The three top executives at defence giant BAE Systems have seen their bonus scheme salvaged by a tax deal from HM Revenue & Customs last Thursday.
Under the terms of their long-term incentive plan, chief executive Ian King, finance director Peter Lynas and executive director Linda Hudson only qualify for the reward if earnings per share (EPS) increases by at least 5 per cent annually over a three-year cycle. However, earnings per share were likely to be flat this year until the HMRC settlement, which BAE said would increase EPS by 5.9p – comfortably breaking the 5 per cent threshold.
A defence analyst said: "I think this should be listed as an extraordinary item in the accounts, but it will probably go in as operational earnings, triggering the bonuses. I'm disappointed that there will be a payment as a result of something so trivial."
A company spokeswoman said: "BAE Systems has a long-term incentive plan which encompasses a three-year period and which includes other measures such as total shareholder return as well as earnings per share."
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