The already tarnished reputation of Percy Barnevik, the former chairman of ABB, suffered further yesterday after his former employer demanded some of his pension back.
The Swiss-Swedish engineering giant suggested there was something improper about the size of the pension awarded in 1996 to Mr Barnevik when he stepped down as chief executive. ABB revealed that Mr Barnevik had been granted a massive 148m Swiss francs (£61m) pension, while the award to his successor, Göran Lindahl, was put at Sfr85m (£35m) and similarly questioned.
Mr Barnevik took on the chairman's role after 1996 but quit that position in November last year, admitting that he must "take my share of responsibility for the less good performance of ABB in recent years". Mr Lindahl left in October 2000.
The new chairman, Jürgen Dormann, said: "The board of directors has now determined that approval procedures for these benefits were unsatisfactory and that the company will seek restitution of amounts paid in excess of its obligations."
ABB said it was acting after a detailed internal review, coupled with external expert opinions. The company will now start negotiations with the men over the return of some of the money. ABB said it "hopes the matter can be settled amicably".
It is thought that Mr Dormann moved to clean up corporate governance at ABB since his arrival, in league with Martin Ebner, a board member since 1999. It is understood that the pension arrangements for Mr Barnevik and Mr Lindahl had never been discussed by the whole ABB board.
Mr Ebner, a billionaire Swiss financier whose BZ Group is ABB's biggest shareholder, has been described as Europe's leading shareholder activist. Kurt Schilknecht, a BZ spokesman, said: "We are always in favour of when things are made more transparent and corporate governance structures are established."
The moves against Mr Barnevik and Mr Lindahl could have a knock-on impact on two of Britain's biggest companies. Mr Barnevik is chairman of AstraZeneca and is up for re-election in April and Mr Lindahl is deputy chairman of Anglo-American and is due to take the chairman's job in May.
Mr Barnevik, 61, is credited with forging the merger of Sweden's Brown, Boveri & Cie with Switzerland's Asea in 1988. He said yesterday: "My salary and pension were based mostly on results and according to the agreements with the company."
Mr Lindahl, 56, said he was informed before Christmas of the concerns at ABB over his pension and indicated his willingness to co-operate. He added: "I would like to point out that, to date, I have not sought to draw on the key part of the pension benefits."
ABB yesterday reported its "worst ever" figures for 2001, which showed a loss of $691m (£487m) after taking a total of $952m in charges on top of a hike in asbestos provisions.Reuse content