Marconi to fight Simpson over £1.8m pay-off

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The Independent Online

Lord Simpson faces a showdown with Marconi over a £1.8m compensation package he can claim for losing his job as chief executive of the beleaguered telecom company.

Derek Bonham, the new chairman who ousted Lord Simpson in a boardroom coup, said he would resist any claim for the money.

Mr Bonham said he wanted Lord Simpson to follow the example set by Sir Roger Hurn, who said he would forgo any compensation for loss of office as chairman.

"I am putting myself in the position of a very irate shareholder and I know what I would like to happen," Mr Bonham said over the weekend.

Mr Bonham is also chairman of the company's six-strong remuneration committee, which will deal with the issue of any claim by Lord Simpson for compensation.

A company spokesman said: "The position is that a discussion will take place between the remuneration committee and the individual concerned, and they have not taken place.

"I know that Derek did express those views and although he did not state them as chairman of the remuneration committee I think one can draw speculation from that."

Lord Simpson was not available for comment yesterday.

He is entitled to £1m compensation for loss of office. He can also claim a total cash windfall of £800,000 on top his traditional pension entitlement and any share options. Marconi confirmed it had paid £795,000 into a scheme known as a Funded Unapproved Retirement Benefit Plan (Furb).

The company's annual report states a director is entitled to the cash amount in the Furb "in the event of cessation of employment before normal retirement age".

The Government has intervened in the row, saying executives who presided over corporate failure should "share the pain" felt by employees and shareholders. Patricia Hewitt, The Secretary of State for Trade and Industry, said she had no problem with "world class" salaries when companies were run effectively. "When workers are losing their jobs, and shareholders are losing their money, then executives ought to be sharing the pain," she told GMTV.

Meanwhile, Marconi denied it was renegotiating the terms of its debt with its bankers. Marconi's spokesman said the company wants to reduce, not increase, its debt from £4.4bn to between £2.7bn and £3.2bn by next March.