Turnaround expert to head up Jarvis
Friday 15 October 2004
Jarvis appointed a new chief executive yesterday and had to leap to the defence of bonus payments made to past directors at its annual meeting.
Steve Norris, the Conservative politician who is the chairman of the troubled engineering and construction group, told angry shareholders that the directors who ran Jarvis at the time of the Potters Bar rail crash in 2002 deserved the bonuses they received for that year. He insisted that investigations had shown that management failures could not be blamed for the accident.
"We had a straightforward duty to pay a bonus once the requirements of those bonuses had been met," Mr Norris said. "There was no question of reward for failure against a background of losses. We paid it before the loss was identified."
Jarvis came close to collapse this year, breaching covenants on its debts. The company awarded pay-offs totalling more than £1m to the directors it ousted in 2003. Paris Moayedi, the former chairman, received a £565,400 pay-off and a £19,500 contribution to his pension.
In addition, the company's report and accounts, published last month, show that six directors received "performance" bonuses worth more than £800,000 for the year to April 2003, the period covering the Potters Bar crash, when seven people died after a train was derailed by a faulty set of points maintained by Jarvis.
John Farmer, one of about 100 shareholders at the AGM, complained that shares were worth between £5 and £6 before the rail crash but were now worth only about 30p. He said to Mr Norris: "I query your suitability to stay in the job. You have presided over a shambles."
Although the indignant shareholders voted against the company's remuneration policy, counting proxy votes lodged before the event, the resolution on pay received the backing of 84 per cent of votes cast.
Ahead of the AGM, Jarvis announced that Alan Lovell, a former boss of Dunlop Slazenger, had been appointed chief executive with immediate effect. His predecessor, Kevin Hyde, had been eased out of Jarvis a month ago.
It is understood that Mr Lovell was the choice of the banks that essentially run Jarvis after it breached the terms of its loans. He has acquired a reputation as a turnaround specialist. Before Dunlop, he led Costain, another troubled engineering and construction group.
Mr Norris said the restructuring, under Mr Lovell, would be "painful but deliverable".
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