GCap Media has shelled out £2.6 million in severance payments to ousted directors, and chairman of the company’s remuneration committee, Alastair Ross Goobey, has apologised to shareholders.
The non-executive issued an unprecedented statement offering a full explanation for the sums paid to David Mansfield, the former chief executive, and other former colleagues.
Mansfield left the group last September after a clash with Ralph Bernard, GCap’s current chief executive. He walked away with the largest sum of £1.8 million in total, including a £1.13 million payoff.
The remaining £1.46 million in payments were shared by Peter Harris, Paul Davis and Linda Smith, all of whom worked for Capital Radio, which merged with GWR last year to form GCap Media.
Mansfield, Davis and Smith all left after the tie-up, and a weak advertising market exacerbated long-running problems at Capital in London.
Ross Goobey conceded that the payoffs were substantial amounting to “more than 2.5 times base salary.” He said: “One might expect. . . an executive serving on a contract with a notice period of 12 months would be entitled to less than this.”
However, he insisted that the £2.5 million payout was a consequence of the contracts that the former employer Capital Radio had entered into in January and February 2001, at a time when he was not chairman of the committee and when “securing the services of management was more difficult.”
The contracts stipulated that executive directors leaving on good terms were entitled to 95% of 12 months’ salary plus the value of other benefits including bonus. GCap has now scrapped such contracts, Ross Goobey said in his apology, contained in the company’s annual report.
Since GCap was formed in May last year its shares have fallen 6%, with bid speculation propping up the price (see Revamp Renders GCap Profits Down). Bernard earned £718,000 last year, during a period in which GCap lost £47.9 million (£6.4 million profit).
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