Steve Robinson, who has run Menzies' high street stores for four years, will leave the group when the deal has been completed. He is on a three year contract of around pounds 170,000 which will entitle him to pounds 500,000 compensation. However, it is understood that Menzies has agreed to double that figure in return for ensuring a smooth handover of the business to Smith's.
The lavish compensation seems certain to anger Menzies' shareholders and create another corporate governance row over boardroom pay.
David Mackay, John Menzies chief executive, declined to confirm details of Mr Robinson's severance terms yesterday. He said the detail would be available in the company's next annual report. However, he did pay tribute to Mr Robinson's role in improving the Menzies operation: "He has played a key role in bringing the business forward and he deserves some recognition for that."
Mr Robinson had been part of a management buy-in group that lost out to Smith's in the battle for Menzies. Under a pounds 55m offer tabled by Alchemy, the venture capital group, Mr Robinson would have remained in charge of the stores and taken a stake in the business. Under the terms of yesterday's deal the enlarged business will be run by Beverley Hodson, managing director of WH Smith Retail.
WH Smith said it had no plans to break up the Menzies chain. While it admitted that there would be some store closures and job losses, Smith's pledged to keep most of Menzies 232 stores and retain the Menzies name in Scotland where it has 92 outlets. The remaining stores south of the border will be re-branded as WH Smith.
Richard Handover, chief executive of WH Smith, said the deal would enhance the group's position both in Scotland and in railway stations and airports: "It is a good opportunity for us to get truly national coverage. We plan to keep the whole business
He said WH Smith had met the Menzies management last year but stressed that this was not about buying the retail chain but about the possibility of sharing certain functions such as IT systems in the distribution business.
WH Smith shares closed 10.5p to 503.5p. Menzies's rose 13p to 441.5p.Reuse content