Lossmaking British-based cable company Telewest – whose two biggest shareholders are Microsoft and Liberty Media – faces accusations of executive ‘fat-cattery’ after revealing it awarded four directors huge bonuses last year. The revelation came little more than a week after it announced 1,500 redundancies [WAMN: 03-May-02].
The £690,000 ($1 million; €1.1m) payout – to ceo Adam Singer, finance director Charles Burdick, strategy director Stephen Cook and Mark Luiz, ceo of its content arm – rewarded the executives for a year in which pre-tax losses surged by 63% and share price tumbled nearly 40%.
Aside from underscoring Telewest’s inept sense of timing, the bonuses will fuel the debate on how directors are rewarded. Many of last year’s bonuses were based on EBITDA (earnings before interest, tax, depreciation and amortisation), which rose 23% in 2001.
The same quartet stand to make over £1 million in bonuses this year if EBITDA targets are met, even though Telewest shares have crashed 83% since the start of 2002 and the firm may face a debt-for-equity swap as it labours under £5.3 billion of debt.
Data sourced from: Financial Times; additional content by WARC staff