View from City Road: A precedent worth following

Most companies would have you believe they have no option but to pay up the contracts of sacked executives, even when those same executives have fouled up on a grand scale.

Legal obligation is invariably cited to justify these sometimes outrageously large golden goodbyes, guaranteed to raise the hackles of bankers and shareholders.

Lep Group, now run by the company doctor David James, has adopted a very different stance. Once the company's parlous financial position became clear its former chairman John Read was dismissed without a penny.

Since then he has been pursuing a case for wrongful dismissal. Bankers have resolutely refused to sanction any out-of-court settlement. Their stance has paid off.

Yesterday Mr Read, who was about to be deluged with highly damaging allegations about his stewardship, caved in. He received no compensation, though Lep agreed to pay costs of pounds 350,000. It must be hoped that Lep has set a precedent others will follow. But that's perhaps expecting too much.