Loser in battle for Grand Met top job could net pounds 1m

Boardroom shake-up: McGrath wins two-man race for chief executive post
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Grand Metropolitan, the food and drinks giant, yesterday announced a major boardroom shake-up which saw the abrupt departure of a senior director with a payoff that could come close to pounds 1m.

The move immediately re-ignited controversy over inflated levels of boardroom pay.

The fight for the top chief executive's job came down to a two-man race. The winner was John McGrath, chairman of the group's vital IDV drinks division.

The loser: David Nash, chief executive of the company's food sector. He will now leave the company with compensation of pounds 790,000, qualify for his bonus payable for the year to September and can cash in share options. The final total is likely to be in excess of pounds 1m.

Triggering the change was the news that the chief executive, George Bull, will take over as chairman when Lord Sheppard steps down as chairman of the Burger King and Haagen-Dazs group next March.

Mr Nash's compensation was immediately criticised by both Labour and in the City. One analyst who viewed the payoff as excessive said: "It seems a fat pile of cash for someone who is resigning."

There were also comparisons made between the near pounds 1m pay-off and the pounds 1 an hour wage paid to a Burger King employee earlier this year.

Mr Bull defended the compensation saying: "David Nash is not a 17-year- old looking for a bit of casual labour. He is a very skilled and talented executive." He added that under a re-structure which will also see removal of eight other jobs in Mr Nash's division, his job had ceased to exist.

Mr McGrath said Mr Nash deserved the bonus payments for his work at the company's food business during the past year, during which he has engineered the company's pounds 1.7bn acquisition of the US foods business Pet in January, and taken responsibility for the Burger King chain after the sudden departure of its chief executive in the same month.

Grand Met shares closed 6p down at 451p, valuing the company at pounds 9.43bn. However, Mr McGrath's appointment was greeted with a largely positive response in the City.

One drinks industry analyst said: "He is a bit more aware of shareholder value than others in that seat have been. He is a bit more hands-on and aware of the strategic issues and is consensual rather than dictatorial."

However, some observers feel Grand Met's failure to appoint any fresh blood from outside the company would count against it among institutional investors. One said : "A number of large institutions do not hold Grand Met shares because of their view of the management. That is unlikely to change as there are no new faces."

There is also promotion for Paul Walsh, the 40-year-old chief executive of the US Pillsbury division. He joins the board today and will take control of Grand Met's European food operations. Bob Lowes will continue as chief executive of Burger King reporting directly to the new chief executive.

Mr Walsh is highly regarded in the City and according to some industry observers, his elevation and relative youth gives him the look of heir apparent.

Mr Bull offered little fresh information on the future strategy of the group. He denied widespread speculation that Burger King might be sold and said that future expansion of the chain lay in the United Sates where the business is performing well. He dismissed speculation that the company was a candidate for a break-up bid.