Cray admits error on secret sacking

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The Independent Online
THE CHAIRMAN of Cray Electronics, a data communications group whose shares collapsed last week after a profits warning, has reduced his salary for the current year from £250,000 a year to £100,000. He admitted making a mistake at the interim results in January in not revealing that he had sacked a key executive.

Roger Holland, chairman and one of four directors who awarded themselves £27m of bonus shares in 1993, said there would be management changes, showing that "we take this whole business very seriously".

He was talking after visiting some of the company's Scottish shareholders. The company has been seeing its top 50 institutional holders to limit fall-out from the profits warning.

On Monday Cray said that its profits for the current year would be about £6m compared with £26.2m last year and analysts' forecasts of about £32m. The cause was problems at Cray Communications, its computer networking division.

Last December the company had identified problems and decided to replace Cray Communications' chief executive, Ray Piggott, for incurring cost overruns and failing to meet sales targets.

No mention was made of Mr Piggott's departure in the interim statement the following month, although Mr Holland says it was mentioned to analysts and institutions. Insofar as the information was material, Cray was breaking Stock Exchange guidelines in not publishing it.

"As far as we were concerned we had sacked Mr Piggott and there were legal reasons for not saying anything at that stage," Mr Holland explained. "I felt that it would not have been helpful, but I did not mean to hide anything. In retrospect, I think it was a mistake."

Last week Cray's shares dropped from 155p to 79p.