Monday, June 18, 2007

EMI: A company in crisis

Almost five years to the day after revealing Ken Barry's reward for failure was £6million, EMI's annual reports reveals that in the year in which he was forced out, Alan Levy pocketed £4.6 million quid. Oh, and they're still paying him some benefits, despite him having been kicked out in January:

The annual report says: "Mr Levy is entitled to continue to receive for one year from termination the value of retirement benefits and benefits in kind provided to him under his employment agreement."

Part of the Kilimanjaro of cash Levy shovelled into his pockets was a £1.1million bonus. Now, you might wonder how a boss being ousted after issuing a profits warning might come to qualify for such a huge bonus:
Last year's extra £1.1m bonus - when fellow executives missed out on performance-related awards - is explained to shareholders as part of his contract, which states that "in the event of his termination without cause he would be entitled to a bonus in respect of the financial year in which the termination occurred, pro-rated down to the date of his termination, with the bonus being based on the average bonus achieved in the prior three years".

Technically, Levy went "without cause" and somehow got the cash.

Now, I'm not Alan Sugar, but if you have senior executives blessed with contracts where they can screw up, give up and cash up, it doesn't exactly make them as desperate to do well as if their payment required some sort of success, does it?

When you read Paul Birch's moist-eyed picture of record labels being "forced" to lay people off, you might want to ponder how many jobs might have been saved at EMI had Levy been paid according, if not to his needs, then at least to his value.