View from City Road: Alexon raises pay question

Mass blood-letting at Alexon, the loss-making womens' fashion retailer, yet again raises the dubious connection between boardroom pay and performance.

The removal by disgruntled shareholders of Lawrence Snyder, chairman, and his joint chief operating officers, Ruth Henderson and Peter Ridsdale, looks likely to be accompanied by sizeable payoffs as compensation for loss of office.

In the year to end January 1992 Mr Snyder earned pounds 237,000 from Alexon for 10 months' work while the highest-paid director, presumably the then chief executive, Ruth Henderson, drew pounds 264,000.

In that year Alexon made pre-tax profits of pounds 11.3m but an attributable loss of pounds 1.8m after hefty extraordinary losses on closed businesses. In the year to January 1993 things went from bad to worse, with nearly pounds 1m of pre-tax losses, a passed final dividend and a badly shrunken share price.

The departing Alexon directors had three-year service contracts and their compensation, as yet undisclosed, will be based on lower basic salary figures after last year's dire performance but should still amount to a tidy sum.

Large shareholders may regard this as a small price to pay for new management blood. Even so, such payments look uncomfortably like a reward for poor performance. It is not as if Alexon could be faulted for meanness in the past. In 1991/2 the remuneration committee, headed by the ex-Burton finance director Brian North, approved a pounds 425,000 ex gratia payment to former directors.

Compensation is a sensitive subject in a week in which the Institute of Management has accused directors and managers of greed over pay rises and the axed Lasmo chief executive, Chris Greentree, was shown to have received a 40 per cent pay rise after the oil company made a pounds 385m net loss and cut its dividend.

But the tale is not one of unrelenting extravagance. John Carter, chief executive of Hepworth, the building materials group, took a 23 per cent cut from pounds 323,000 to pounds 248,000 in 1992 as his bonus evaporated.

In the well-heeled world of insurance broking, the chairman and chief executive of Steel Burrill Jones saw their remuneration fall by more than 50 per cent in response to only a modest fall in earnings during 1992. And a repentant Lord Fanshawe, chairman of Sedgwick Group, told shareholders at yesterday's annual meeting that he and his executive directors would take a 10 per cent basic pay cut in 1993 after a year in which the dividend was slashed in half.