Marconi axeman leaves with £4.5m pay-off

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The Independent Online

The Marconi executive responsible for axeing more than 20,000 workers from the telecoms company is leaving with a £4.5m pay-off after restructuring himself out of a job.

Mike Donovan, Marconi's chief operating officer, resigned from the board with immediate effect yesterday and will leave the company altogether at the end of the year.

In addition to one year's salary worth about £400,000. Mr Donovan will also be entitled to 800,000 share options with a value of £4.15m due to him over the next nine months.

He has already received 600,000 shares under an executive bonus scheme set up 18 months ago, 530,000 of which he sold in August, netting a £3.13m profit.

Had Mr Donovan left of his own accord to go to another job, rather than being made redundant, he would not have been allowed to exercise the remaining 800,000 share options.

A Marconi spokesman said: "Mike has worked his way out of a job. He has been very good at restructuring the business, but that is not necessarily the skill set we need going forward."

He disputed the size of Mr Donovan's pay-off, arguing that the 800,000 options due him had already been earned as Marconi had hit the performance targets which will trigger payment of the shares.

As chief operating officer, Mr Donovan was largely responsible for the rationalisation programme which has seen Marconi shed 40,000 jobs and cut £1bn from its operating costs over the past three years.

Of the 40,000 reduction in headcount, half have gone through the sale of businesses to other companies and half have been redundancies.

Mr Donovan was also in overall charge of Marconi's operations in the US, where he was based, but two of the three American businesses he ran have now been sold off, leaving him with no role in the US either.

John Devaney, the chairman of Marconi, said: "We, and Mike, have recognised for some time that once the operational restructuring was largely complete, and the last of our non-core businesses had been disposed of, Mike's role would need to change. Unfortunately, it has not been possible for us to find an appropriate role for him."

Mr Donovan was brought into Marconi by its former chief executive, Lord Simpson of Dunkeld, who was forced out of the company in disgrace following its near-collapse three years ago.