The top three bosses at FTSE 100 defence titan BAE Systems are set to miss out on multi-million pound bonuses after failing to meet their earnings targets for 2012.
Last year, chief executive Ian King, finance director Peter Lynas and US head Linda Hudson, below, were criticised for raking in bonuses despite overseeing job losses and a profit decline.
The only reason the trio were awarded such lucrative packages was because BAE received a one-off tax rebate of almost £200m, which boosted the earnings per share (EPS) financial measure by enough to trigger bonuses.
Without that rebate, which some analysts thought should not have been included, EPS would have been under 40p a share but ended up at 45.4p. This meant that, including base salaries, Mr King's remuneration was £2.4m, Mr Lynas received £809,000 and Ms Hudson was awarded more than £1.6m.
Analysts at Investec have estimated that EPS will slump to 39.4p in 2012, while UBS has forecast just 37.5p. The amount could still be boosted by 3p a share if BAE finally agrees with Saudi Arabia the price of a 2007 Typhoon contract ahead of Thursday's results, though this seems unlikely.
Under the company's share-matching and performance share plans BAE's top brass get bonuses and long-term stock awards if EPS grows between 5 and 11 per cent annually over a three-year cycle.
BAE's financial performance has been sluggish recently due to global defence spending cuts. This was one of the key reasons why Mr King was keen to merge with Airbus-maker EADS last year, better balancing the business with a huge civil aviation manufacturing arm.
However, German Chancellor Angela Merkel vetoed that politically sensitive move, leaving BAE executives to ponder how they will grow the business while government defence budgets continue to be squeezed.
At last year's annual general meeting in Westminster, angry BAE employees protested over plans for nearly 900 job cuts at a site in Brough, East Yorkshire. However, many of these have since been saved through winning contracts, most notably a £2.5bn order from Oman for Typhoon and Hawk military aircraft in December.
However, fears remain that BAE will soon have to shut one of its dockyards due to a lack of shipbuilding work, once two supercarriers, worth a combined £5bn, are largely completed over the next few years. As first revealed in The Independent on Sunday, consultant LEK was brought in to review the future of sites in Portsmouth and Scotland, with the south-coast operations most under threat.
BAE is not expected to confirm any closure in this week's results. However, the Government is prepared for the political fall-out of any such announcement, as a recent Ministry of Defence report concluded Portsmouth dockyard does not have much of a future in its current form.
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