Home > News > 2009 > August 2009 > Pensions Week - Gilchrist is trustee chair after EMI bins Smellie
Pensions Week - Gilchrist is trustee chair after EMI bins Smellie
Music giant EMI has replaced its trustee chairman Ian Smellie with Bestrustees’ Clive Gilchrist.
PW can exclusively reveal that this decision was taken at the end of May after the trustee board failed to come to an agreement over additional contributions with private equity house Terra Firma, which owns EMI.
A source close to the situation told PW that Quentin Stewart, financial director of Terra Firma, owned by Guy Hands, was also removed from the pension negotiations at this point to enable a fresh start. The Pensions Regulator was said to be aware of the situation.
Prior to his departure, Smellie accused Terra Firma of weakening EMI by adding to its debt, and called on the private equity house to make extra payments to protect the 22,000 members of the pension scheme.
Clive Grimley, partner at Barnett Waddingham, said it was the first time he had seen a chairman being removed by an employer and that the story would send shockwaves across the industry.
“This event is not particularly good news and unfortunately it could lead to more divisions between trustees and the employer in future,” he commented. “But chairmen must be prepared to stand up and fight their corner against their employer. They have got one interest and that is to look after the wellbeing of the members.”
Grimley also predicted further emphasis on what was expected of trustee chairmen from the regulator. “The Pensions Regulator has issued statements recently that it expects a higher standard of knowledge from chairmen and in my opinion this is just the thin end of the wedge,” he said.
“I think it will push more responsibility onto chairmen, with further accountability being forced onto independent chairmen.”
TPR has denied having any involvement in Smellie’s departure, which surprised a number of pensions lawyers. Lesley Harrold, lawyer at Norton Rose commented: “As Smellie argued that the employer’s covenant was weakened by Terra Firma adding to EMI’s debt, it is perhaps surprising that the trustees did not seek to involve tPR on the basis that they alleged scheme security had been reduced.”
It is unclear whether Smellie has also been forced from any other form of employment at EMI, but if he has left the company as an employee, there is potential for him to sue for unfair dismissal.
Maria Stimpson, partner at Allen & Overy, stated: “It is rare for a trustee chairman to be employed by the group, but if he is, employment legislation does give employees the right to not to be subject to any detriment by his employer.” This could include if he was sacked following any functions which he performed (or proposed to perform) as a trustee, such as refusing to agree a funding plan.
“Trustees can complain to a tribunal if they do suffer any such detriment and if they are dismissed from their employment with the group. Where the reason for the dismissal is something they did as a trustee, then they will be treated as unfairly dismissed.”
EMI’s trustees and Clive Gilchrist declined to comment.
For the full article on the Pensions Week website please click here