Maurice Saatchi's pay cut by pounds 400,000: Chairman agrees new contract after 'cathartic' tension with chief executive

Click to follow
The Independent Online
MAURICE SAATCHI has taken a pounds 400,000 pay cut and abandoned his controversial rolling five-year contract as part of a new incentive package at Saatchi & Saatchi, the advertising group.

The deal puts the chairman on a pounds 200,000 base salary and a rolling three-year contract, though a new bonus scheme could take his pay up to previous levels.

Shareholders at the company's annual meeting yesterday were told that the whole board was being put on new contracts with high bonus incentives.

Charles Scott, the chief executive involved in a very public power struggle with Mr Saatchi over the company's direction, had described the chairman's contract as not within the spirit of the Cadbury code.

Yesterday Mr Scott said Mr Saatchi had voluntarily accepted the new contract, while Mr Saatchi described the 'creative tension' with Mr Scott as cathartic.

Sir Peter Walters, head of the compensation committee who was asked to look at board pay, said the chairman was leading from the front. But this did not stop criticism of board, with one shareholder describing last year's remuneration as utterly obscene at a time when the company's financial fortunes had sunk. Mr Saatchi had been entitled to a salary of pounds 625,000 a year without a bonus element, though the company said he had drawn only half this figure in the last four years.

His new bonus deal is linked to Saatchi making revenues above pounds 740m. One per cent above the target and he gets pounds 10,000, rising to pounds 200,000 if revenues are 5-6 per cent above pounds 740m.

Last year Saatchi's revenues were pounds 813m, though the company said this year is not comparable because of businesses sold and accounts lost. However, analysts said the company should comfortably make more than pounds 740m this year.

Saatchi shares rose 9p to 142p after Mr Scott said revenues in 1994 should be higher than expected, though still lower than last year. Higher profits were still expected from cost reductions, he said.

Mr Scott said the full benefit of recent account wins - notably from the Miller Brewery in the US, the national lottery in the UK, and its appointment as one of Warner- Lambert's two worldwide agencies - would not come through fully until 1995. 'But I am able to say with confidence that I believe we are on the road to recovery.'

Senior management in Saatchi's struggling US business have gone as part of a big shake-up, and Mr Saatchi will take over direct responsibility for the operation.

(Photograph omitted)