Directors cash in at 3i

THE executive directors of 3i, the investment group planning a stock market flotation next month, have been awarded two-year contracts for the first years of 3i's life as a quoted company.

The lengthy contracts are likely to annoy some institutional investors, led by the communication workers pension fund PosTel, which would prefer service arrangements to be limited to one year.

The directors, who stand to be issued with share options, also enjoy cheap loans from the company, according to details in the pathfinder prospectus.

Ewen Macpherson, chief executive, is on a salary of pounds 225,000. His appointment can be terminated after two years at the end of the initial contract, and then one year thereafter.

Finance director Brian Larcombe, Neil Cross and Richard Summers are on salaries of pounds 165,000, pounds 183,750 and pounds 157,500 respectively, with the same termination terms.

The prospectus reveals that boardroom emoluments are expected to soar from pounds 1.14m in the year to 31 March 1994 to pounds 1.65m in the current year.

The four executives borrowed a total of pounds 456,000 from the company under its staff loan scheme. The interest rate is 5 per cent on the first pounds 50,000, rising to 5 1/2 per cent thereafter.

3i last week opted to go ahead with its flotation plans, despite hefty falls in the stock market last week. Several large companies, including the cable group TeleWest, postponed their float plans.

PosTel's chief executive, Alastair Ross Goobey, wrote to leading quoted companies a year ago threatening to vote against those with service contracts of more than a year. He said at the time he planned to revisit the subject in 12 months.