Lonrho directors demand pay-offs to go quietly

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The Independent Online
FOUR of Lonrho's oldest directors - all of them of pensionable age or more - are demanding substantial pay-offs to leave the board voluntarily.

Dieter Bock, the German financier who became joint chief executive of Lonrho last year, has asked several directors to 'retire' as part of an attempt to 'clean up' Lonrho's image.

Sources close to the board say the plan has caused a furious row, with four directors - each of whom already receives a generous pension in addition to salary - demanding compensation to go quietly.

The four directors believed to be discussing departure are: Rene Leclezio and Peter Youens, both in their seventies, and Paul Spicer and Robert Dunlop. All four are seen as allies of Tiny Rowland, still joint chief executive of the company and the man who has led the group in a uniquely maverick fashion for more than 30 years.

Though the issue has not yet been considered formally at a board meeting, it is expected to be high on the agenda early in the New Year.

Mr Bock is unhappy that the directors receive pensions, some estimated at pounds 200,000 a year, on top of their salaries. Sources say he is determined to negotiate toughly on their demands as a way of demonstrating to shareholders that costs are coming under control.

Under the company's articles of association, directors can be dismissed from the board only after a unanimous vote of directors. Effectively this has meant that the Lonrho directors have a job for life which they only leave voluntarily.

Mr Bock wants to change the articles to bring Lonrho into line with other companies, but to do so he needs the approval of a 75 per cent majority of the shareholders at the annual general meeting. This year's meeting is expected to take place in March, and shareholders are likely to take a keen interest in discussion of the directors' compensation.

One City shareholder said that he would not be unduly concerned by large pay-offs, which he thought a price worth paying to normalise practices at the company.

Mr Bock, who is regarded with scepticism in some parts of the City because of his reluctance to explain satisfactorily where his money comes from, has impressed some financial institutions with his progress in modernising Lonrho.

The long-running feud with the Fayed brothers was ended towards the end of last year. Although Mr Rowland claimed the credit for it, many think that the rapprochement would not have happened without the arrival of Mr Bock.

Mr Rowland is expected to be unaffected by the clamp- down on directors' perks. He is said to be viewed as a special case by Mr Bock because of his huge experience in running the company and his vast network of contacts.

None of the directors was available for comment at Lonrho's Cheapside headquarters. Tiny Rowland was said to be in Acapulco, Mexico.