Shares worth £206m for Mel­rose board

The Guardian - - FINANCIAL - Rob Davies

Di­rec­tors at the en­gi­neer­ing turnaround spe­cial­ist Mel­rose In­dus­tries are in line to re­ceive shares worth more than £200m as part of a bonus scheme that is among the most gen­er­ous in the City’s his­tory.

The in­cen­tive plan, which is linked to value cre­ated for share­hold­ers since 2012, means four top ex­ec­u­tives, in­clud­ing the chief ex­ec­u­tive, Si­mon Peck­ham, can each ex­pect shares worth about £35m.

This is be­cause di­rec­tors are en­ti­tled to shares worth 7.5% of any in­crease in the value of Mel­rose over a five-year pe­riod that ends this May.

The com­pany con­firmed that this would be worth about £206m to di­rec­tors, based on Mel­rose’s re­cent share price and ad­justed for cash that share­hold­ers had in­vested and taken out of the com­pany over the past five years.

Just four ex­ec­u­tives will get 68% of the to­tal, ac­cord­ing to the com­pany’s an­nual re­port.

That means Peck­ham, the ex­ec­u­tive chair­man, Christo­pher Miller, the vicechair­man, David Roper, and the fi­nance di­rec­tor, Ge­of­frey Martin, are likely to split stock worth £140m be­tween them.

The £35m each of them can ex­pect dwarfs the £23.3m re­ceived in 2015 by Tony Pid­g­ley, founder-chair­man of the house­builder Berke­ley, but is still some way be­low the £70m Sir Martin Sor­rell re­ceived the same year for lead­ing the ad­ver­tis­ing giant WPP.

Di­rec­tors can sell enough shares to cover the cost of tax on the awards but must re­tain at least 50% of the re­main­ing shares for at least two years.

A source close to the com­pany said none of the di­rec­tors had ever sold any of their shares in Mel­rose, ex­cept to sat­isfy tax bills.

The com­pany has also re­turned more than £3bn to in­vestors, who ap­proved the pay plan in 2012, by tak­ing over strug­gling en­gi­neer­ing firms, spruc­ing them up and sell­ing them on.

The terms will be set out in the an­nual re­port, prob­a­bly next month.

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