£1.4m pay-off for Carlton's Green

MICHAEL Green, chairman of Carlton Communications, is set to receive a £1.4m pay-off when the group merges with Granada despite not having a formal contract, it has emerged.

Green is due to leave the group when the merger is complete after being ousted as chairman of the new ITV plc in October by institutional investors led by Fidelity Investments.

News of the pay-off is understood to be included in the listing particulars for the merger, which are due to be published on Monday.

The payment is the equivalent of two years' salary - Green was paid £707,000 in 2002.

In addition, he will also receive two years' pension contributions, and walk away with millions of pounds worth of share options.

Green, who founded Carlton more than 20 years ago, has never had a formal contract with the media group.

However, the group is understood to have been given legal advice saying that after working for the firm and drawing a salary for a number of years he has an implicit contract, and should be treated in the same way as other directors who have two-year contracts.

But the move is likely to spark outrage among shareholders who called for the removal of Green, who is held partly responsible for the collapse of ITV Digital, and demanded the appointment of someone from outside the two groups.

Carlton is also understood to be giving finance director Paul Murray a pay-off of several hundred thousand pounds when he leaves the company.

The group declined to comment, and a spokesman for Green said he did not want to be drawn into a debate on his severance package.

Tomorrow's listing particulars will also include details on Charles Allen's contract when he takes over as chief executive of the new group. It is thought his current two-year contract at Granada will be reduced to an annual contract when the £4.5bn merger is completed in February.

Last month the two companies signalled there would be job cuts when they announced the combined group would make cost savings of about £100m.

The merger was approved in October by Trade and Industry Secretary Patricia Hewitt. She accepted undertakings from the pair in November relating to 'behavioural remedies' to address their dominant position in the advertising market.

The main undertaking allows advertisers to roll over their existing contracts to the new enlarged ITV group.