Contract for Hays chief angers NAPF

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Services group Hays has fallen foul of the powerful National Association of Pension Funds over one of its most senior executive directors.

The NAPF, which represents firms with more than £600m of investments, is advising members to abstain from voting on the re-election of director Xavier Urbain, the head of the haulage and logistics division.

The organisation, which is also advising members to abstain from voting on the remuneration report, is concerned about Mr Urbain's two-year rolling contract. Most shareholder groups advocate contracts of just one year. The NAPF noted that the group chief executive, Colin Matthews, was appointed with two years' notice, due to reduce to one in November 2004, but he is expected to leave the company before then. His replacement, Denis Waxman, the founder and managing director of Hays Personnel, is already on a one-year contract.

Concerns were also raised in an NAPF report about the "substantial payments" Mr Urbain could receive for the sale of the logistics arm. If the business is sold before the end of 2003, he will receive a £640,000 sale bonus and an additional £640,000 if he remains with the division for at least a year after that.

A value of between £200m and £400m has been put on the arm and Mr Urbain has been rumoured to be considering a management buyout. Other interested parties could include rivals such as Deutsche Post, Exel and Tibbett & Britten, as well as financial buyers.

Hays is undergoing a radical transformation that will eventually see it refocus on recruitment and human resource services only, and is selling off various businesses. The overhaul has pushed it into the red, however, with final pre-tax losses of £477m revealed two months ago. The year before, pre-tax profits were £147.6m.