Investors call for end to golden handshake
Monday 31 May 1993
Postel, one of the UK's biggest pension funds, wants to see executives restricted to one-year rolling contracts so that if they are forced to quit, they are not entitled to huge 'golden handshakes'.
The BT and Post Office pension fund, which controls pounds 23bn, is willing to vote against contracts longer than a year.
Major financial institutions, such as Postel, invest in shares and own major stakes in companies which would enable them to block new contracts for executives at annual meetings.
Huge pay-offs recently have included pounds 1.5m for Robert Horton, who was ousted as chairman and chief executive of BP following a boardroom row and pounds 1m for Stephen Brown, chief executive of the sugar group Tate & Lyle, when he left after less than a year following a clash with other executives.
Alastair Ross Goobey, Postel's chief executive, told BBC 2's The Money Programme that it was not fair that shareholders should pay for management failure.
'I am going to suggest that we actually now start to make it public that we would vote against the reappointment of any executive director with more than a one-year rolling contract.'
He was backed by Paul Myners of the money managers Gartmore, which controls around pounds 15bn.
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