Holdings could be forced to pay almost pounds 2m to buy out the service contracts of three of Suter's executive directors, according to documentation relating to the property and leisure company's recently launched pounds 260m bid.

The offer document shows all four of Suter's executive directors currently enjoy service agreements which can only be ended by the conglomerate on 36 months' written notice.

As such, the contracts contravene the Cadbury corporate governance code, which expects companies to offer an explanation for any rolling contract extending for longer than a year.

David Abell, Suter's chairman and chief executive, saw his salary rise from pounds 355,000 to pounds 390,000 on 1 May this year, which could mean Ascot has to pay him pounds 1.17m to buy out his contract of employment.

In addition, he owns 3.56 million shares in Suter, worth pounds 7.8m on the basis of Ascot's closing price of 313p last night. He also has options, exercisable at between 99p and 303p, over 564,000 shares and warrants which according to Ascot's offer terms could net him a further pounds 1.1m.

Other directors poised to cash in on the Ascot offer include Anthony Owen, who is paid pounds 165,000, also under a three-year rolling contract. Finance director Alan Hewitt has another three-year roller worth pounds 110,000 a year, up from pounds 99,000 in May.

Robert Morris, deputy managing director of Suter, has been offered a job as a director of Ascot for which he has not been offered a new contract. His existing three-year contract, worth pounds 230,000 a year (up from pounds 200,000 in May), will continue after the acquisition, again in open contravention of the spirit of the Cadbury recommendations.

Suter's board is recommending Ascot's offer, which marks an end to Mr Abell's 18-year involvement with a company he bought into in 1978 while still working for British Leyland, where he had been a main board member at the age of 32.