Abbey directors could quit with £20m

Golden Parachutes worth nearly £20m to Abbey National directors were revealed yesterday when Banco Santander Central Hispano posted the formal offer document in connection with its £8.6bn takeover of the British bank.

Golden Parachutes worth nearly £20m to Abbey National directors were revealed yesterday when Banco Santander Central Hispano posted the formal offer document in connection with its £8.6bn takeover of the British bank.

Luqman Arnold, Abbey's chief executive, could make up to £5.5m. He is entitled to more than £1.6m in lieu of notice when he leaves, probably next summer. He also has share options worth £3.5m and stands to make a profit of £352,000 on his holding of 345,000 Abbey shares.

The £1.6m is made up of gross salary, pension contributions and a bonus calculated reference to the average of 70 per cent of gross salary and percentage bonus paid in the first 12 months, for the whole notice period. If he leaves after 30 June next year the bonus will be the average percentage of salary for the previous two years.

And although Stephen Hester, Abbey's chief operating officer, forfeited a payoff when he accepted the job of chief executive of British Land in July, he can still make £2.1m from share options. Other executives stand to receive similar payments for options and termination of contracts.

Despite the fact that the chairman of Abbey, Lord Burns, is non-executive his contract gives him the same notice as the executive directors - a year on the company's side, six months if he quits. He receives £465,750 and Abbey pays half the BUPA membership for him and his wife.

Matt Young, a spokesman for Abbey, said: "There are no special payments here for directors: this is all contractual. What the board has given to shareholders is a great-value deal and the certainty it will be delivered."

The payments to departing directors pale in comparison with advisers' and related fees, which total €165m (£112m), the document shows. Abbey expects to pay about €90m for advisers, printing, postage, and holding a shareholder meeting. Santander estimates it will pay €75m to investment banks and lawyers.

Morgan Stanley of the US was Abbey's financial adviser. UBS and Lehman Brothers acted as corporate brokers to Abbey. Santander was advised by Goldman Sachs, JPMorgan Chase and Merrill Lynch. The Spanish bank will also pay €300,000 for listing new Santander shares and €13.75m to create a free share-dealing facility for Abbey investors.

To the embarrassment of Emilio Botin, Santander's chairman, he has had to detail in the document a criminal complaint filed by two shareholders against himself, José María Amusátegui and Angel Corcóstegui. The latter two were directors of Banco Central Hispano before Santander took it over. The pair received payments totalling €151m when they left the group, which Santander says was approved by shareholder meetings. The two shareholders say the payments were unlawful. The Abbey takeover document says: "Having taken legal advice, the Banco Santander board is of the opinion that the proceedings against the defendants can be successfully resisted."