Top executives at one of Britain’s best-performing industrial groups are close to landing a share bonanza worth more than £200m, placing it among the largest one-off payouts ever made by a FTSE-100 company.
Sky News has learnt that the management team of Melrose Industries, which specialises in turning around underperforming engineering businesses, could receive in the region of £206m from an incentive scheme due to pay out in the next few months.
The details, which will be disclosed in Melrose’s annual report next month, relate to a five-year bonus scheme approved by the company’s shareholders in 2012.
Melrose, which owns manufacturing names such as Brush and Nortek, has generated billions of pounds of profit for its investors since it was set up more than a decade ago.
Sources said that an accounting note in Melrose’s recent annual results, which disclosed a £22.8m charge for employers’ national insurance contributions, hinted at the scale of the potential share scheme payout.
One insider said the current 40-day average share price of about 210p would equate to a total award to Melrose’s top team of £206m, although the final figure had yet to be determined this weekend.
A number of top shareholders in Melrose contacted by Sky News said they were comfortable with the size of the payout.
“We signed up to this knowing the scale of the upside for management,” said one.
“They only make money if we do.”
Melrose’s top team is led by chairman Christopher Miller, deputy chairman David Roper, Simon Peckham, the chief executive, and chief financial officer Geoff Martin.
Between them, the four men are expected to receive roughly 75% of the aggregate payout, which is calculated by handing participants in the bonus plan 7.5% of the total shareholder gain.
A further 20 senior managers would share the remainder of the multimillion pound rewards under the scheme.
Melrose has sold companies including metering business Elster and Bridon, an industrial cable-maker, during the last few years.
The share bonanza will come amid growing scrutiny of boardroom pay at the UK’s top companies, with Theresa May vowing last year to crack down on corporate excess.
Ministers are starting to formulate responses to a green paper published in the autumn, while a report on corporate governance and executive pay is expected to be published by the Department for Business, Energy and Industrial Strategy shortly.
While some companies, such as Thomas Cook and Imperial Brands, have faced revolts over much smaller management incentives than those at Melrose, the industrial turnaround group has generally enjoyed strong support from its shareholders.
Since its inception, Melrose has returned roughly £3.2bn to investors by selling a string of companies for big profits.
A person close to Melrose pointed out that its executives’ pay was strongly aligned to shareholder returns and that its chief executive’s basic salary was £450,000 – well below the average for a company with a market value of more than £4bn.
This year’s share scheme will be the second to crystallise at Melrose since the company was established.
In 2012, executives shared a £126m windfall under the previous incentive plan.
The company’s management team have never sold shares other than to settle tax liabilities, and will be obliged to hold onto half of the latest share awards for at least two years.
Melrose, which declined to comment, will seek shareholder approval for a further incentive scheme at its annual meeting later this year.