Young and Ross ousted after clash of personalities

Cable & Wireless crisis: Two chiefs leave 'with immediate effect' and could collect pounds 3m in severance packages

MARY FAGAN,

RUSSELL HOTTEN

and DAVID HELLIER

The chairman of Cable & Wireless, Lord Young of Graffham, and his chief executive James Ross were last night ousted from the company after a dramatic boardroom battle.

The two stand to collect pounds 3m between them in severance packages, but the company last night refused to comment on pay-offs. A formal statement said the two men would leave "with immediate effect".

The departures followed two days of crisis meetings involving the two men and non-executive directors trying to resolve a simmering clash that had suddenly reached boiling point. Lord Young will now be replaced as non-executive chairman by Brian Smith, chairman of the airports group BAA. No replacement has been announced for Mr Ross.

Mr Ross said last night: ''I am very disappointed to be leaving Cable & Wireless at such an important stage of its evolution. C&W has terrific strengths and I am proud to have helped its development over the past three and a half years." He said Brian Smith had an excellent executive team and he wished them all well.

Lord Young was not immediately available for comment. The announcement of the dual departures came after the market closed. C&W's shares gained 26p at one point yesterday on speculation that it could fall prey to a takeover bid, but fell back to close up 9p at 429p.

City analysts described the development as extraordinary and dangerous and said it could leave the company open to a bid.Mike Styles, of Credit Lyonnais said Cable and Wireless would now be regarded by the market as "in play".

C&W was plunged into turmoil at the weekend after it emerged that Mr Ross had threatened to go unless Lord Young was removed or reduced to a much diminished role. The bitter dispute between the two men over the running of the group came to a head last week when it was announced that Lord Young was to remain as executive chairman until his 65th birthday in February 1997.

The final decision that both should leave immediately was made by the non-executive directors, led by Win Bischoff, chairman of Schroders. The non-executives were the only common denominator in a series of meetings with Lord Young, Mr Ross and other executives at secret locations over the last few days.

These culminated in the chairman and chief executive being seen in succession by the non-executives yesterday afternoon. One source said: "The question now has to be who is really running the company."

There had been a view that Rod Olsen, finance director, would be promoted to the chief executive's role as he had been taking on more operational responsibility in recent months. Some people have said the non-executives might consider recalling Duncan Lewis, who in September quit abruptly as chief executive of C&W's Mercury offshoot after nine months in the job.

At the height of the turmoil on Monday, C&W feared that it might become the target of an opportunistic takeover bid from the US mobile phone billionaire Craig McCaw. Mr McCaw denied last night that he had ever contemplated a bid for C&W.

Lord Young is leaving a year earlier than planned. His pay package was worth pounds 479,247 last year and although he did not have a formal contract he is likely to have negotiated compensation for leaving the group more than a year earlier than planned.

Lord Young also stands to benefit from the exercise of more than 1 million C&W share options. Most profitable appear to be the 761,904 options granted in November 1990 at an option price of 210p. With the shares trading yesterday at 429p these would net him a profit of more than pounds 1.6m if exercised now.

Mr Ross's salary and other benefits were worth pounds 391,275 last year, down from pounds 578,100 the year before. He was on a one year rolling contract, which could be paid in full. He has 724,407 outstanding options, granted at option prices of between 222.44p and 446.5p,which could net him a profit of around pounds 1m.

Comment, page 25