Erinaceous board offers handsome reward for ugly failure

Can you put a price on failure? Erinaceous board felt it worth £736,000, the handsome pay off it gave former chief executive Neil Bellis and his fellow director, and sister in law, Lucy Cummings.

The golden goodbye is based on the pair's annual salaries and is what they are entitled to under the terms of their contracts.

Really?

Many out of pocket shareholders might argue the mess the company is currently in, which in addition to its £168 million debt has seen it at the centre of SFO raids and allegations of fraud, is a result of Bellis and Cummings' failure to live up to their end of the contract.

Which begs the question why they are being paid anything?

Of course, Bellis and Cummings are not alone in the blame. Chairman Nigel Turnbull, laughingly the author of the Turnbull Report on risk management and internal controls in companies, also bears responsibility.

At the very least he was asleep at the wheel while the company ran itself into the ground.

You can be certain he will not be handing back the £110,000 he was paid last year as non executive chairman, though somebody should perhaps hand him a copy of his report.

Other non executive directors, including Liberal Democrat peer Lord Razzall and Lord Poole, a former adviser in John Major's government, clearly didn't do too much to justify their £30,000 salaries either.

Of course, the banks who happily lent large dollops of cash to fund Erinaceous' aggressive, and reckless, acquisition strategy, also deserve a mention.

But the non-executive directors all failed miserably to provide the checks and balances they are paid to and their role in all this surely worthy of some scrutiny from the FSA.

If you have little sympathy for shareholders, after all you are warned the price of shares can go up as well as down, then consider the plight of the unlucky 4,000 employees of the firm.

Erinaceous is unlikely to be put into administration, but a large chunk of the current work force are still likely to lose their jobs in the shake up that follows between disposals and cost cutting. Ultimately they will pay the biggest price for the failures of others.

But if you are still struggling to put a price on failure try this one. Erinaceous shares have plunged from 392p in January to about 16p yesterday. A company once estimated to be worth £400 million now has a market cap of around £17 million.