UK: Scottish Power Pays Former Executives 'Obscene' £11m

Publisher Name: 
The Guardian (UK)

Four executives of energy company Scottish Power cost the company £11m in severance pay when they left their jobs over the past year, the group's annual report revealed yesterday. The payouts were immediately condemned as "obscene" by the Scottish National party's energy spokesman, Richard Lochhead.

The annual report showed that Ian Russell, its former chief executive, left in January with compensation of £2.3m and a pension top-up of £2.7m - even as the company was warning customers it was forced to raise their bills because of soaring oil and gas prices.

Mr Russell's payoff is triple his annual salary of £648,000 and the pension payment doubled his entitlement to £6.8m.

Directors Charles Berry and David Nish, who left the company last September, pocketed a total of £2.6m and £2.2m in payoffs and pension enhancements respectively. And Judi Johansen, the former head of the company's PacifiCorp arm that was sold this year, received a total of £1.1m.

The total payouts of £10.9m are on top of the executives' normal pay and pension contributions of £10.5m.

Mr Lochhead said: "Customers who have been hit by a succession of increases in the last few months will view these astronomical payouts to executives who lost their jobs as obscene.

"The extra money being paid by consumers is going to make these fat cats even fatter. Given the recent increases in fuel bills by Scottish Power, the timing of the revelations will anger many."

Scottish Power raised the price of gas by 15% and electricity by 8% in March, and has warned that bills will rise again due to high wholesale costs. Last year the company said it was cutting 450 jobs across the UK, half of them in Scotland.

Scottish Power said the severance payments made to the directors were "entirely based on their contracts, no more and no less". It said Mr Russell's pension had increased by so much because the 2005 figure assumed he had several years of employment ahead, while the 2006 sum reflected the fact he had effectively retired from the firm.

Scottish Power has been in the takeover spotlight since it rebuffed a £10.7bn approach from E.ON last year. Gazprom, E.ON, RWE and Scottish and Southern Energy have been touted as possible bidders.

AMP Section Name:Energy
  • 201 Executive Compensation