Maurice offloads shares in Saatchi

Maurice Saatchi, the deposed chairman of Saatchi & Saatchi, is believed to have sold a substantial chunk of his remaining 890,000 shares in the company he founded with his brother in 1970. His holding is thought to be among the seven million shar es traded on Wednesday, which depressed the share price by 8p to 138p.

Yesterday the shares rebounded 2p to 140p in very light trading. But they are still 9p lower than before the former chairman issued his letter last week bitterly attacking the board and the shareholders who voted him out of office last month and rejecting their offer for him to stay on as chairman of Saatchi and Saatchi Worldwide, the agency that does about 40 per cent of the group business.

Meanwhile, a temporary truce could now be declared in the war of words Maurice has launched on the company. Talks have begun to discuss terms of the compensation due to him for loss of office. The former chairman's lawyers are expected to demand that negotiations start with the five-year rolling contract worth £625,000 a year, which he gave up last year in the belief that a generous new option package would be put in place by the end of the year.

That would indicate a starting figure in excess of £3m, plus the value of his pension contributions, medical insurance and any of the other perks that go with the remuneration package of a chairman. But the company will argue that the starting point should be the two and a half years remaining of the three-year fixed contract which he accepted last year and his salary of £200,000, which would suggest compensation of around £500,000, plus the value of his other perks.

The board will insist that his decision to give up his old contract at the annual meeting in May was not directly linked to the creation of the £5m share option scheme which aroused the ire of dissident shareholders led by David Herro of Harris Associates of Chicago.

The directors in June last year only agreed to "use their best endeavours" to have it adopted. It would appear that the details of the scheme, devised by the remuneration committee headed by Sir Peter Walters, were not made available until early December, when Mr Herro took exception not to the principle of an option scheme, or even to its value, but to the way in which it appeared to discriminate in favour of Maurice Saatchi relative to the chief executive Charles Scott, and other executives.

Specifically, the scheme would have allowed Mr Saatchi to exercise all his options immediately while others would have had to phase their options over a period as long as seven years. In the event the option scheme has been thrown out by the dissidents along with the chairman himself, although it seems certain a revised version will be drawn up in due course for the benefit of the remaining executives.

The company is also adamant that any settlement in excess of the legal minimum will be tied to the reimposition of non-competition and non-solicitation contracts, which would in effect prevent Maurice Saatchi from setting up a rival organisation and poaching disaffected clients for a period of perhaps two years. It is a moot point, however, exactly how much the former chairman would be willing to accept in return for calling off his campaign against the management and shareholders who have rejected him.

The company's president, Charles Saatchi, the former chairman's elder brother, is still employed, on a five-year contract at a salary of £312,000. Four years remain to be served on the contract.

But the company is adamant that it has no intention of unilaterally changing his contract. If he were to leave as a gesture of solidarity with his brother, it would be of his own free will, no compensation would be offered, and unlike Maurice (but like other creative staff in the agencies which make up the group) he would still be bound by the contract clauses that prevent him from setting up in competition to the agency or from poaching clients.