Clerical Medical is no doubt a good deal for Halifax as it

Clerical Medical is no doubt a good deal for Halifax as it prepares for flotation on the stock market next year, but is it, even at a pricey pounds 800m, such a good one for Clerical Medical’s policyholders, the company’s present “owners”?

Their immediate benefit is only pounds 111m, paid out in the form of special bonuses, plus an allocation of pounds 160m to increase the ultimate value of their policies. The rest of the money goes into the long term with-profits fund and to provide a core of shareholders’ capital. He stressed that “nothing had been decided,” and that any rumours of 10 per cent cuts had come “out of the sky”. Last night he defended the review, being undertaken at the direction of Stephen Hill, the paper’s new chief executive, saying “a lot of good ideas have come out”. The review has been dubbed Century Bold, the name of a newspaper typeface, to reflect its scope and range.
The Financial Times chapel (branch) of the National Union of Journalists last week suspended its involvement in Century Bold working groups, pending clarification from the company about redundancies.In a letter to staff, Mr Lambert said he was “not yet in a position” to say if changes being recommended would lead to redundancies, but promised that any job cuts would be achieved through voluntary departures, “as far as possible”.Mr Lambert insisted there were no plans for job cuts on a “crude top- down basis”.

A full-scale review of costs and editorial systems at the venerable financial title is nearing completion, and is expected to yield radical prescriptions about staffing, budget systems and other management issues. Fears of job cuts of as much as 10 per cent at the Financial Times yesterday prompted a promise by the newspaper’s editor, Richard Lambert, that any staffing changes would not “damage the quality of the newspaper”, and that full details of any redundancy programme would be announced by next week at the latest. Mr Leschly is on a two-year contract, although he is entitled to three years’ pay in the event of a takeover.His basic salary and fees rose from pounds 765,000 to pounds 800,000 in 1995, while the bonus he received jumped from pounds 654,000 to pounds 928,000.The spokesman said the company had added a tremendous amount of value to shareholders over the past few years, and the shares had been one of the best performers in their sector over 12 months.. He is now part-time chairman of British Aerospace.Most of of Mr Bauman’s emoluments from SmithKline last year came from cashing in so-called “stock appreciation rights” (SARs), which are linked to the growth in the share price and form part of the company’s long-term incentive scheme He exercised nearly 863,000 SARs to net pounds 1.71m.

Under the terms of his contract, he is still entitled to payments until he reaches the age of 65 in September this year.Most of SmithKline’s executive directors continue to be on three-year contracts, in apparent contradiction to the current trend to move towards two-year contracts. In 1993, he picked up pounds 1.9m, before a pension contribution of pounds 1.16m, some 9 per cent down on the pounds 2.1m he received in 1992. A spokesman said: “We are a global health-care company and, as we have said in previous years, to attract the calibre of executive director we require, we must pay competitive salaries. These are comparable with similar sized global operations.”Mr Bauman earned a reputation as one of the UK’s most lavishly rewarded directors while he was at SmithKline. Security Services shareholders will receive 3.84 shares for each share held. Trading in the new shares should commence in June.Comment, page 17. Bob Bauman was paid pounds 2.81m last year by SmithKline Beecham, despite retiring nearly two years ago as chief executive of the drugs giant.

The payment was disclosed in SmithKline’s annual report, entitled Striving to Make People’s Lives Better, which was released yesterday.
Harry Wendt, a former chairman who retired on the same day as Mr Bauman in April 1994, took home a further pounds 392,000 last year, adding to the pounds 840,000 he pocketed in the previous year.SmithKline also revealed that its new chief executive and former Wimbledon finalist, Jan Leschly, picked up pounds 1.8m last year, down from pounds 2.44m in 1994.However, stripping out an pounds 850,000 one-off payment for moving expenses in the previous year, the 1995 figure actually represented a 13 per cent increase.The disclosures are likely to raise more eyebrows about the increasing levels of boardroom pay, particularly in the light of the Government’s calls for pay restraint to help beat inflation.SmithKline’s five executive directors were paid a total of pounds 4.91m last year, and the 10 non-executive members of the board shared pounds 609,000.Hugh Collum, finance director, made a pounds 1.53m profit from exercising share options.News of the pay increases for SmithKline’s present and former directors comes just days after it was revealed that Sir Richard Sykes, chief executive of drugs rivals Glaxo Wellcome, saw his remuneration rise to pounds 2.1m for the 18 months to December 1995.Sir Ronald Hampel, ICI chairman, won a 42 per cent rise in emoluments to pounds 863,000 last year.SmithKline last night defended the payments. When the sale was prevented last year Securicor said that it would not rule out disposal to a third party or “some sort of flotation”.The group said yesterday that no discussions are taking place with BT or any other potential buyer and that “the directors believe that the interests of shareholders will be best served by retaining the Cellnet stake for the present”. However, it added: “Nevertheless, all options will be kept under review.”Under the terms of the deal, 600 million new shares will be created with Securicor shareholders owning 65.4 per cent and Security Services shareholders the remainder.Existing Securicor shareholders will receive 6.7 new shares for every ordinary share and 3.8 new shares for their `A’ shares. There is also a view that a Labour government would look more favourably on the move, which BT has pursued since 1982.City analysts believe that BT would have to pay about pounds 1.5bn for Cellnet, which accounts for about 70 per cent of Securicor’s profits. A lot of institutions refuse to buy shares in companies with two-tier voting structures.”The City immediately started to speculate on the implications for Securicor’s Cellnet stake. The Government last year blocked an attempt by Securicor to sell the Cellnet stake to BT, which already has a 60 per cent holding, by refusing “at present” to lift the ban on BT taking 100 per cent of the mobile company.However, Sir Peter Bonfield, BT’s new chief executive, is known to be keen to achieve full ownership. With competition increasing and the Orange flotation proving popular it is possible that the DTI might change its mind.

One analyst said: “It’s long overdue and people have been looking for a simplification for some time. The company has been over-complicated.”Another said: “It will make the stock more liquid and the company easier to understand. It is scrapping its three different classes of shares, with the trustees of the original founders surrendering control.
The move pleased the City and Securicor `A’ shares moved 200p higher at pounds 18.05. Securicor, the security and Cellnet communications group, yesterday announced it was to sweep away its archaic multi-tier voting structure in a move that immediately fuelled speculation that the company was intent on selling its 40 per cent stake in Cellnet, the mobile telephone operator. Securicor will combine its twin company, Security Services, in which it owns a 51 per cent stake, into one holding company called Securicor.