Lord Young to settle for pounds 2.4m
Saturday 02 March 1996
Lord Young of Grafham is poised to accept a pounds 2.4m compensation package following his ousting in November as chairman of Cable & Wireless after a boardroom row with James Ross, who was also forced to leave the company. The expected agreement comes after months of bitter negotiation between the company and its former head, who is thought to have been demanding about pounds 4m.
The deal for Lord Young includes the right to exercise share options which at yesterdays price would make him a profit of almost pounds 2m. He is also likely to receive a further pounds 400,000 in salary, bonuses and other benefits.
In structure the package is similar to that agreed with Mr Ross, who agreed a pounds 1.3m deal last week. The discussions with Lord Young are thought to have proved more delicate as he had no formal service contract with the company.
The size of the settlements have raised eyebrows in the City as the row between the two men became acrimonious and public, damaging the image of the group.
At the time, analysts said that the situation increased the vulnerability of C&W, which for months had been at the centre of takeover speculation. One commentator said that the reward seemed rather high for failing to get on with colleagues.
Shares in C&W closed at pounds 4.52 yesterday, an increase on the opening price of 7.5p.
A spokesman for the group declined to comment on any deal with the former chairman. "Our position is that we have made an offer an are awaiting a response."
However, it is thought that talks are drawing to a successful close and that Lord Young may use the money to establish a company advising business on investment overseas.
The debacle has left C&W without a chief executive. Duncan Lewis, former chief executive of its Mercury Communications subsidiary was in the running but is thought not to be on the shortlist.
Rod Olsen, the finance director who has been appointed acting chief executive, also ruled himself out.
The view is that the group is poised to appoint an foreigner to the post, possibly from a large US cable or telecommunications company. C&W recently took the step of changing its articles to allow a non-Briton to take the job.
Some City analysts still believe that the group is ripe for break-up. There has been speculation that BT may attempt a deal with AT&T of the US to acquire C&W and divide the spoils.
BT would not be allowed to have Mercury but would be interested in the substantial assets in the Far East and the Pacific region. AT&T, which is attempting to break into the UK telecommunications market, could use Mercury to leapfrog into a pole position.
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