Concerns raised over Thomas Cook CEO’s contract
Thomas Cook has been accused of ignoring corporate governance codes after it emerged yesterday that it had handed new chief executive Harriet Green a two-year notice period to persuade her to take the job.
In contrast, Green is obliged to give Thomas Cook only six months’ notice if she decides to quit.
The disclosure, revealed in the company’s annual report, flouts the UK corporate governance code, which recommends a maximum notice period of one year.
In a bid to attract Green, who was appointed by Thomas Cook in May, the company offered her a two-year notice period that reduces by one month every month for the first year and a half. After that, it will remain at six months.
"This is a significant breach of best practice and the disparity between the notice period for the company and the notice period for the CEO is striking," a spokesman for shareholder advisory group Pirc told the Daily Telegraph.
"It protects the CEO at the time that she is an unknown quantity for the company. This serves only to shield the chief executive at the expense of the company."
Early this week Green was praised by the financial press for the improvements made to the ailing company since she started in July.
The Daily Mail pointed out that she had shown her commitment to Thomas Cook by acquiring 500,000 shares at 23p each.
The City has generally welcomed the stability she has brought to the operator following the sudden departure of former chief executive Manny Fontenla-Novoa in August 2011 during the height of the company’s financial crisis.
Also, writing in today’s Telegraph, business editor Damian Reece points out that companies do not have to comply with the corporate governance code.
He added: "For this stricken company to attract a chief executive of any note on an orthodox one-year notice period was never going to work.
"A smart cookie like Green knew the risks she was taking leaving a highly successful perch at Premier Farnell to try to revive the package holiday basket case. Shareholders should be reassured by that."
Green’s basic salary is less than her predecessor’s, but her total pay package could still reach nearly £3m for her first year.
In its annual report, filed yesterday, Thomas Cook said Green’s notice period was "considered appropriate" in order to secure her appointment.
The issue is expected to be raised by shareholders at Thomas Cook’s annual general meeting on February 7.
By Linsey McNeill
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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