Lord Young pockets pounds 2.4m pay-off
Tuesday 12 March 1996
Lord Young is to pocket pounds 2.4m under the terms of a pay-off agreement announced yesterday with Cable & Wireless, where he was removed as chairman last November during a dramatic boardroom bust-up.
The bulk of the package comes from a profit on share options worth pounds 2.2m. The balance will be made up of three months' salary, worth pounds 119,000, a share of the directors' bonus scheme, and pension entitlements.
Lord Young of Graffham was dismissed, along with C&W's chief executive, James Ross, after an outbreak of hostilities that led the board to conclude that both top men had to go.
It was after this clear-out that BT made a second takeover approach to C&W, it was confirmed by both companies yesterday. But C&W said the exploratory talks broke down, and there are no current negotiations.
Brian Smith, who took over as chairman of C&W, said of his predecessor's pay-off: "This settlement is fair to everyone concerned: the company, Lord Young, our employees and shareholders. Lord Young will gain from his share options in line with the doubling of the share price during his time as chairman of the company."
C&W said it would not make any payments to enhance Lord Young's existing contractual pension rights. His salary in 1995-96 was pounds 475,000. The company had previously agreed a pounds 1.2m pay-off package with Mr Ross, who had been on a pounds 400,000 salary.
Lord Young did not have an employment contract, at his own request. James Ross was on a one-year rolling contract.
Rod Olsen has taken over as acting chief executive, but the company is still looking for a permanent replacement. The boardroom bust-up reflected strong differences over the strategy of running C&W as a global federation of disparate companies, the biggest of which is the controlling stake in Hongkong Telecom.
Adding to the tension was the mixed performance of C&W's Mercury subsidiary, which was set up to compete with BT in the UK, but with disappointing results.
Lord Young, 64, served in several ministerial posts during Margaret Thatcher's years as Prime Minister, first as Secretary of State for Employment, and then at the Department of Trade and Industry until 1989. He joined C&W as chairman in October 1990.
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