Marconi investors angered by £900,000 pay-offs

Click to follow

Marconi's shareholders reacted angrily yesterday to news that Lord Simpson of Dunkeld, the troubled telecom equipment maker's former chief executive, was to walk away with a £300,000 pay-off, while John Mayo, its former deputy chief executive, had secured an initial £600,000 pay-off.

The company said Lord Simpson would receive the sum as "full and final compensation" for his loss of office, benefits and future pension contributions. He agreed to waive all further entitlements under his contract, which had been due to expire in July 2002. Mr Mayo's entitlements to salary, pension and benefits have been, or will be, honoured in full, it said.

Sir Roger Hurn, Marconi's former chairman, was the only one of the three to walk away empty handed, having neither sought nor been offered any compensation whatsoever.

All three men were forced to resign in the wake of the company's dire financial performance. Mr Mayo was the first to leave, in July, shortly after Marconi's first profit warning while Sir Roger and Lord Simpson went early last month after the company warned it was heading for a £5bn loss this year.

A spokesman for Marconi said Lord Simpson had been entitled to around £1m while Mr Mayo was still in talks with the company to seek more compensation, which the spokesman said Marconi was "resisting". Sir Roger, meanwhile, did not have a contract with the company, he said.

Shareholders and industry watchers alike were outraged that the company's former directors had received pay-offs when Marconi's future was still so uncertain. Their anger was, to some extent, mitigated by the fact that Lord Simpson had not forced the company to pay out the full £1m he had been contractually entitled to.

"We have consistently fought for no compensation whatsoever," said one angry investor who did not want to be named.

Another said: "Sir Roger did the decent thing. Simpson's deal was, at best, a sensible compromise. But Mayo, that's a big disappointment and it still isn't resolved."

Roger Lyons, general secretary of the Manufacturing Science Finance Union, was particularly unimpressed with Lord Simpson's severance package. "The staff at Marconi face an uncertain future and the architect of their misery is walking away with [a] king's ransom. This is outrageous and a slap in the face for the workforce and shareholders alike."

So far this year, Marconi has laid off 10,000 employees worldwide including 3,600 workers in the UK in an effort to cut costs as trading deteriorated.

Mr Lyons said: "Across industry, staff have been asked to accept performance related pay, how can this be fair when executives get big pay-offs regardless of their performance."

In the year ended 31 March, Mr Mayo received total remuneration, excluding pension contributions, of £883,000, Lord Simpson around £1m and Sir Roger around £295,000.

Marconi, which is due to issue a trading update on Monday, hit the headlines again last week when it warned the terrorist attacks in the US had "increased the general uncertainty" in its markets and said there was no assurance that first-half forecasts would be met.

Marconi made the statement in a report filed to the US Securities and Exchange Commission. The filing has to be made annually to satisfy US stockmarket regulations.The statement was the first Marconi had made since its 4 September update and gave some investors further cause for panic.