C&W chairman defends compensation payouts
Saturday 29 June 1996
Speaking at the company's annual meeting, Mr Smith said the payments to former chairman Lord Young of Graffham and former chief executive James Ross, were "what they were due to that point". He described the terms of three months' pay plus their share option entitlements as standard.
The two directors, who were asked to leave the company in November, were reportedly offered compensation of pounds 2.4m and pounds 1.3m respectively. "Leaving emotion aside, I believe this was a fair settlement for two people who had worked hard and successfully for the company and who had left it in excellent financial shape," Mr Smith said.
He was also quizzed by one shareholder on why incoming chief executive Dick Brown was immediately granted an option package worth an estimated pounds 2.6m.
He replied that the deal was "the sort of incentive package required to get a top-level executive from the US to come on board". Mr Brown takes up his post on Monday.
Mr Smith said that in Europe, its majority-owned Mercury Communications had come back strongly from its disappointing year in 1994/95 and while there was more work to be done, the results "are now coming through". He denied speculation that C&W wanted to "dump it". "It remains a cornerstone of our European strategy and Europe continues to be one of our main areas of focus."
On the break-down of recent merger talks with BT, Mr Smith said the board had a clear duty to shareholders to investigate the proposal but it became clear "the obstacles were intractable and that the lengthy discussions were blocking some of the other options we wished to pursue".
Cable & Wireless said reports that the company is considering a stake sale in majority owned Hong Kong Telecom to the Chinese were "purely speculative". A Hong Kong newspaper had yesterday quoted a "senior C&W source" as saying the company would consider selling part of its 57.5 per cent holding in HK Telecom to the Chinese to help secure better access to the Chinese telecoms market.
Mr Smith said that despite the upsets and excitement" of the 1995/96 year, the true picture was one of solid growth.
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