Courtaulds and Argyll ponder cut in contracts

THE CAMPAIGN by PosTel, the pension fund manager, to cut the length of directors' service contracts scored its first public success yesterday when Argyll and Courtaulds said they were considering the change, writes Heather Connon.

Courtaulds, the chemicals company, said two directors were already on two-year contracts and the remuneration committee would discuss the matter further 'in the near future'.

Argyll, owner of the Safeway chain, intends to make similar changes after discussions with PosTel and other shareholders.

Although the Cadbury committee on corporate governance recommended a maximum of three years for directors' service contracts, a number of large investors believe that is too long because they mean that directors who perform badly were still guaranteed large pay-offs.

The most vociferous campaigner has been Alastair Ross Goobey, head of PosTel, who has said he intends to vote against the appointment of directors on contracts of more than two years. He would not comment on how PosTel voted at Argyll's and Courtaulds' annual meetings yesterday.

Argyll also faced fierce questioning about salaries at the meeting. Its chairman, Sir Alistair Grant, was paid pounds 986,000 in the year to 2 April, up from pounds 546,000 the year before. But he explained that the figure included a pounds 529,000 bonus, relating to the previous three years, and his basic salary rose by only 2 per cent.