On 7th April, Hunting announced the retirement of CEO Dennis Proctor: https://www.investegate.co.uk/hunting-plc–htg-/rns/retirement-of-dennis-proctor-as-chief-executive/201704070700088531B/
This follows a very difficult period for the company and its shareholders, as it suffers from sharp cutbacks in CAPEX by the oil & gas industry.
I was shocked to read this today: https://www.investegate.co.uk/hunting-plc–htg-/rns/directorate-change-and-remuneration-disclosure/201709010700054964P/
A payment of US$1,688,350 will shortly be made to Mr Proctor which includes US$785,600 related to his service contract obligations with the balance reflecting a settlement in connection with the cessation of employment.
(in addition to which Proctor retains bonus and LTIP entitlements, though these may not amount to much in the light of the company’s continuing losses.)
Why does retirement result in the need for the company to make a huge payoff?
This seems to me to be a case of massive payoffs for (already wealthy) executives on retirement, whereas workers might be lucky to get a carriage clock!
I’d be interested in some informed views.
DISCLOSURE: I only have a token holding in Hunting, at present, for monitoring purposes.
A good spot. My guess is : Age discrimination means you cannot have a contract with a retirement age. So anyone with a 12 month contract will ask for 12 months pay in lieu of notice when asked to leave. The only way around this is to have a strong performance management process and review if he/she is still fulfilling his/her contract effectively. This can take some time and is disruptive. It is better to reduce contracts of directors to less than 12 months, in my opinion. Companies should still be able to ask for non-competes of 12 months.
Cliff Weight (I don’t hold any shares in Hunting.)
I agree with Cliff. I have no evidence is this particular case but I suspect that retirement is simply a very British way of saying “fired” hence a compromise agreement (ie payoff) was made.
I have no shareholding in Hunting.