Chief executives who left large firms in controversial circumstances last year clocked up more than £10.5 million, according to research carried out by law firm Pinsent Masons.
Pinsent Mason’s research suggests that chief executives leaving FTSE 250 firms following difficult circumstances received pay offs to the tune of £1 million each on average. However, this figures could be even greater as some businesses have yet to publish their annual report with details of director remunerations. While annual reports must include details of pay and benefits, companies are not obliged to give any specific details regarding the component parts of pay offs.
Tom Flanagan, employment partner at Pinsent Masons, said: “While there has been much criticism of fat cat salaries in the past, it’s important to note that businesses have to adequately reward their top staff for the risks they take on in attempting to turn around a poorly performing company or shouldering the responsibility of creating wealth.
“But businesses need to ensure their contracts of employment reflect the reality of the role, and the time may have come to consider introducing new structures to their employment contracts. Most people would not object to high rewards for those who create wealth and otherwise achieve, but not for simply being there and certainly not for failure.”
The research involved conducted an analysis of media cuttings from the last 12 months, which were used to review which executives of FTSE 250 businesses left their role during 2007.