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Thursday, 11 October, 2001, 10:36 GMT 11:36 UK
Marconi pay-off is 'outrageous'
Marconi logo
The 300,000 pay-out to former Marconi chief executive Lord Simpson has been condemned by unions but praised by City shareholders.


This is outrageous and a slap in the face for the workforce and shareholders alike

Roger Lyons
MSF
New chairman Derek Bonham had not been expected to make the 1m contractual payment to Lord Simpson, but eventually agreed to a reduced settlement in addition to 2.5m in retirement benefits.

The MSF union's general secretary Roger Lyons said: "This is outrageous and a slap in the face for the workforce and shareholders alike."

Ten thousand workers have been sacked from the company this year.

Michelle Edkins, corporate governance director at Hermes Investment Management, which owns a 1.14% share in Marconi, said she thought the pay-off was a "pretty good result" for shareholders.

Second profits warning

Lord Simpson resigned from Marconi in September after the company issued its second profits warning over a period of just two months and sacked thousands of workers.

Former Marconi chief executive Lord Simpson
Marconi: This is "full and final compensation" for Lord Simpson

The size of his payoff, and of chairman Sir Roger Hurn's, who resigned with him, had been the subject of controversy.

Marconi said on Wednesday Sir Roger had not sought or been offered any compensation.

However, the group confirmed that John Mayo, the chief executive-in-waiting who was ousted after the profit warnings, received a 600,000 pay-off.

Shareholder result

The firm, which was recently relegated from the FTSE 100, has seen its share price has plunge from peaks of more than 12 last year to 16.2 pence on Wednesday

While small shareholders have been outraged by the decision, larger shareholders are happy with the outcome.

"It was as good as we could expect. Derek Bonham did a good job for shareholders," said Ms Edkins.

"In the scale of things it is a couple of months pay for Simpson - which for a lot of people is a pretty low pay-off."

A spokesman for the National Association of Pension Funds, which represents major institutional shareholders, said: "At this point, given the settlement, this is a good example of what can happen with greater shareholder scrutiny. I think our view is that it is around 800,000 more value to shareholders."

Union anger

"This is outrageous and a slap in the face for the workforce and shareholders alike," said MSF union general secretary Roger Lyons.

"Across industry staff have been asked to accept performance-related pay. How can this be fair when executives get big pay-offs regardless of their performance?"

Unions said the sum was equivalent to about 10 Marconi workers' yearly salaries.

Amicable deal

Derek Bonham, who took over as chairman of Marconi, was understood to have vowed to block Lord Simpson's pay-off.

But Marconi said the settlement had been reached "amicably" between Lord Simpson and Mr Bonham.

"George was paid up to his departure and given a one-off payment of 300,000," a spokesman said.

"We think this is an equitable solution. It was amicably reached between both Derek Bonham and George Simpson."

Marconi said the pay-out was "full and final compensation" for Lord Simpson's loss of office, benefits and future pension contributions.

The former chief has also agreed to waive all further entitlements under his contract, which would have extended to July 2002.

 WATCH/LISTEN
 ON THIS STORY
The Financial Times' Simon Targett
"Shareholders see they do have a role to play on pay"
Shareholder Martin Charlton
"They have done a disastrous job"
See also:

01 Oct 01 | Business
Marconi shares hit by US attacks
27 Sep 01 | Business
Marconi shares hit all-time low
26 Sep 01 | Business
City analysts gloomy over Marconi
11 Sep 01 | Business
Marconi's share slide halted
05 Sep 01 | Business
Marconi shares collapse
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