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Baltimore Paid 'Outrageous' Salaries Says New Boss

by Jason Gorringe,, London

22 October 2001

Bijan Khezri, who took over as chief executive of cash-strapped, one-time Nasdaq star Baltimore Technologies just a week ago, told the Financial Times last week that the company had been paying outrageous salaries. "Fran Rooney (the former chief executive who quit in July) was paid £450,000 . . . no senior executive, including myself, should be paid more than £150,000," said the former merchant banker.

The 32-year old Mr Khezri had controversially wanted to offer share options to the non-executive directors, but instead will offer them shares. Dublin-based Baltimore appointed Mr Khezri to take over from Paul Sanders, who filled in after Rooney's departure. Mr Khezri first became involved with the company in 1997 when he advised Irish encryption company Zergo on an acquisition; he became a director and in 1998 engineered Zergo's merger with Baltimore. The merged vehicle became one of the technology boom's highest-flying stocks, valued at more than £5bn in 1999.

Despite his past involvement, Mr Khezri now says that Baltimore then made some silly acquisitions. Now he has taken on the resulting mess, and insists he will be able to clean it up.

The numbers are certainly horrible: Baltimore, which makes security software, said two weeks ago that revenue for the third quarter of 2001 was £15 million ($22 million), down from £20.1 million a year earlier. Its cash balance at the end of September was £32.4 million, down from £53.9 million at the end of the second quarter of the year. In August Baltimore said it planned to cut its staff from around 1,100 to 470 by the second quarter of 2002 as it sought annual savings of £72 million. Last week the company's share price in London was 16 pence, down from £15 at the peak.

Mr. Khezri told the FT that the company was "fully committed" to the restructuring program, which "should provide the company with the necessary resources to take it into the next growth phase." That will involve the sale of Content Technologies - bought for £692m in a deal which Mr Khezri now says did not "make any sense". Content may now be worth £50m or less.

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