Staff at the troubled catering giant Compass could face soaring pension contributions just weeks after seeing their two top bosses enjoy a boost to their pensions of more than £1m each.
The group is grappling with ways to fill a £532m pensions black hole but this will not affect its two outgoing executives, Sir Francis Mackay and Mike Bailey, who have both had the value of their pension pots topped up in the past 12 months.
The Compass annual report, which some institutional shareholders received on Friday, showed that Sir Francis, the chairman, saw the value of his pension rights increase by £1.23m last year to £16m. Sir Francis is to be replaced by Centrica's Sir Roy Gardner as soon as the gas group can find a replacement.
Mr Bailey, the chief executive who resigned in the autumn after a series of profits warnings and alleged fraud at one of Compass's subsidiaries, benefited from a bigger increase of £1.4m, taking his total to just over £15m. He will leave once headhuntersrecruit his successor.
The fate of the departing executives differs markedly from the company's 500,000-odd staff, who saw the deficit in their retirement scheme swell last year by one-quarter. The fund's trustees could demand either that staff pay more into the scheme or that the group cuts the accrual rate, paying less per employee into the pension fund, a company spokesman admitted. "Reducing the accrual rate would reduce the cost of the pension over the life of the pensioner," he said, adding that a solution to the problem would be announced "within the next four to six weeks".
Another option is to use the proceeds of the proposed sale of its travel concessions business, which includes its agreement with Marks & Spencer's Simply Foods stores, to plug the gap. Analysts believe the business could fetch up to £1.3bn.
The spokesman said the increases to Sir Francis and Mr Bailey's pension entitlements reflected their length of service with the group. Sir Francis, who is 60, started with the group as finance director in 1986, while Mr Bailey, 57, has been a director since 1993.
The annual report, to be published on the company's website today, shows that Mr Bailey was one of a number of executives to waive his rights to performance bonuses. Mr Bailey turned down about £300,000 due for meeting sales targets.Reuse content