Cadbury 'helps to cut pay-offs'

THE CADBURY code on corporate governance is helping institutional shareholders to step up the pressure on companies to reduce the sums paid to executives when they leave their posts, it was claimed yesterday, writes Roger Trapp.

In the wake of John Cahill's departure from the chairmanship of British Aerospace earlier this month with a pounds 3.2m pay-off, Mike Sandland, chief investment manager at Norwich Union Investment Management and a member of the Cadbury committee, said there were signs of companies reducing the lengths of executives' service contracts to below the three-year maximum recommended in the code.

Pointing out that he no longer voted in favour of three-year rolling contracts, he added that while executive pay would remain a 'high profile subject' it was likely to have a different character by June 1995, when the committee would be replaced by another body.

Mr Sandland's comments come days after Alastair Ross Goobey, head of Postel, one of the biggest investment fund managers, called on other institutions to back him in tackling the worst cases of 'expensive one-way tickets for management'.