Shareholders in Murray Financial Corporation, the failed building society takeover vehicle, triumphed in ousting its founder from the board yesterday and will now try to block his £800,000 pay off.
Ken Murray, who set up MFC to takeover building societies in 1998 with £10m of backing, yesterday resigned as a non-executive director after a three-hour extraordinary general meeting of the company in London.
The meeting was convened by Resurge, a finance company run by the entrepreneur Jonathon Rowland, which owns 30 per cent of MFC. It has been frustrated that the loss-making company has not pulled off any deals and is now nothing but a cash shell. Resurge wanted its own representation on the board and objected to the terms of Mr Murray's contract.
Mr Murray appointed four new non-executive directors of the company last week. They made an abortive attempt to get the meeting adjourned yesterday. After the vote went to a shareholder poll, the two parties held private talks that resulted in four Resurge board candidates being appointed and in Mr Murray's resignation. The company now has eight directors, which even Resurge yesterday said was "ridiculous" for a shell company.
Resurge will now examine Mr Murray's contract to see if he is entitled to the three years' pay-off he claims, which would give him around £800,000. It vowed it will not pay up if the contract is not watertight.
"It has amazed us that a director can frustrate a shareholder to such a degree," Jamie Constable, of Resurge, who was appointed to the MFC board yesterday. "He has done nothing for the company, but his salary has kept on being paid. It is morally inconceivable that he should have got £250,000 a year and this pay-off arrangement."
Mr Murray resigned as executive chairman of the company last month, but since re-elected himself as non-executive.
John Redwood, the former Conservative Cabinet minister, was also dragged in to the pay row. He was a non-executive director of MFC until July last year, and was on the board's remuneration committee when it agreed the three-year contract for Mr Murray.
Mr Murray defended his pay off, saying the terms of his contract have been fully disclosed in the company's report and accounts for years.
Shares in MFC floated on the AIM market at 10p and the company came close to a £30m reverse takeover of Leek Building Society in 1999. But this failed to materialise and its shares were at 3p yesterday, making it worth only £3m.
Mr Murray said he was "glad to be rid" of his involvement with the company, saying dealing with shareholders was a "nightmare".
"They came across to me as immature, inexperienced and bad tempered. That's not my style. You can be chilled out and polite about these things without behaving like they did," Mr Murray said yesterday.
Mr Constable said Resurge was in talks with three parties that would be interested in a deal with MFC.
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