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June 15, 2012 11:33 am
Sly Bailey has stepped down as chief executive of Trinity Mirror six months before her planned departure with an exit package of about £1.1m.
The publisher of the Mirror is contractually obliged to pay her 11 months’ basic salary, as well as a pension entitlement. But Trinity would not be drawn on how large her cash bonus or share award will be.
The exit package could prove to be controversial with shareholders, who last month threatened to revolt unless big changes were made to the group’s pay scheme, including Ms Bailey’s £1.7m 2011 remuneration package.
One person familiar with Trinity said: “Sly stepped away from day-to-day management some time ago. The contents of her office have been filling up the lifts in recent days.”
The board announced that until a replacement for Ms Bailey is found, her job will be assumed by Vijay Vaghela, finance director, in conjunction with David Grigson, the new chairman.
The search for a successor is being carried out by headhunters Egon Zehnder. Several executives from the newspaper industry have been approached informally but it is believed that no definitive shortlist has been drawn up.
Investors in the publisher of the Daily Mirror and The People had repeatedly demanded a substantial cut in Ms Bailey’s pay in light of the group’s market capitalisation, which has dwindled from £1.1bn when she joined in 2003 to £67.6m today. Trinity has paid no dividend since 2008. Ms Bailey said: “Newspapers are a business like no other and it’s been an absolute privilege to have led Trinity Mirror in this fascinating and all-consuming role.”
The company’s shares have fallen 90 per cent over the past five years amid the economic downturn, migration of readers to the internet and the fragmentation of advertising spending.
Trinity’s pension liabilities total £1.7bn, dwarfing its market value. The publisher’s pre-tax deficit in the year to January 1 ballooned from £161m to £230.1m.
Trinity struck a last-minute bargain with trustees of its pension scheme in March to slash annual contributions in order to obtain a refinancing that allows it to pay £168m to US creditors over the next three years.
It has also been the target of allegations of phone hacking. Jeremy Paxman, the presenter of the BBC’s Newsnight programme, told the Leveson inquiry into media ethics last month that former Daily Mirror editor Piers Morgan explained to him how to hack mobile phone messages nearly a decade ago.
Mr Grigson on Friday spoke of Ms Bailey’s “immense contribution and leadership over nearly 10 years”. Shares in Trinity were unchanged at 26.25p.
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