Former executive sues Marconi for ?1.6m

Marconi is being sued by one of its subsidiaries to recover £1.6m to top up the pension fund of former finance director John Mayo.

Stanhope Pensions Services, a 100% owned subsidiary of Marconi, and Mr Mayo are the trustees of his executive pension fund. They have issued Marconi with a writ claiming the company owes his pension plan £963,000. With the associated tax liability on such a payment, which convention dictates Marconi must pay, the total claim amounts to £1.6m.

Stanhope, as a trustee, and Mr Mayo have been seeking a cash injection for some weeks to allow him to transfer his pension from one fund to another. Marconi has rejected the claim which must now be settled in court.

A Marconi spokesman said: "We have received a writ but we will not decided on how to proceed until it has been fully reviewed by lawyers."

In common with many pension funds, Mr Mayo's plan has suffered at the hands of tumbling equity markets and has become significantly underfunded. It is the duty of the trustees to ensure it is adequately funded.

Without a top-up there will, on transfer, be insufficient funds to provide all the benefits to which Mr Mayo is entitled. The trustees are therefore asking Marconi to make good the shortfall before the transfer is made.

Mr Mayo's demands will rile Marconi executives and long-suffering shareholders. He left Marconi last year with a compensation package of more than £1m following a poorly received profits warning.

According to Marconi's accounts for 2001-2002 he received more than £2m by way of basic remuneration, compensation and pensions of which more than half related to his pension fund.

Marconi will be reluctant to pay more money to Mr Mayo particularly as a pension top-up would amount to little more than a backdated undewrwriting of the pension fund's performance.