Shares worth £206m for Melrose board
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.