Melrose executives to land £200m share payout

Four executives at Melrose Industries are set to receive bonuses worth about £35 million each in one of the biggest City paydays in recent years as the specialist engineering group prepares to announce the results of a five-year incentive scheme.

Melrose’s chief executive, chairman, deputy chairman and chief financial officer are in line for the all-share bonuses as part of a windfall for senior managers at the company.

Simon Peckham, Christopher Miller, David Roper and Geoff Martin will take about 70 per cent of the executive bonus pool originally set up in 2012.

The final size of the payouts will be determined by Melrose’s closing share price at the end of May, but based on the company’s current market value the four men, as well as more than 20 other senior managers, can expect a final share award that will exceed £200 million.

The bonuses are not expected to provoke the kind of anger that has greeted some large paydays with most fund managers regarding the company, which specialises in turning around struggling engineering businesses, as a big success story.

Alastair Gunn, a fund manager at Jupiter Fund Management, applauded the Melrose management team at a City dinner last week and said that he had no problem with their large rewards given how well shareholders had done.

Under the terms of the share awards, the managers must hold on to at least half of the stock for a minimum of two years, although they will be allowed to sell some up front to settle the tax liabilities linked to the payment.

Looked at over the five years since they were first awarded, the share payments equate to annual earnings for the top four of about £8 million, putting them all among the highest paid executives in the FTSE 100.

Since the start of 2012 Melrose shares have risen by nearly 250 per cent. Its share price growth is even more impressive when compared with its original valuation when it listed on AIM in 2003 of £13 million, which compares with a current market capitalisation of nearly £4.3 billion.

It has returned a further £4.3 billion in dividends and payments to shareholders.

A spokesman for Melrose confirmed that the calculations of the bonus payments, first reported by Sky News, were “in the right ball park”, adding: “This scheme was approved by shareholders five years ago in 2012.”