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C-charge fat cats bonanza
By Jonathan Prynn Consumer Affairs Editor, Evening Standard Last updated at 00:00am on 11.03.05Two bosses of the company behind the congestion charge have cashed in share options worth almost £1.3 million.
The directors - Paddy Doyle and Gordon Hurst - took their profits two weeks ago following bumper financial results from Capita, the outsourcing firm that runs the charge on behalf of Transport for London.
The news comes days after it emerged that Capita was fined £4.5 million for missing congestion charge performance targets.
And it follows the revelation that London Transport Commissioner Bob Kiley, the official responsible for the charge, is due a £365,000 bonus this year.
The company has also been caught up in the chaos over the new secondary schools admission system in London, for which its software was used.
The Capita directors' windfall followed the announcement of a 25 per cent increase in profits to ?148.2 million, which delighted the City and sent Capita's shares soaring.
Four days after the announcement, the directors took advantage of the strong price to exercise 300,000 share options each. These gave them the right to buy shares at 169p and sell them again immediately at the then market price of 381.2p.
That works out as a profit of about ?2.12 per share or £636,600 each. Share options are widely used to "lock-in" senior executives by promising big windfall payments if the price goes up.
The personal gains by Capita directors have enraged critics of the congestion charge.
Chair of the London Assembly Transport Committee, Liberal Democrat Lynne Featherstone, said: "It beggars belief that private companies and their directors are making massive windfall profits while underperforming.
"Despite Capita's highly publicised inability to meet targets, they have failed to dent the City's expectation that profits will continue to roll in unabated. Serious questions must be asked as to how the PFI contracts agreed by ministers and the Mayor have allowed companies to make huge profits while failing to deliver."
It also emerged that executive chairman Rod Aldridge, who owns about 2.5 per cent of the company, transferred 550,000 shares worth about ?2million into his personal charitable trust, which is helping to fund the construction of a new academy school in Blackburn.
Capita's shares have almost doubled in price since the congestion charge started in February-2003, when they were worth about ?2.
The five- year contract awarded by Ken Livingstone is worth an estimated ?30 million in profits to Capita. A proposed extension to February 2009 could be worth an extra ?3million-?4million in profit from revenues of ?38 million.
The share-option profits came a month ahead of the publication of accounts expected to reveal big bonuses for Capita's four executive directors.
Last year Mr Aldridge made ?504,739 in salary, benefits and a bonus, chief executive Paul Pinder was paid ?464,534, while Mr Doyle, who is operations director, got ?308,731 and finance director Mr Hurst received ?305,248.
