The battle against excessive pay deals secured another victory yesterday, when Thus, the troubled telecoms group, revealed its directors had agreed to waive a 24-month pay-off arrangement if the company is sold.
William Allan, John Maguire and Philip Male, the three executive directors of the company, have agreed to forego their entitlement to 24-month pay and benefits if they leave shortly before or after a takeover. This arrangement would have given Mr Allan, chief executive, a £606,000 pay-off if the company was bought out and he left the company as a result, Mr Maguire, chief finance officer, a £465,800 pay-off, and Mr Male, chief operating officer, £497,000.
The change in policy, however, does not kick in until April 2004. The directors have agreed, however, to forfeit their change of control payoffs before April next year if they leave voluntarily.
Thus made a loss of £58.8m this year and none of its three executive directors received a bonus for 2002/03, having missed their performance targets. This meant Mr Allan took a 32 per cent pay cut for 2002/03, Mr Maguire 27 per cent, and Mr Male 30 per cent. Otherwise, their pay-offs in the event of a takeover would have been far higher.
The company's remuneration report, published in its annual report and accounts, says the change of control provision was "consistent with market practice at the time" to ensure the retention of directors in the extremely volatile telecoms sector. But after "a change in the attitude of institutional shareholders to such provisions", the directors have given up their entitlements.
"The board has always been responsive to what the market feels is right and has been conscientious about corporate governance issues," a spokesman for the company said yesterday. "These kinds of issues have been at the forefront of investors' minds in the past six to 12 months, and the board thought it was appropriate to review its practices."
The move is part of a groundswell of investor backlash on excessive "rewards for failure". Ray Haythornthwaite, chief executive of the cash-strapped engineering group Invensys, put himself on a months' notice on Thursday, reducing the payout he would receive if he left the company or was sacked by about £800,000.Reuse content