Stein leaves Ladbroke with a pounds 1m pay-off: Company chief who accepted, then rejected, a back-seat role agrees to step down as non-executive

CYRIL STEIN finally stepped down from Ladbroke yesterday with a pounds 1m pay-off from the company he has headed for 27 years.

His decision not to carry on as a non-executive director surprised few in the City, where his proposed back-seat role had been viewed as untenable since its announcement last September.

John Jackson, chairman, said: 'Cyril believed that an overnight change to a non-executive role would be no problem. But as the year-end approached he decided, and the rest of the board agreed, that he would find it difficult.'

Mr Stein will receive pounds 200,000 compensation for the three years he had contracted to act as a non-executive director. In addition, he has made himself available to Peter George, chief executive, on a consultancy basis, for which he will be paid pounds 160,000 a year for five years.

Mr Jackson insisted the decision had been genuinely mutual, though it is thought that a bungled series of announcements in December precipitated Mr Stein's departure.

Following proposals in the Budget that companies would be able to pay dividends out of foreign income, Ladbroke quickly said it would take the opportunity to ease its mounting advance corporation tax problems.

The decision, which was made by Mr Stein but which angered institutional investors that stood to lose income as a result, was reversed within a week.

The departure makes it increasingly likely that Ladbroke will cut its 1993 dividend in March. Uncovered by earnings per share in 1992, the payout's maintenance was closely associated with Mr Stein's continued presence on the board.

That apart, analysts think the change will make little difference to Ladbroke's strategy. Mark Finnie, at NatWest Markets, believes a rumoured rights issue to ease its pounds 1.3bn debt burden is unlikely.

Ladbroke's shares rose 13p on the news to close yesterday at 193p. The market's warm reaction partly reflected the potential return of institutions which, having crossed swords with Mr Stein in the past, might now feel able to invest again.

Ladbroke came close to disaster in 1979 when its casino licence, responsible for nearly half the group's profits, was taken away. Following allegations that the company had used police computer information to target potential clients, the management was deemed 'not fit and proper' to operate casinos.

The company today is unrecognisable from the pounds 2m business that came to the market in 1967. Having spent the cash flow from its profitable betting shops on expansion, Ladbroke now has interests in hotels through the worldwide Hilton chain, do-it-yourself retail through Texas Homecare and property in the form of a pounds 700m portfolio.

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