item0078B  1082, 1083

Wouldn't it be nice to get paid twice?  Once for simply doing your job, and a second time for being ever so co-operative and not doing your job badly.  It is, of course, a fantasy - unless you belong to Britain's corporate elite, which has produced several recent instances of such a mad idea.

You might imagine that one of the main responsibilities of being a Chief Executive or Chairman - one of the core elements of any job description, and the stuff for which you get your bases salary - is to help organise an orderly transfer of power to your successor when you retire.

But in several recent cases, bosses have been awarded special bonuses for doing precisely that.  The most egregious case was at J Sainsbury, where part of Sir Peter Davis' notorious bonus was for finding a new chief executive and a new chairman-in-waiting - in reality, jobs for the Board Nominations Committee - and then successfully introducing them to their new responsibilities.

Now come two new cases.  United Business Media proposes paying Lord Hollick, the chief executive, a £250,000 bonus after he leaves in May for a successful handover to his successor, David Levin.  And at Travis Perkins, Frank McKay, the chief executive, is getting an additional £100,000 bonus for effecting an "orderly transfer" of responsibilities to his successor Geoff Cooper.  And what, anyway, might a "disorderly" one look like?

Now the smooth handling of succession can legitimately form part of a retiring executive's personal goals for the year - with this in turn forming an element of their normal annual bonus.  To the extent they screw up the handover, their bonus should be docked.

But in both the new cases, the payments appear to be additional to the annual bonuses, rather than itemised elements from them.  Travis Perkins points out that Mr McKay was originally going to hand over in the summer, prior to his October retirement, but this was brought forward to February after the company bought Wickes and - rightly - thought it important that the new chief executive get on board quickly.  But Mr McKay is not exactly suffering: until he goes in October he will still evidently get his £510,000 salary and be eligible for regular bonuses - and the £100,000.

These payments are not big relative to the remuneration of the executives concerned, which makes them doubly ill-advised.  For they make Britain's bosses look small - the kind of individuals who do not do the decent thing without their being something extra in it for them.

 < Back to Home Page