Chelsea boss's £2.25m parachute

CHELSEA managing director Trevor Birch is in line for an extraordinary pay-off worth up to £2.25m if he is axed by the club's new owner, Russian billionaire Roman Abramovich.

Birch, appointed in March last year after chairman Ken Bates ousted his predecessor Michael Russell, is on a £500,000-a-year contract, huge by the standards of a company of Alternative Investment Market-listed Chelsea Village's size.

Liverpudlian Birch signed a four-year 11-month contract in January that gives him the right to a massive golden parachute if he is sacked.

The contract states the company may 'at its entire discretion terminate this agreement with immediate effect'. This would trigger a payment 'equal to the basic salary which the director would have earned from the termination date' to the end of his contract in December 2007.

He would also be entitled to the value of other benefits over the period, including a £1,000-a-month car allowance, health insurance for him and his family and a £50,000-a-year pension contribution.

Though Birch is staying on after the £140m takeover that stunned the football world last week, the scale of the potential payout is astonishing for a company of Chelsea's size.

The vast majority of quoted company directors are now on one-year contracts with no guarantee of even that being paid in full as boardrooms come under increasing pressure from shareholders to 'mitigate' pay-offs.

The terms of the contract are included in a bundle of documents made publicly available today when the formal offer document-is posted to Chelsea shareholders.

It also discloses Birch will get an 18-month 'reward for failure' payment worth £750,000 - equal to 18 months' salary - if he has 'failed to perform his duties to a standard reasonably satisfactory to the board of Chelsea Village'.

The long-term nature of the contract is much closer to those given to football managers than corporate directors. It also marks a huge rise in boardroom pay at a time when cash-strapped Chelsea has been grappling with spiralling players' wages.

Birch was initially on £300,000 but got a 67% pay rise on 1 July - the day of the takeover. The 2002 accounts reveal that, last year, the entire Chelsea Village board was paid only £532,000 and that the highest-earning director - almost certainly Russell - got just £285,000 plus £30,000 compensation for loss of office.

The offer document urges investors to accept Abramovich's 35p-a-share bid.