Cheap options for Montague

ROBERT MONTAGUE, the chief executive of Tiphook, has cut his salary by three-quarters to pounds 200,000 under the proposed financial reconstruction of the deeply indebted transport leasing group.

But in a move likely to cause controversy, he will be granted options over two million shares at 20p and more than a million at 65p to replace existing option agreements.

Tiphook's shares fell 9p to 58p yesterday as the City digested the interim results, which showed a loss of pounds 180m for the six months to 31 October after exceptional items. At that price, Mr Montague's 20p options would be worth pounds 750,000.

Mr Montague, who stepped down as chairman on Monday, earned pounds 816,000 last year.

The deal also provides for a minimum bonus of pounds 250,000 for him over the next five years, even if the reconstructed Tiphook does not make any profits. He will receive a further pounds 250,000 after 18 months for signing a covenant that prevents him competing with Transamerica in the container leasing market.

One analyst said: 'Shareholders who have seen the value of their investment in Tiphook plummet will not be impressed to see the man who presided over the decline rewarded in this way.'

A Tiphook spokesman said the package was a lot less than Mr Montague could have had under the terms of his three-year contract.

Two directors who have agreed to resign after the rescue is completed have agreed compensation of more than pounds 1.1m in total.

The reconstruction package, which depends on the sale of Tiphook's container division, will be voted on by shareholders at an extraordinary meeting on 10 March.

But the company is still teetering on the brink of extinction. Its bankers have agreed to provide facilities until 1998, provided the container division sale goes through.

However, the group's auditors, Touche Ross, heavily qualified the accounts, warning that there was doubt over the company's ability to continue as a going concern.

Richard Bernstein, of City Marketing Financial Analysis, said the rescue document was the most remarkable he had seen.

'It is hedged with so many caveats, and depends on so many assumptions, that it leaves the impression that what's left of the company will be hard pressed to make any money,' he said.