Midland paid out pounds 1.45m to two former directors

PAYOFFS last year to the two highest- paid directors of Midland Bank, Gene Lockhart and George Loudon, were negotiated down to pounds 1.45m, representing little more than half the full value of their contracts, it emerged yesterday.

According to Midland's annual report, Mr Lockhart was paid pounds 735,658 and Mr Loudon pounds 720,000. Both payments were for 'termination of services' after the takeover of Midland by HSBC Holdings, parent of the Hongkong & Shanghai Banking Corporation. Mr Lockhart's payoff included pounds 265,873 put into a bank pension scheme.

Both directors had contracts requiring Midland to give three years' notice, and the payments are believed to represent about 18 months' salary.

Their last reported salaries were pounds 400,000 each in 1991, but there are thought to have been increases last year so the two directors' contracts could have cost Midland a total of pounds 2.5m to pounds 3m if they had been paid in full.

A Midland spokesman said the payments were based on the 'minimum contractual requirements that we had to pay'.

In addition to their payoffs, the two directors are believed to have cashed in share options when they left Midland. On the basis of the last quoted Midland share price, Mr Lockhart, an American consultant, would have made about pounds 500,000 profit and Mr Loudon about pounds 200,000

Mr Lockhart joined Midland in 1987 to run its operations side and modernise the computer systems. At the time of the takeover he was head of the UK branch banking system but it quickly became clear that there was no room for him in the new HSBC management. He has since returned to consultancy.

Mr Loudon, a Dutchman, was chief executive of the Midland Montagu investment banking subsidiary, now run by an HSBC executive.

The salary of the highest-paid Midland director dropped sharply last year, from the pounds 400,000 paid to Mr Lockhart to pounds 345,000 paid to Brian Pearse, chief executive.

This is the first time for some years that the highest-paid director has been the man who runs the bank.