It is understood that the £2.6m in severance payments was authorised under Ross Goobey, of which Mansfield was the main benefactor, and £1.46m was paid out for loss of office between Capital Radio executives Peter Harris, Paul Davis and Linda Smith, prior to Capital's merger with GWR to form GCap Media in May 2005.
The payments were offered by the company despite it recording an underlying pre-tax profit slump of 40% in May.
Ross Goobey's explanatory statement appeared in the company's annual report yesterday, where he said: "One might expect... an executive serving on a contract with a notice period of 12 months would be entitled to less than this."
However, Ross Goobey insisted that the £2.6m payout was an inevitable consequence of the contracts offered to the former employees of Capital Radio when they joined in 2001.
Mansfield departed GCap Media after only four months last year, receiving £1.13m compensation for loss of office following boardroom clashes with the company's current chief executive Ralph Bernard.
The contracts offered by GCap Media entitled executive directors "leaving on good terms" to 95% of a year's salary, plus bonuses and other benefits.
The company has since scrapped such contracts and claims it took legal advice on whether it was obliged to pay Mansfield. Harris, Davis and Smith were paid a total of £1.46m, despite never working a single day for GCap Media.
In a statement, GCap Media said: "The contracts for the former executive directors were negotiated back in 2001; a time when the market was significantly more buoyant.
"The pay-offs were contractual and were made as a consequence of the board's decision that these former executives were 'good leavers' and were choosing to leave the company by mutual agreement."
Since forming in May 2005, GCap Media's share value has fallen 6% and the company has recorded a 40% decline in profits to £22.2m for the year ending March 31.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the .
.jpg)
.jpg)