Rentokil Initial is to pay Doug Flynn £2.4m to become its chief executive as compensation for forfeiting shares at Aegis, the media buying and market research group that he is leaving.
The payment will be made up of £800,000 in cash with the remaining £1.6m in Rentokil shares. Mr Flynn, whose appointment was announced yesterday, will also see a large rise in his basic salary. His pay will increase from £588,000 to £800,000 for agreeing to fill the vacant chief executive's office at Rentokil, the troubled corporate services business that is the world's leading pest control group.
Mr Flynn, 55, a former managing director of Rupert Murdoch's News International, said he had received "several" approaches over the past few years to change jobs. "It will be the last job I do before I retire to a beach somewhere. Sooner or later you have to identify what the last challenge is," said Mr Flynn, who is an Australian.
Last May Aegis shareholders rejected Mr Flynn's pay package, objecting to his two-year notice period and bonus of twice his annual salary in the event of a takeover.
Aegis's chairman, Lord Sharman, has been aware for two years that Mr Flynn has been holding talks with John Fairfax Holdings, the Australian newspaper publisher. Lord Sharman is understood to have had his succession plan prepared as a result of the Fairfax wooing and yesterday he announced that Robert Lerwill, an Aegis non-executive, will replace Mr Flynn.
Rentokil's chairman, Brian McGowan, has been searching for a chief executive since he ousted James Wilde last July.
Mr Flynn joins Rentokil in April after a torrid year for the company, during which it has warned on profits and also parted company with Sir Clive Thompson, who was forced out as chairman in May after a boardroom split.
Mr Flynn was undaunted yesterday at the scale of the task facing him at Rentokil, which has been the centre of persistent takeover speculation, although Mr Flynn said that he thought it unlikely a bid would materialise.
"Rentokil is a big operation with very strong brands. It has had its share of problems. It is a great challenge and a great opportunity for me," he said.
Mr Flynn will be paid a bonus of up to 100 per cent of his annual salary and will also benefit from a five-year, long-term incentive plan which includes an annual share award equal to a year's salary based on the company's total shareholder return.
Mr Flynn said one priority would be to understand the industries that the company is operating in, but he has already identified the company's culture as an area that needs immediate attention. "My impression is that there is a cultural issue that needs to be addressed. It needs to return to a more direct, entrepreneurial approach to life. It has had a bit of life squeezed out of it."
Mr Flynn, a former explosives expert with ICI in Australia, became managing director of News International in 1994, and then chief executive of Aegis in 1999 at the height of the media and technology boom.Reuse content