Ousted Mayo settles £1.6m pension dispute with Marconi

John Mayo, the former deputy chief executive of Marconi, yesterday reached an out of court settlement with the telecoms equipment maker over his pension pot.

Mr Mayo, who was ousted from the company in July 2001, had claimed he was owed about £1.6m to cover a pension fund shortfall of £963,832 and £642,555 of taxes. "The proceedings have been settled amicably," a spokesman for the company confirmed last night. "The details of the settlement are confidential."

Some details of the settlement may, however, be released in the company's annual report and accounts which will be published in June. Controversially, Mr Mayo was paid £2.3m for the three months he worked at the group in 2001. He received a salary of £162,000 for that period as well as £443,000 of other benefits, boosting his remuneration to £605,000. On top of that, he received £644,000 in pension benefits, an extra £428,000 payment to meet pension commitments and £600,000 termination payment. The settlement of Mr Mayo's pension claim came as Marconi's rescue refinancing plan won approval from the High Court. Documents will now be sent to creditors who will vote on the plan towards the end of this month.

Under the terms of the rescue plan, Marconi's bondholders and banks will seize control of 99.5 per cent of the business and will get a cash payout of £340m in return for agreeing to cut the company's debt to £788m from about £4bn.

The move will see Marconi emerge from the restructuring process with debt of £788m or net debt of £186m taking into account a £602m cash pile.

After its creditors have voted on the scheme, the group still needs court approval before it can be implemented. The plan is expected to be signed off before the end of May with dealings in shares in the restructured group due to start on 19 May.

The restructuring is disastrous for Marconi's shareholders, however, who will be left with just 0.5 per cent of the restructured company. They will get just one share in Marconi Corporation for every 559 shares they hold in the current Marconi plc.