The defence and aerospace group BAe Systems is targeting savings of £400m by 2003 from its takeover of the defence electronics arm of the former GEC, it emerged yesterday.
The new efficiency plan is disclosed in the company's annual report along with details of the share option awards that senior executives will be able to exercise if the target is met.
Originally BAe forecast that the merger would deliver savings of £275m. But the group's 1999 accounts reveal that if annual cost savings exceed £400m by 31 December 2002, then the new options, worth two times salary, will be exercisable in full.
If the savings are less than £400m but more than £275m the options are exercisable on a sliding scale from zero to 100 per cent.
John Weston, BAe's chief executive, has been granted 237,000 options while a further 1.25 million options have been spread among five other BAe executives. The options are currently worth nothing having been granted at 421p compared with BAe's closing price last night of 354p.
However, BAe also granted further options to executives last year under its performance share plan.
Depending on how far BAe meets certain performance targets over the next three years, Sir Dick Evans , the chairman, could receive more than 100,000 shares currently valued at £359,000, while Mr Weston has been granted 82,000 shares currently worth £296,000.
Sir Dick was BAe's highest paid executive last year with a total package worth £705,000 - up 3 per cent on the previous year. Mr Weston earned a total of £594,000, including a bonus of £146,000.
BAe's remuneration committee, chaired by Sir Robin Biggam, has also decided that all executive directors must hold shares in the company worth at least the amount of their basic salary, rising to two times salary.