Matalan chief digs into his pocket to keep top managers

John Hargreaves, the founder and chairman of Matalan, yesterday sought to halt the exodus of the discount retailer's top management by pledging to foot the bill for multi-million-pound payouts to his top six executives if the company is taken over in the next four years.

The promise, which came as Matalan unveiled a new share-based bonus scheme, was made to soothe City fears that yet another wave of executive departures could derail the group's tentative recovery. It was designed to compensate the newly promoted management team, led by John King, for its lack of a backlog of share options.

Mr Hargreaves, whose family controls 52 per cent of Matalan stock, could pay out up to £22.5m if the out-of-town discount retailer is acquired at the end of next year at around 400p per share. At this level, his family would net around £850m from any sale.

He said the new arrangement demonstrated "the family shareholders' commitment to the new management team," adding: "It will fully incentivise them to grow the value of the business for the benefit of all shareholders."

Analysts welcomed Mr Hargreaves' plan, although Matalan shares slipped 2.75p to 253.5p as the prospect of an imminent takeover receded. Nick Bubb, at Evolution Beeson Gregory, said: "It's an excellent idea. It indicates that he wants to keep them [the team], which is a change. He wouldn't be doing this if he thought there was a risk of some big bust-up."

The City largely blamed Mr Hargreaves, who started the business in the Seventies, for the surprise departure of Matalan's former chief executive Paul Mason and Phil Clarke, its retail director, earlier this year. Institutional investors lobbied the company, tipped as a potential target for either Tesco or Wal-Mart, to draw up an incentive plan that would give Mr King's team a reason to stay.

Charles Thompson, who heads the group's remuneration committee, said: "Institutional shareholders were very concerned indeed as to how we would retain this team." Asked whether the new plan had helped to reassure investors that Mr Hargreaves' notoriously difficult working temperament would not hinder Mr King's nascent recovery, he added: "I've seen nothing in this particular relationship that gives me any cause for concern."

Under the new long-term incentive plan, Matalan's six senior executives will be required to build a minimum shareholding in the company equal to double basic salary. A third of their annual bonus will also have to be invested in the company's shares, and held for at least three years. Shareholders will be allowed to vote on the plan at an extraordinary meeting on 18 November.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test
Tour de France 2015: Twins Simon and Adam Yates have a mountain to climb during Tour of duty

Twins have a mountain to climb during Tour of duty

Yates brothers will target the steepest sections in bid to win a stage in France
John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy