Two million pieces of silver

24 July 2003

On the contrary. Those bonuses were merited by very hard work but on behalf of the firm’s creditors, not its shareholders. Emptyhanded shareholders in the advertising group have blasted the "rewards for failure" that executives will get after its sale.

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In a series of meetings on 23 July, shareholders in Cordiant voted to sell the advertising company to media giant WPP for 2.5p a share, but also to remove all its executives from the company board. Shareholder Brian Myerson, who together with his partner in Active Value Associates, Julian Treger, had lost £35m as a result of the sale, strongly criticised bonuses totalling £3.3m which are due to be paid to the chief executive and finance director, calling them "rewards for failure".

Cordiant has fallen to WPP following a slide into financial difficulty. In February, it breached debt covenants and lenders gave it a waiver until 18 July to resolve its problems. Management decided in April to sell the company, in defiance of attempts by Active Value to organise a recapitalisation.

Following the sale to WPP, according to Active Value's interpretation of his contract, chief executive David Hearn will be entitled to a bonus of up to £548,000 linked to the sale value of the company. In addition, WPP has agreed that after he has served three months from the date of the sale, it will "procure the termination of his employment", opening up his contractual right to a £1,427,000 payment in the event of termination following a change of control. Andy Boland, finance director, is in line for a payment of £817,000. Hearn and Boland have been in post since 1 January 2003.

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