Rice could net pounds 17m from sale of LucasVarity

VICTOR RICE, the chief executive of Lucas Varity, was at the centre of a row last night after it emerged that he could pocket over pounds 17m from the sale of the car parts and aerospace group to one of its two US suitors.

The company is at the centre of a takeover battle between the US engineering giant TRW and its rival Federal-Mogul, which is expected to be resolved this week. TRW launched a pounds 4bn agreed cash takeover of Lucas last week but its offer could be trumped if Federal-Mogul decides to raise its initial pounds 3.6bn cash and shares approach after looking at the Lucas books this week.

It emerged last night that Mr Rice will net a fortune regardless of the outcome of the bid war. If TRW wins, he will keep his job and will become deputy chairman and head of the automotive subsidiary of the enlarged group. He could also net a profit of around pounds 13m by cashing in his share options at TRW's offer price of 288p per share.

If Federal-Mogul buys Lucas, Mr Rice is widely expected to leave his job because of a clash of personalities with the Federal-Mogul chief executive Dick Snell.

In this case, Mr Rice will be able to benefit from a pounds 3m-plus "golden parachute" agreed in 1996 at the time of the merger between Lucas and Varity. According to Lucas's annual report, Mr Rice is entitled to compensation equal to four times his basic salary, or pounds 3m, if the company is taken over. Federal Mogul would also have to pay a pounds 30m break-up fee to TRW if it won the battle for Lucas.

Sources close to Federal-Mogul yesterday attacked Mr Rice's compensation package and the break-up fee, saying that the two measures were an attempt to lock the company out of a counter-bid.

They added that the two measures would cost Lucas shareholders around 2p a share on any increased bid. Federal-Mogul's initial bid, rebuffed by Lucas, was pitched at 280p a share and analysts are expecting the company to increase it to at least 300p a share.

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