Sky share fall cuts Murdoch bonus to £2m

Click to follow
The Independent Online

James Murdoch has been awarded more than £2m of BSkyB shares under an incentive plan, just days after delivering a strategic plan that has wiped £2.6bn off the company's stock market value.

The chief executive of Sky, the pay-television group, was awarded 450,000 shares as part of a £10m remuneration package the company set out in May. However, they were only granted on Wednesday, making them worth £2.1m at yesterday's closing price. In May 450,000 BSkyB shares were worth nearly £3m.

The share award, which vests in August 2007, "provided that certain performance criteria are satisfied", is at nil cost to Mr Murdoch. Although the targets were not spelt out, the company has said the vesting of 70 per cent of the award would be subject to "internal performance metrics" being outperformed, equally weighting subscriber growth, earnings per share growth and free cashflow per share. The vesting of the rest would be subject to "total shareholder return" performance.

Sky shares have fallen by over a fifth since Mr Murdoch outlined his long-term strategy for the company at a presentation to the City on Wednesday last week. He was appointed chief executive last November.

Investors took fright at the investment programme he announced last week, which meant analysts had to revise down profit forecasts for the current financial year and the next.

Mr Murdoch said the company had to "re-introduce" the Sky brand to consumers so that it could continue to grow subscriber numbers after it hits its target of 8 million homes at the end of next year. He set a new aim of 10 million customers in 2010, with a new focus on lower-paying consumers. Acquiring customers is an expensive process for Sky and many in the City wanted the company to slow down to milk the 7.4 million homes it already has.

This week James Murdoch's father, Rupert, chairman of Sky, endorsed the new strategy. Murdoch senior said: "Our agenda and the chief executive's agenda is to return [Sky] to being a strong growth company rather than just a cash cow."