Payoffs at Kingfisher may be as high as £3m

Big packages at two groups look likely to stoke the dispute over payoffs. Nigel Cope reports
Kingfisher, the beleaguered Woolworths to Comet retail group, which announced a radical boardroom shake-up after a profits warning in January, yesterday said payoffs to the ousted board members could be as high as £3m.

The compensation levels are certain to anger shareholders in the group, which was the worst-performing share on the FT-SE 100 last year.

The company has also said that Sir Geoff Mulcahy, who was demoted from chairman to chief executive following the profits warning in January, is unlikely to receive a salary cut and will still receive about £622,000 for the year.

However, he is waiving his long-term incentive bonus which is thought to have been around £200,000 last year. Sir Geoff's total remuneration in 1993-94 was £1.3m.

The compensation payments will be made to the four executive directors whose departure was announced following a warning in January on poor trading at Woolworths and Comet.

They are chief executive Alan Smith, finance director James Kerr-Muir, corporate communications director Nigel Whittaker and strategy director Tim Breene. All were on three-year rolling contracts.

Mr Smith, who was paid £640,000 last year, seems set for a payoff of more than £1m. Mr Kerr-Muir and Mr Whittaker were on salaries of £410,000- £500,000. Kingfisher said yesterday that executive director contracts would be reduced to two years.

Kingfisher said the payments were less than some reports which had suggested the combined compensation could be as high as £5m.

However, some are bound to see the payoffs as a reward for failure. Kingfisher shares crashed from a 778p peak last year to finish at 379p. Yesterday they closed down 5p at 435p.

The company is expected to announce its new strategy at its full-year results meeting next Tuesday. Some analysts are expecting a radical shake- up at the Comet electrical group, which will make a loss in the year. Other have pondered whether the wholesale break-up of the Kingfisher group is a possibility.

Henderson Crosthwaite is forecasting profits to drop from £3109m to £280m when the results are announced next week.