ICI cuts pay-off to ousted chief executive by £400,000

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The Independent Online

ICI, the chemicals giant, continued the backlash against rewarding directors for failure yesterday by cutting the pay-off of its ousted chief executive.

It said Brendan O'Neill, who was forced out last month, could receive only half of the £810,000 he was entitled to under the terms of his contract.

The move is likely to increase pressure on other City boards to stop granting substantial pay-offs to executives whose performance does not justify them.

But Mothercarerevealed yesterday that it had paid a total of £897,000 to three directors who left the company over the past year as its performance foundered drastically.

BHP Billiton, the international mining firm, said it paid Brian Gilbertson, its chief executive for just six months, £4.1m in compensation. Mr Gilbertson, who is highly rated in the mining industry, is not seen as an example of the awards for failure, but the level of his compensation staggered investors.

Ian Henderson, an investment manager at JP Morgan Fleming Asset Management, which owns shares in BHP Billiton, said the sums of money paid out in cases such as Mr Gilbertson's were "mind boggling". He added: "I think these things are not rational, they're not reasonable. They don't bear independent scrutiny."

ICI's board attempted to head off charges of excessive boardroom pay at its annual shareholder meeting in London by unveiling the tough terms of the severance deal it negotiated with Mr O'Neill. The terms involve Mr O'Neill receiving £410,000 now, equivalent to basic pay and pensions contributions for six months' work.

While his contract allows him a pay-off worth one year's salary, he will not receive the second £410,000 if he finds a new job on a similar or better salary in the next five months.

The move effectively bars Mr O'Neill from being paid twice - once in compensation for losing his job at ICI and once by a new employer. The practice is a focus of the current outcry against payments for failure.

Mr O'Neill, who stepped down after a disastrous collapse in ICI's share price, picked up £1.01m last year, including a £361,000 performance bonus. He could still take away a bonus as part of his severance pay, but that would be a maximum of 25 per cent of his base salary.

Despite the board's crackdown on Mr O'Neill's pay, several shareholders at the meeting were unhappy. They berated ICI board members for more than doubling their own bonuses to £1.18m in a year when the company slashed its dividend to shareholders.

Jessie Bonner-Thomas, a shareholder, said: "If you perform badly, you should get nil. There are many weak links on this board. We should have Anne Robinson up there."

Sunil Kumar Pal, another investor, complained that the board had behaved like "fat cats" and told Lord Trotman, the chairman of ICI, that he should "say sorry" for ICI's rocky performance last year.

Lord Trotman looked at times irritable at the barrage of criticism. He said: "If you want me to say sorry I will. I am very sorry."

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