Dr Pepper chief in line for £28m pay-off

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The Independent Online
John Albers, chairman and chief executive of the American soft-drinks company Dr Pepper, said last night that he would leave the group with a golden goodbye believed to be worth almost £30m once the £1.7bn agreed takeover by Cadbury Schweppes goes through. Cadbury executives were in Dallas yesterday holding talks with Dr Pepper's senior management about their roles after the merger. The City expects at least 200 to go from Dr Pepper's 1,000-strong workforce. These talks will continue today.

Mr Albers, in his early sixties, said he had no idea of the precise figures, but did not argue with estimates of £28m and said his departure would leave him financially secure. Generous severance payments and stock options will drive the payout.

It is also understood that Ira Rosenstein, Dr Pepper/Seven Up's chief financial officer, stands to gain £19m as a pay-off - taking the total windfall to £47m - but it was unclear last night whether he would remain with the company.

Speaking from the Dallas headquarters of Dr Pepper/Seven-Up, Mr Albers said that after retirement he planned to spend more time at his 1,300-acre cattle ranch in Texas. He also intended to travel and to continue investing, mainly in medical stocks.

Mr Albers, who first joined Dr Pepper in 1971, sank $6m of his personal fortune into the two management buyouts the group underwent in 1984 and 1986.

He said: "I was probably going to retire in 18 months anyway. It is not unusual. I have told Dominic [Cadbury, chairman] I will do everything possible to make this transition work. I have talked to him and will talk again but I will not become long-term as part of this merger."

Mr Rosenstein, who is in his early fifties, is also understood to have invested heavily at the time of the management buyouts and, with Mr Albers, is credited with Dr Pepper's improved performance in recent years.

The windfalls, believed to be a record for American executives following a British takeover in the US, are due to severance agreements that the two directors signed with Dr Pepper in August 1991. It is believed the agreements guarantee each will receive a lump sum worth three times their most recent salary/ bonus package and that all their stock options will be purchased by Dr Pepper should the executives leave within three years of a change of control at the company.

The biggest benefit of all comes from stock options. According to 1993 published figures Mr Albers is understood to qualify for a payment of just under $42m (£26.6m), and Mr Rosenstein for $28.7m.

There are also reimbursement guarantees by Dr Pepper to the two directors if they are liable to pay the US Inland Revenue Service extra taxes because of the severance payments. The pay-offs come as City analysts estimate that up to one in five of Dr Pepper's workforce will lose their jobs following the merger.

David Wellings, Cadbury's chief executive, was in Dallas yesterday for the meeting with Dr Pepper's senior management about their possible new roles.

A spokeswoman for Cadbury in London refused to confirm or deny the pay-offs.

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