£268m PAYDAY
Incredible Silicon Valley-style rewards on offer to top brass at UK software group Micro Focus
BOSSES at Britain’s biggest tech company are in line for a payday of nearly £270m in a Silicon Valley-style bonanza.
Just weeks after finishing its £6.5bn takeover of Hewlett Packard Enterprise’s (HPE) software business, micro Focus said it would hand executives and managers the bonus if its share price rose to £34 in the next two years.
That would require the stock to gain another 40pc in value by September 2019, after closing 1pc, or 23p, higher at £24.36 last night.
Critics branded the deal – potentially one of the biggest in UK corporate history – ‘extraordinary’.
It comes amid mounting concern over fat cat pay in British boardrooms. Under the pay deal, five executives alone will be handed 3.7m shares if the stock hits £34.
The highest paid will be Kevin Loosemore, the company’s executive chairman since 2011, who stands to gain £37.4m. The 58-year-old oxford University graduate, who took home £8.4m a year in pay and bonuses over the past two years, already held shares worth £17m yesterday.
Chris Hsu, 47, micro Focus’s new chief executive who was previously executive vice-president at HPE Software, will take the next biggest slice at £30.6m.
others set to cash in include finance chief mike Phillips, 54, who will take home £23m while chief operating officer Stephen murdoch, 50, and board member Nils Brauckmann, 53, will both pocket £17m each. a further 4.2m shares, worth £142.8m if the price hits £34, will be handed to about 30 other senior figures.
Stefan Stern, a spokesman for the High Pay Centre, said the proposed payout raised questions about whether the right people were being rewarded.
He said: ‘They are simply extraordinary numbers. There is nothing wrong with performance incentives for people who create value, but I suspect those people – probably programmers and IT specialists – are not the people who will benefit from this.
‘It is fair to say most people could not begin to understand how you reach numbers like these for three years’ work – they are beyond the lottery.’
The windfall would be granted only if the share price hits £34. If it fails to pass £27, they get nothing. a micro Focus spokesman insisted the payout was conditional on ‘delivering exceptional shareholder returns’.
Before its takeover of HPE, micro Focus was worth about £4.45bn, and yesterday that had risen to around £10.5bn.
The spokesman added: ‘micro Focus has developed a very clear strategy, linked to a financial plan and to a rewards systems that only pays executives when shareholders see returns.
‘remuneration policies align executive incentives to long-term shareholder interests. The HPE transaction represents the next stage in micro Focus’s track record of delivering exceptional shareholder returns.’
Edwin morgan, director of policy at the Institute of Directors, said: ‘The key test of whether directors’ pay is justifiable is the judgment of shareholders. after these payouts... the shareholders must make their judgment on whether the current parameters are valid.’