Feltex board believed amount offered was 'adequate'

Feltex has terminated the contract of its former chief executive, Sam Magill, after failing to reach agreement on the terms of his golden handshake.

Magill, who quit in June after the carpet-maker's second profit downgrade this year, left abruptly last month in advance of his initial Christmas departure date.

The board had been seeking to agree on final severance terms with Magill, who received $454,000 as part of a $1.3 million payout to four top executives who shared responsibility for the downgrades.

It believed the amount was "adequate" and had not been prepared to pay more than that figure.

"Unfortunately, the board has been unable to reach a final agreement with Mr Magill on terms that it believes are in the best interests of Feltex's shareholders and consistent with his employment contract," chairman Tim Saunders said yesterday.

"The board has, therefore, terminated Mr Magill's employment with immediate effect."

Although Magill had stepped down as chief executive, he technically remains a company director. But the board has asked for his resignation.

If he did not resign, he would have to be voted out by shareholders when his position came up for renewal.

The 36-year veteran of the carpet industry had been at the helm of Feltex since 2000. He formerly managed Shaw Industries Australia which merged with Feltex that same year.

Melbourne-based director Peter Thomas is filling his shoes until a new chief executive is appointed. A decision is expected by the end of the year.

A company spokesman said it was unclear whether Magill was taking legal action, "but one would presume he probably would because the lawyers of the two parties have not been able to come to an agreement and Feltex had taken pre-emptive action".

He believed the dispute related only to Magill.

Meanwhile, merger talks with the company's biggest rival, Godfrey Hirst, which snared a 10 per cent stake in the company in June, have gained little traction.

Feltex said its first priority was to complete its own restructuring.

An operational review of top-level management, plant costs, locations and capacity is due to be finished before its annual meeting on December 1.

An announcement is likely in the third week of October.

Feltex shares, which have plunged 61 per cent since April, were unchanged on 50c yesterday.

- additional reporting NZPA