Directors share farewell cash: Tarmac and Costain disclosures may fuel severance pay row
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Your support makes all the difference.TARMAC, the building materials group, paid its chairman compensation for loss of office because his role became non-executive. The rival builder Costain paid more than pounds 812,716 to two directors who left during 1992.
The payments, disclosed in the companies' annual reports, are likely to fuel controversy about the scale of severance payments to former directors despite poor performances by their companies.
Tarmac lost pounds 350.3m in 1992 while Costain lost pounds 148.6m and has been forced to sell off large parts of its business to cut its debts, which still stand at more than its net assets.
Sir Eric Pountain gave up his executive responsibilities at the beginning of the year, although he remains non- executive chairman of the group. A spokesman said he shared in the pounds 492,000 paid to former directors, reflecting the early termination of his service contract. His salary stayed constant at pounds 313,000.
The spokesman said the payment was shared by three directors, but would not disclose the identities of the other two nor break down the individual amounts paid. It is likely, however, that the other recipients were Jack Mawdsley, who was head of the building products division, and Tony Collins, former chief of the property division.
The Costain payments were made to Gordon Haworth, who left the US mining business at the start of 1992, and Tom Slee, who was replaced as finance director by Alan Lovell. Again, the group would not break down the sums paid but it is likely that the bulk of the payment was made to Mr Haworth.
The compensation payments are the latest made by struggling building companies. George Wimpey has paid more than pounds 1m in two years while Taylor Woodrow paid pounds 1.4m to five former directors. They are likely to fuel criticism of the terms of service contracts which, because they run for three years, mean that directors can be paid substantial sums when they leave.
A number of institutional investors have also criticised companies making such payments when they are laying off large numbers of employees. Tarmac's British workforce fell from 31,715 to 28,590 in 1992 while Costain employee numbers were cut from 6,318 to 4,942.
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