pounds 1m payout for Wickes directors

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The Independent Online
The new chief executive and finance director of Wickes, the do- it-yourself retailer whose former bosses are being investigated for fraud, have been awarded salary and options package valued at more than pounds 1m each.

Wickes has also spent more than pounds 10m in fees to professional advisors in the last six months since discovering past profits linked to supplier rebates had been overstated by pounds 51m.

The details are contained in a document sent yesterday to Wickes' shareholders urging them to accept a deeply discounted pounds 53.2m rescue rights issue or risk the crisis-hit company going into receivership.

Of particular interest are provisions for "golden parachute" payments if Wickes loses its independence. Analysts say Wickes has been so weakened by the discovery of the serious accounting irregularities that it is a sitting duck for a pounds 200m takeover.

Bill Grimsey, who was appointed chief executive last month, stands to earn a bonus of pounds 230,000 if Wickes is taken over by August 1997 or his employment is terminated within a year of such an event. Bill Hoskins, Wickes' finance director, will get pounds 200,000 under a similar arrangement.

The document also shows that Mr Grimsey received a special payment of pounds 115,000 "in recognition of the exceptional services he has provided to the group since July 1996". Mr Hoskins got pounds 100,000 for his recent efforts.

Mr Grimsey is on a one-year rolling contract paying pounds 230,000 a year and has share options valued at pounds 690,000, while Mr Hoskins is also entitled to share options worth three times his annual salary of pounds 190,000.

The exercise price of both sets of options is performance-related, but it could be set at the shares' closing price on the day before a bid is made for Wickes.

Trading in Wickes' shares was suspended at 69p in June after the accounting scam came to light, forcing the resignation of pounds 1m-a-year chairman Henry Sweetbaum. Seven other directors have since left.

Dealings in the company's shares will resume on 7 January if shareholders approve a one-for-one rights issue, which has been fully underwritten by SBC Warburg, at the equivalent of 15p a share, a pounds 100m capital reduction and new banking facilities of pounds 52m.

Wickes said the rights issue will cost it pounds 3.5m in expenses, including a standard underwriting commission of 2 per cent equal to pounds 1.35m.

It has also paid pounds 6.6m in fees to lawyers, accountants and auditors. Some pounds 5m will be split between City law firm Linklaters & Paines and accountancy firm Price Waterhouse, who led an internal inquiry into Wickes' accounts.

Last month the Metropolitan Police and Serious Fraud Office began a formal investigation into unnamed former Wickes' directors. Wickes does not expect the inquiry to result in any liability for the group.

Wickes said the total pay bill for directors in the year to December 1995 was pounds 3.85m.