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City of London defends payoff for departed executives
by Robert St George on Oct 07, 2013 at 10:20
The City of London Investment Group has argued that its award of £700,000 in severance pay to two executives, who left the company in April after just three months in their roles, was justified.
Doug Allison was announced as City of London’s chief executive on 31 December 2012, having been its finance director since 1998. Valerie Tannahill, who had worked there since 1997, replaced him as finance director. Both quit the firm in April.
At its full-year results last month, City of London revealed that it had paid the pair a combined £700,000 ‘in connection with termination arrangements’.
‘The board is aware of understandable concerns by shareholders with regard to the firm’s remuneration policy,’ City of London acknowledged in a statement today.
The group explained that ‘regrettably’ it could not divulge further information on the payments due to the terms of the exit agreements, but claimed that they were approved unanimously by the board ‘after very extensive consultation and negotiation’. The board maintained that the payoffs were ‘in the best interests of the company and its shareholders’.
The high management turnover has contrasted with lower turnover from the business. In the year to 31 May 2013, City of London’s revenues fell by 14% to £29.4 million and pre-tax profit by 23% to £8.9 million. Over the past year its share price has slipped by 14%.
Underlying this has been a drop in funds under management from £2.9 billion in 2012 to £2.1 billion at the end of September. David Cardale, City of London’s chairman, has recognised that the group has suffered ‘redemptions on an almost unprecedented scale’. However, City of London revealed today that it had won a ‘major mandate’ for its core emerging markets strategy in September and expected inflows in the fourth quarter of the year.
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by Danielle Levy on Dec 06, 2013 at 07:46