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Tui Travel UK’s former finance director receives pay package of £2.4m

Paul Bowtell’s payoff revealed in Tui’s annual report

Paul Bowtell, the former Tui Travel finance director, who left after the discovery of a £117m accounting error in its UK subsidiary, has received a package worth £2.4m in cash and shares, despite working just three months of the last financial year.

The embarrassing accounting error had been building in Tui Travel UK’s accounts over several years, but was not discovered until the summer of 2010, shortly after KPMG took over as auditors to the subsidiary.

When the full scale of the problem was unearthed by the auditors in October 2010 Tui’s shares dropped 11% and Bowtell stepped down from the board – though Peter Long, chief executive, was at pains to praise him as “one of the most capable chief financial officers I know”. Top executives at the UK division also left.

Bowtell’s payoff was not revealed until with the publication of Tui Travel’s annual report. It shows he received £745,000 in severance as well as a one-off payment of £343,000 into his pension pot. Adding in three months’ salary of £123,000 and five different share-based payouts, his total pay package for the year to September 2011 reached £2.4m.

The report also reveals the company’s plans to ignore investor calls for a new auditor to be appointed following the controversial replacement of KPMG just two months after the accountants blew the whistle on years of botched accounting at the tour operator in the UK.

Alan Brett, research manager at corporate governance group Manifest, said he was “shocked and horrified” at what he said was Tui Travel’s failure to address investor concerns. “They [the board] made a promise to shareholders at last year’s AGM. There has been no follow-through.”

He was referring to a deal brokered with institutional investors by Tui Travel senior non-executive director Sir Michael Hodgkinson a year ago, days before the group’s shareholder meeting. In an effort to avert a protest vote against the change of auditor, Hodgkinson pledged that a new audit committee chairman would be appointed and would immediately review the appropriateness of replacing KPMG with PricewaterhouseCoopers.

Brett said: “This issue is more serious than all of last year’s remuneration rebellions put together. Auditors are the eyes and ears of shareholders.” Two months after Bowtell’s resignation, Tui unexpectedly dropped KPMG as auditor, prompting anger from institutional shareholders and governance groups. In a highly unusual move, the accountancy firm revealed in its statutory resignation letter that its relationship with “certain [Tui Travel directors] became increasingly strained”.

KPMG was replaced by PwC, who had been auditing scandal-hit Tui Travel UK for the years during which the accounts were shown to have been at fault. Institutional investors were also concerned because PwC was auditor to Tui Travel’s German parent group Tui AG, which owns 55.5% of the London-listed tour operator.

Tui Travel said: “A full review of all key audit areas was undertaken by the audit committee under its new chairman and they were satisfied with the appointment and independence of our auditors.” © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds