Shareholder anger at £2m bonus for top three Marconi executives

Marconi's shareholders reacted with fury yesterday after the disclosure that its top three executives are to receive £2m in bonuses for agreeing to stay with the failed telecoms equipment company through its financial restructuring.

The £5bn reconstruction will hand control of Marconi over to its bankers, leaving shareholders, many of whom have lost tens of thousands of pounds on their investments, with a stake in the company of just 0.5 per cent.

Mike Parton, Marconi's chief executive, Michael Donovan, the chief operating officer, and Stephen Hare, the finance director, will each receive a "retention" bonus worth 150 per cent of their base salaries. In the case of Mr Parton, the bonus is worth £787,500, on top of his £525,000 salary. Mr Donovan will receive £600,000 in addition to his £400,000 salary while Mr Hare will get £562,500 on top of his £375,000 salary.

The bonuses are payable in four tranches. The first two have already been paid. The three executives will receive the third payment a week after completion of the financial restructuring, expected early next year, and the final one three months after that.

A spokesman said details of the bonuses have been available for inspection since May. But shareholders attending Marconi's annual meeting yesterday had only 15 minutes to examine them – depriving most of the chance to tackle the Marconi chairman, Derek Bonham, about the arrangement.

After the meeting, however, shareholders expressed their shock and anger. John Welsh of Putney, south-west London, said: "It is disgraceful. When you are a director of a company and it goes down like Marconi has then you should waive your salary altogether, never mind being paid a huge bonus."

Alan Malcolm of Hampstead, a former Marconi employee and small shareholder with 7,000 shares, said: "I am horrified. I would hope that they do not take these bonuses." John Farmer, another small shareholder, described the bonus arrangement as "appalling" and said the three executives should give the money back.

The Marconi spokesman defended the payments on the grounds that it needed to keep the three executives on board during the restructuring. "The banks and bondholder committees are aware of the payments and have not made any objections," he added.

Earlier, during what proved to be a stormy annual meeting at the Central Methodist Hall in Westminster, shareholders queued up to lambast the board over the way the financial restructuring had destroyed virtually all value for investors. One shareholder described it as "a truly fraudulent affair which leaves me and others with little confidence in shareholding and the workings of the City".

Another demanded that each member of the board stand up and give a short apology to shareholders for the way they had been mistreated.

But most shareholder ire was reserved for the former Marconi chief executive, Lord Simpson of Dunkeld, and its deputy chief executive, John Mayo, who presided over the spectacular collapse of the company and then walked away with pay-offs and pension top-ups worth £512,000 and £1.028m respectively. Mr Bonham said he was "personally disappointed" that he had not been able to strike a tougher deal with the two former executives.

In between the outbursts there were some lighter moments. At one point, Mr Bonham apologised for ignoring a lady who was trying to ask a question. The shareholder then introduced herself as Hazel Tyrrell from Dublin – "that's hazel as in nuts and Tyrrell as in squirrel". She wanted to know what qualifications Mr Donovan had for the job. Mr Bonham said he did not know.