Blunder that cost trading boss £15m bonus. . . and his job
THE boss of TP Icap has been fired and risks losing a bonus of up to £15m following a mistake that sent shares crashing 36pc.
John Phizackerley was sacked over a cost-cutting pledge that the City trading firm has realised will be impossible to deliver.
TP Icap is expected to treat him as a ‘bad leaver’ meaning he will not be entitled to anything from a bonus payout which would have been worth up to £15m. But friends of the 56-year- old have warned he could take legal action if stripped of money he feels he earned.
Known in the City as Phiz, the exbanker oversaw the merger of Tullett Prebon with part of rival broker Icap in 2015 and was aiming to save £100m a year by slashing costs.
But TP Icap has said this is impossible and only £75m a year can be saved.
The company added that there will be a £10m hit to profits this year from uncertainty over new trading rules, with this bill rising to £25m in 2019. Shares dropped 36pc, or 150.9p, to 269.3p, wiping nearly £850m off the firm’s value.
Sources close to the business slammed Phizackerley for building up expectations to an unmanageably high level.
An insider said: ‘He over-promised and it became clear he was not going to be able to deliver.’ The board began looking at how much money was likely to be saved in the second quarter of this year and it became apparent that the targets set by the chief executive were unachievable.
Chairman Rupert Robson told Phizackerley he was fired at a meeting last night, with unanimous support from other directors. It is understood the pair had repeatedly clashed over how much Phizackerley would be paid, and the targets which he was set.
Friends last night said that the cost- saving targets were set by the whole board and it is wrongly trying to pin the blame on the ousted chief executive.
Father of four Phizackerley, who earned £2.3m last year, will get six months’ base salary as a pay- off worth £ 310,000. It is thought likely that the board’s remuneration committee will decide he is a bad leaver, meaning he will lose any rights to a bonus linked to successfully merging TP and Icap.
This would have paid him a maximum of £ 15m in 2020, depending on the company’s share price and whether certain targets had been hit.
Sources stressed that no final decision has yet been taken.
Phizackerley, who lives in a £7.4m house in Wimbledon, South West London, started his career as an engineer working nights in a South African gold mine, but quit after witnessing horrific riots during apartheid.
He rose through the ranks to become a top banker at the European arm of US lender Lehman Brothers, working there on the day it went bust in 2008.
Phizackerley then merged what survived of the operation with Japanese bank Nomura before a long break from the City that ended when he took the Tullett job four years ago.
He is being replaced at TP Icap by Nicolas Breteau, head of global broking. Robson said: ‘It has become clear that a change of leadership is required to execute our medium-term growth strategy and deliver the detail of the integration process.’