Southern Cross chief to turn down £500,000 compensation

THE boss of failed care homes giant Southern Cross said yesterday he will waive his entitlement to a payout of up to £500,000 when he leaves the company.

Chief executive Jamie Buchan was brought in two-and-a-half-years ago to rescue Britain’s biggest care homes provider, but he was forced to accept defeat when landlords rejected a plan to reduce rents across its 752 homes.

Southern, the UK’s largest care home operator with 31,000 residents, is expected to close down by the end of the year. Two-thirds of its homes are to return to landlords, although the future of the remaining sites is still in doubt.

Buchan said he would step down when the process of transferring the homes is well advanced but will “not avail himself of his contractual rights for compensation for loss of office”.

This would have seen Buchan, who in February voluntarily reduced his pay by 20 per cent to £344,000, receive a year’s salary and benefits, understood to be worth about £500,000.

Chairman Christopher Fisher said: “Jamie Buchan’s decision not to take compensation when he steps down as chief executive later in the restructuring process is entirely consistent with the tireless and selfless approach he has adopted while leading the management team.”

There was no confirmation on whether finance director David Smith will follow suit.

The company’s previous chief executive, Bill Colvin, stepped down following a profits warning in 2008, and Buchan joined the group in January 2009.

He had previously overseen the transformation and sale of London’s ExCeL exhibition centre, backed by a Malaysian private fund, and Southern said the new management team would focus on excellence in service delivery.

But despite Buchan’s efforts, Southern still struggled to pay its rent as fees from local authorities and occupancy rates declined.

The group earlier this year tried to negotiate a deal with its landlords, but all 80 of the owners of its properties refused to take cuts, leaving Southern with no choice but to announce its closure.

The Westminster government has insisted the residents of the homes that have not been taken on by their landlords will not be affected by the restructuring, despite suggestions that some will have to close and patients moved. There are said to be operators in place for the vast majority of the homes – though none were confirmed.

The company is expected to begin the process of transferring employment responsibilities for its care home staff from today.

The first homes will transfer by the end of this month, with a second wave by the end of October, when, the restructuring should be complete.