Michael Payne, the group's managing director, also controversially received a pounds 79,000 bonus for agreeing a new three-year contract, which directly flouts corporate governance guidelines. Mr Payne was previously on a 12- month contract, in line with recommended practice. Mr Payne also received a 20 per cent pay rise, collecting a total of pounds 315,000 in 1997 compared with pounds 188,000 the previous year.
First Leisure's annual report also revealed that John Conlan, the group's former chief executive who left in the wake of Mr Grade's arrival, received a total pay-off of pounds 1.5m. Nick Tamblyn, who used to head up the group's bingo and health and fitness division, received a total of pounds 459,000 after also leaving the group abruptly last June.
The directors' bonanzas come against the background of dwindling profits and a slump in the share price. Pre-tax profits for the year to October fell to pounds 41.5m (pounds 42.1m). Its shares have fallen by almost a fifth to 303.5p over the last 12 months, underperforming the market by more than 30 per cent.
Institutional shareholders expressed concern at the revelations. One said: "A salary of over pounds 500,000 looks a lot for a company of First Leisure's size. Maybe he needs the money to keep him in cigars" - a reference to Mr Grade's trademark accessory. Another said: "This bonus for extending the contract looks unjustified."
Mr Grade has also been issued with 651,757 share options which can be exercised at 313p a share. Mr Tamblyn retains options over more than 150,000 shares despite his pay-off.
First Leisure said yesterday that it wanted to give Mr Payne, who is 60-years old, a three-year contract to ensure he remained with the group. "This was an exceptional case. We wanted to prevent him from moving to a competitor or retiring," said a spokesman.
First Leisure also claimed that Mr Grade's total salary had not increased since he was working with Channel 4. He received pounds 450,000 at Channel 4 as well as pounds 60,000 a year in his former role as non-executive director of First Leisure.
The group refused to comment on what criteria Mr Grade would have to meet to receive his maximum annual bonus. However, a spokesman said it would be more demanding than conditions imposed on John Conlan.
Mr Payne and Graham Coles, the group's finance director, both made pounds 86,000 from the group's long-term incentive plan last year.Reuse content