Valad boss valedictory costs $1.9m

Amid the management changes, Valad's investment management mandate, covering $762 million in funds for the Kefron group of Sweden, was also terminated yesterday when the banks in Europe moved to put Kefron into bankruptcy.

Mr Hurley joined the property developer in 1999 and late last year he and a fellow director, Martyn McCarthy, made an unsuccessful management buyout of Valad's European business, that the group bought for $2 billion in June 2007.

Mr Hurley has been on a leave of absence from the group since December 2010 but on full pay. It is understood Mr McCarthy will remain with Valad to help run the European business.

Valad's 2010 annual report stipulated that Mr Hurley, who was paid a $1.88 million retention bonus last year, was entitled to a $2.3 million termination payment if his "employment is terminated without cause in a year prior to June 30, 2011". However, the acting chief executive of Valad, Clem Salwin, managed to negotiate a lower payment to Mr Hurley.

In a short statement, Valad's chairman said Mr Hurley will now be paid $1,902,198, which includes an agreed termination payment of $940,000, payment in lieu of the contractual nine-month notice period, accrued annual leave and long service leave entitlements.

While the payout was marginally less than first expected, it nonetheless rankled investors who said the group still has a long hill to climb.

The co-founder of Valad, and vocal shareholder, Barry Wynne, said the saga continued.

"The board and directors are going to have to perform above normal to create wealth for shareholders, which is after all, the primary function of the board," he said.

Andrew MacFarlane, a property analyst at Goldman Sachs, said the loss of Mr Hurley, one of the group's founders, caused his firm to question Valad's future ability to retain investment management mandates.

He said Mr Hurley's termination did not come as a surprise due to his involvement in the failed management buyout of Valad's European business. "Nevertheless, the costs involved in Mr Hurley's termination are significant relative to the small group profit generated last year and expected this year," he said.