Ousted Shire chief takes home £5.9m pay-off

Rolf Stahel, the ousted chief executive of Shire Pharmaceuticals, walked away with a £5.9m pay-off, which included a £4.3m pension top-up, it emerged yesterday.

The figures were revealed in the drugmaker's latest financial results, which suggested Mr Stahel's bonanza will eat up the gains from better-than-expected trading so far this year.

The company insisted that, contrary to the spate of recent "payments for failure", Mr Stahel's pay-out was a reward for success. It also said it would still bring the Swiss businessman only a relatively modest pension.

Based on an analysis of FTSE 350 chief executives' pension pots, Shire's board decided to top up Mr Stahel's fund so that his new pension will be "just above six figures", Angus Russell, Shire's finance director, said. With a pension from his 27 years at Wellcome on top of that, Mr Stahel's annual pension income will represent a third of his final salary of about £650,000.

Mr Russell said: "On the face of it, £4.3m looks a large sum, but the pension it buys is nothing like that. Shire has always had a defined-contribution scheme and when we looked at Rolf's pension – bearing in mind he is 59 and has given us nine years' service, but where the contributions were small, especially in the early years – we were surprised to find that the fund would only yield an annual pension in the very low double-digit thousands of pounds."

The rest of Mr Stahel's £5.9m pay-out represents his one-year notice period, a bonus of one times his salary and the earned portion of his long-term incentive plan – the size of which is related to a mixture of share price and company earnings performance.

Shire shares are languishing at levels last seen at the start of 1999, but analysts cite Mr Stahel's departure as one of the reasons for the last lurch down in October. This was when Shire's non-executives forced his resignation after a row over strategy. It is believed there had been clashes between Mr Stahel and the North American non-executives who dominate the board over where Shire should concentrate its search for acquisitions.

Mr Stahel had been one of the FTSE 100's most respected bosses. He arrived in 1994 and built Shire up through a string of acquisitions. The company was worth £100m at its flotation in 1996. He has agreed to hold on to his 600,000 shares and further options for at least two years and is not expected to retire. Although currently on holiday in Europe, after a Caribbean tour, he is expected to seek a new pharmaceuticals industry role.

Shire's new boss, the American Matthew Emmens, said yesterday that strong product sales in the first three months of 2003 meant the company was already on course to beat sales forecasts for the year, although he could not raise earnings guidance.

Adderall, the hyperactivity drug which accounts for about 40 per cent of sales, appeared to be holding off the competitive threat from newly-launched rivals. This eased market fears and sent Shire shares up 36.25p to 438.25p, the best performance of any blue-chip stock yesterday.