Sherlock's second big payoff
Tuesday 16 May 1995
and MARY FAGAN
Peter Sherlock, whose short reign as chief executive of the NFC transport group ended after a power struggle, is to receive £585,000 in compensation. It is the second time in less than three years that Mr Sherlock has received a large pay-off after unexpectedly departing from a company.
The NFC settlement is substantially less than the £1.3m he was claiming from the company, which is thought to have first offered £100,000. NFC said the payment "represents the compensation he was entitled to under his contract". As well as payment for loss of office, the money covers Mr Sherlock's costs and pension entitlement.
He was thought to be earning a minimum of £250,000 a year which, under his three-year rolling contract would have entitled him to at least £750,000. Less than three years ago Mr Sherlock quit the board of Bass, the brewing group, after six months in charge of the company's Holiday Inns business. He received £395,000 compensation.
NFC's pay-off is not as high as some recent compensation packages - Peter Davis's £2m from Reed-Elsevier or Robert Montague's £1.4m from Tiphook - but it is still likely to cause disquiet. NFC has a large and vocal group of employee investors who have taken pride in its shareholder democracy and equal treatment for staff.
Mr Sherlock was recruited as the "new broom" that would overhaul the company, but resigned last August after only 18 months following several management disagreements over strategy. His thrusting management style was at odds with the paternalistic and hierarchical culture at NFC. He apparently did not get on with James Watson, the chairman, and director Robbie Burns. Mr Burns had resigned but decided to stay on after Mr Sherlock's departure.
Despite NFC's large market share the group came under pressure from smaller players and Mr Sherlock's strategy appeared to do little to improve profitability. He is still a director of Allied Leisure, and is involved in a number of private companies.
Meanwhile, charities will be waiting for news later this week of what Sir Iain Vallance, chairman and chief executive of BT, plans to do with any bonus he may receive for last year. Sir Iain may be unwilling to comment on the issue at the BT results meeting on Thursday, but has given away substantial sums over the past few years. In 1991 - long before the "fat- cats" debate - he gave some £150,000 to charity, with one of the main beneficiaries thought to have been the Princess Royal Trust for Carers, of which he is chairman. The bonus dropped to £90,000 in each of the subsequent two years before jumping to £185,000 in 1994 when BT made a pre-tax profit of £2.7bn.
Sir Iain insists that what he does with his money is his business. But it is believed that a large part of the total was given away in each of those years. Sir Iain's basic salary has remained constant since 1992 at about £465,000.
BT is expected to announce pre-tax profits of about £2.7bn for the year to 31 March 1995, after taking a charge for redundancy of at least £750m to £800m. The company made more than 16,000 voluntary redundancies during the year and is expected to announce cuts of about 12,000 over the next 18 months.
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