It has been announced that four warring executives – including CEO Ian Craig – have been put on notice and are expected to leave the company by 2017 following a public row that has rumbled on for the last six months.
Their successors will not command the same inflated wages as has been offered to the current board, the News understands.
Critics have previously challenged Ian Craig’s £270,000 pay and bonus package – a salary almost twice that paid to Prime Minister David Cameron – while the earnings of his three deputies, each paid around £190,000 a year, have also been questioned.
Pay and conditions for new executives will now face a rigorous benchmarking process against similar jobs at rival firms, with any package taking into account Lothian Buses’ status as a publicly-owned asset.
It comes as chairman Tony Depledge announced a review to set out succession plans for the four executives. He said: “We want to have the right people in place to manage the business and we need to take account of changes as people retire or move on.”
Those facing the axe include operations director Bill Campbell, engineering director Bill Devlin and finance director Norman Strachan – collectively known as the “Annandale Three” after the Lothian Buses depot.
It is not yet known whether the shake-up by Mr Depledge will result in costly pay-offs as all four men involved in the row enjoy bomb proof contracts with golden handcuffs of two-year notice periods.
Legal action could be launched against the council by the departing executives.
It is understood the Annandale Three, whose joint grievance filed against their boss Ian Craig ignited the feud, are taking legal advice on their position.
The protracted boardroom row at Lothian Buses began last August when the trio filed complaints against Mr Craig for his management style and failure to consult them on key decisions. An investigation upheld five grievances, including an allegation Mr Craig spent £269,000 on the brand launch for umbrella body Transport for Edinburgh without their knowledge and that staff “disappeared from employment with no discussion with the board”.
After a failed mediation process, former chairwoman Ann Faulds recommended Mr Craig’s dismissal, but resigned when the council refused to back her.
It is hoped the overhaul at the very top of the company – which is 91 per cent owned by Edinburgh Council and has a turnover of £130m per year – will draw the curtain on a six-month saga that has damaged the firm’s reputation.
Today, Mr Depledge admitted the row played out in the pages of the Evening News had been “bruising and damaging” to the company amid fears it might thwart future attempts to attract top personnel to senior roles.
Mr Depledge, who is spearheading the management review that will see the four men depart, said “change is required” but structures would be in place to ensure the continued smooth running of the firm.
And he signalled that the at-risk executives would be kept at the company long enough to ensure a smooth transition.
“I want Lothian Buses to retain the level of skills and expertise it needs through this period,” he said.
“My focus with the executive directors will be on effective succession planning to achieve a logical and realistic process of change.”
It is understood any management review is also likely to consider whether executives at Lothian Buses should work more closely with the tram service.
Transport convener Lesley Hinds said she welcomed the “proactive” steps taken to try resolve the boardroom dispute.
Cllr Hinds was previously thought to have been a firm supporter of chief executive Mr Craig.
She said: “The council welcomes the proactive steps taken by Tony Depledge and the board of Lothian Buses towards ensuring a stable and secure future for the company.
“As Tony says, these past few months will have been very unsettling for all those concerned so it is absolutely essential that things now move on positively and constructively.
“All staff and the many thousands of passengers who rely on Lothian Buses every day deserve to feel confident that the organisation has a robust management structure in place, to help it build on its successes and continue to provide an award-winning bus service in the months and years ahead.”
Conservative councillor Jason Rust warned that the cost of any litigation or pay-out could be “huge” for the city. And he criticised the council’s apparent U-turn on Mr Craig’s position at Lothian Buses.
He said: “It just seems incredible that after all this time, and the fact that it’s been going on for months and months, that we’re in a situation whereby it appears all parties are being removed in some way or another.
“There’s a lack of clarity around such a major announcement.
“I would have thought that it would have been properly presented and worked out.
“I think at the back of everyone’s mind will be the potential for huge cost and litigation.
Cllr Rust added: “The council’s stance now doesn’t seem to be at all consistent or add up with what the council have previously presented.
“There are just so many unanswered questions that we just need to find out, otherwise it’s going to be the taxpayer that could be hit with a massive bill.”
FORMER CHAIRMAN BLASTS ‘SHAMBLES’ AT THE TOP
A FORMER chairman of Lothian Buses has branded the city’s handling of the boardroom dispute that rocked the publicly-owned firm a “shambles”.
Pilmar Smith, who led the board of Lothian Buses between 1992 and 2010, also said the planned departure of three top executives who lodged a grievance against chief executive Ian Craig would be a “huge loss”.
And he accused the ruling SNP-Labour coalition at City Chambers of being too intimately involved in the running of Lothian Buses since the creation of the umbrella body Transport for Edinburgh – which includes councillors on its board.
He said: “The Lothian regional councillors who started the company and helped to build it up into a great company, to see it like this is absolutely terrible – and not by any fault to Lothian Buses, either.
“I’ve spoken to the unions and they are up in arms. I cannot believe it.
“How they can make a case to get rid of these three people?
“I don’t know. What have they done wrong? It’s a huge loss. You’re not just talking about shooting the messenger, you’re shooting the outriders as well.”
Despite sharing party ties with transport leader Lesley Hinds, Mr Smith slated the city’s management of the company.
He said: “The reason Lothian Buses has been so successful since it was formed was because Lothian Regional Council bought it and formed it, but the council had no control. We ran the company according to the Transport Act, and you’ve got to be hands-off.
“Over the last two years, because they’re changing the goalposts, they’re now running the company. I’ve got to say, they’ve made an absolute hash of it. As far as I’m concerned, as a socialist and a member of the Labour Party, this administration is responsible.”
And Mr Smith added: “It’s a shambles and a lot of people at the company are concerned.
“I never knew such a cock-up, for a well-run company to finish up like this, in such a mess. It just gets worse by the day.”