WH Smith share scheme could net Swann £4m

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The Independent Online

WH Smith, the struggling retailer, unveiled an incentive scheme for its top managers last night that could hand Kate Swann, its chief executive, a £4m windfall.

WH Smith, the struggling retailer, unveiled an incentive scheme for its top managers last night that could hand Kate Swann, its chief executive, a £4m windfall.

Details of the scheme, which was published after the stock market closed and just before the bank holiday weekend, met with raised eyebrows in the City - not least because the retailer had not run its plans by the influential National Association of Pension Funds.

Under the plan, executive directors can spend up to 100 per cent of their gross salary on buying shares in WH Smith. In return, they will receive a matching award of shares worth up to a maximum of five times their original investment, provided the company hits the top performance targets set during the next three years.

If, under Ms Swann's aegis, the company's share price climbs to 557p over the next three years, she will be eligible to receive shares worth £3.9m - should she invest 100 per cent of her £475,000 basic salary on buying shares. She will, however, lose her entitlement to the company's existing long-term incentive plan for the next two years, worth an estimated £1.5m. Shares in WH Smith rose 0.5p to 305p yesterday.

A spokeswoman for the company said that for Ms Swann to receive the maximum payout, she would have created £500m of shareholder value. "Her total award would be worth less than 1 per cent of the value that she would have created."

The scheme, which is open to the top 40 managers, hinges on the group raising its earnings per share growth by one-third over each of the next three years and on increasing its total shareholder return.

Although WH Smith claimed to have consulted its investors on the scheme, a spokesman for the NAPF said: "We have been kept out of the loop on this. We will be looking at the document closely but we haven't seen it yet."

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