Getting a chief executive to leave with as little fuss as possible has long been a dilemma for corporate boardrooms.
On top of the traditional lavish payoff, some have tried offering free use of the corporate jet, others continued use of the secretarial staff.
But the data-centre operator Telecity yesterday came up with a new one for someone so high up the corporate tree: on top of a £750,000 “termination payment”, it is paying its long-term chief executive £45,000-worth of careers advice.
The announcement of Michael Tobin’s departure, after 10 years in the job, was surprising enough, given that he was instrumental in creating the company in its current shape. Telecity’s shares fell by nearly 7 per cent.
But for some investors, funding an already very wealthy executive’s search for the next lucrative posting raised eyebrows almost as much. Mr Tobin’s 0.3 per cent stake in the business alone is worth more than £5m.
However, headhunters said that while such payments are never usually disclosed when a top boss leaves, they are becoming increasingly common among large firms.
Some organisations will pay for the advice for their departing employees while others will hand out cash to cover the cost.
Recruitment sources named firms including Stork & May, whose website says it works with “senior individuals” who are “making strategic career decisions”, as being outfits benefiting from the trend. It can charge thousands of pounds to create a report for an individual, collect references and advise on their next step. There has also been a boom in individuals seeking advice and training to become non-executive directors.
The “non-exec” market has opened up as companies begin to consider people from a variety of backgrounds and experience and there is now a rise in people going “plural” – taking on more than one job.
Also included Mr Tobin’s package is £70,000 “to compensate him for statutory claims arising from the termination of his employment”, £10,000 towards legal fees over the “termination of his employment” plus payment in lieu of untaken holiday.
He will leave on 31 October and a search for a replacement is under way. Chairman John Hughes will take charge until a new chief executive is found.
“The board and I agree that, with the business in excellent health, now is the time for me to move on to explore other important opportunities and to make way for a new chief executive to take the company to the next stage of its development,” said Mr Tobin.
During his time in charge, Tobin oversaw Telecity’s merger with Redbus in 2006 and its £436m stock-market flotation a year later.
Sweetening the pill: Perks for the ex-boss
Tate & Lyle: Director Stephen Brown was allowed to continue living in a plush house in London’s Kensington for six months after leaving.
Xstrata: Chief Mick Davis was paid millions of pounds when he left as part of the Glencore takeover, including a year’s rent-free office space in its Mayfair HQ and 30 hours use of the Xstrata private jet.
Generali Insurance: Chairman Cesare Geronzi got €4m (£3.1m) compensation for the “loss of fringe benefits”.
Shell: Executive Linda Cook had her pension pot doubled to £16m on her departure.
Virgin Mobile: Chief Steve Burch was said to have been granted £3m in awards including “relocation benefits” to move back to the US.