Bob Murphy, who was forced to quit as chief executive of Cobham late last year after a string of profit warnings, will receive a payoff equal to one year’s base salary and at least £200,000 to return to his native US, according to the defence equipment group’s annual report.
Mr Murphy, who ceased being a Cobham employee at the end of January, saw his total pay and remuneration rise from £1.4m to £1.5m in 2016, in part due to a £200,000 relocation payment. His contractual payoff of 12 months’ salary will be reported in next year’s annual accounts and is expected to total about £775,000.
In light of the group’s poor performance in 2016, neither Mr Murphy nor Simon Nicholls, the former finance director who also quit last year, received compensation for long-term incentive plans.
Cobham also said that it would not compensate the new chief executive, David Lockwood, for 2016 incentives forfeited when he quit his previous employer Laird, which issued a profit warning several months after he left.
Mr Lockwood’s base salary at £690,000 is about 11 per cent lower than Mr Murphy’s although the maximum payout under his long term incentive plan will be increased from 150 per cent of salary to 200 per cent. Under the current remuneration scheme Mr Lockwood could earn anything from £900,000 to £3.32m a year – including long-term incentive awards – depending on the performance of the group.