Kingfisher managers to share £12m demerger bonus

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The Independent Online

Kesa Electricals, the retail business being spun off next month by Kingfisher, is to award its top 150 managers shares worth up to £11.7m over the next three years, it emerged yesterday. Jean-Noël Labroue, who will head the new group, will scoop the lion's share of the award, pocketing up to €1.26m (£880,000) in shares if Kesa hits performance targets. Martin Reavley, the finance director, would receive up to £412,500, in a scheme intended to induce managers to stay with the company.

Details of the awards were revealed in Kesa's listing particulars, published ahead of its planned demerger on 7 July. The move marks the final stage in Kingfisher's transformation from a conglomerate to a retailer focused on the burgeoning do-it-yourself market. The City gave a lukewarm response to Kesa's prospects as an independent company.

Analysts pointed to weak trading figures, a hike in central costs, a higher-than-anticipated tax charge and a change to the group's accounting policy to explain yesterday's 4 per cent fall in Kingfisher shares to 272.25p. "The businesses are all struggling. All markets are contracting and the management didn't do a good job explaining how it intends to restore profit growth," one retail analyst said. Kesa, which will own 790 stores across Europe, saw like-for-like sales fall 1.6 per cent in the first quarter and operating profits slide 16 per cent.

David Newlands, the company's recently appointed non-executive chairman, warned that "economic conditions remain difficult", but insisted Kesa would be "well-placed to benefit when consumer confidence rises".

The accounting change, which relates to how Comet banks revenues from selling extended warranties, would knock 10 per cent off the division's profits this year, Kesa admitted. The listing documents revealed that M. Labroue, 55, who has headed Kingfisher's electricals arm since 2000, would see his salary package, including a travel allowance, soar by 17 per cent to €630,000 (£441,000). He could also be in line for a bonus of around €388,000. Mr Reavley, 48, will earn £275,000, a 9 per cent rise, while David Newlands will be paid £185,000 a year.

Kingfisher's shareholders would receive one share in Kesa for each Kingfisher share they own, although the B&Q owner plans to consolidate its shares on a seven-for-eight basis after the demerger while Kesa will give its shareholders one consolidated share for every five they own. The spread betting firm Cantor Index was last night quoting a grey market price of 38p to 42p for Kesa and 235p to 245p for Kingfisher.Analysts expect the demerged business to be worth £1.2bn.

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