Micro Focus is a UK success story. But the £190m handed to bosses is still madness

The company's executives are hired to drive earnings and get the share price up. They shouldn't be handed millions extra just for doing their jobs

Demonstrators protest fat cat pay (Getty)

Britain might not have produced anything to match the likes of Apple, Google, or Facebook, but we do have Micro Focus, which is determined to prove that it isn't just America’s tech titans that are as good at dreaming up crazy executive pay packages as they are at creating whizzy new products.

Having splashed out nearly £7bn to buy Hewlett Packard Enterprise Software, the firm, which specialises in wringing extra profit from out of the detritus of the software industry, is now the largest tech company on the London Stock Exchange.

To ensure its 30 top executives feel sufficiently motivated to get out of bed and into their Berkshire offices in the morning they’ve had the prospect of 7.9m free shares dangled in front of their noses.

Details of how those spoils are being divided were revealed in an announcement to the stock exchange this morning.

Executive chairman Kevin Loosemore is the biggest winner with 1.1m of the things, worth £26.7m with the share price at just above £24 at the time of writing.

However, his CEO Chris Hsu won’t be going hungry. His 900,000 are worth just under £22m.

Combined, the pay out to the 30 currently stands at £190m.

That’s some kind of bonus. It won’t quite keep the Micro Focus top team in the manner that someone like Apple boss Tim Cook has come to expect.

But I’d say that the top end estate agents around Newbury might like to think about making a few calls, not to mention the race horse trainers based in nearby Lambourn.

Oh but wait, says one of the company’s people. These are long term incentives. They only pay out in full in a couple of years if the shares hit £34. That’s double what they stood at when the remuneration committee first came up with the idea, less a £2 dividend

Some will be handed out if they increase by half that amount, but it’s still pay for performance!

And do remember, this is a company that has done jolly well. Its shareholders have approved the plan too.

Both true. Micro Focus might not be a terribly glamorous business, but it is a success story, which explains why big city fund managers, themselves fond of the odd bonus or three, waved the plan through.

Why worry about the pay when the shares have done really well?

Why make a fuss when there are plenty of companies out there that reward their executives handsomely for being rubbish?

Here's why: Micro Focus’s executives are, like you and me, hired hands, paid to perform a service. They are not entrepreneurs. They are professional managers. So in their case, that service is to run the company and get the share price and the earnings up.

For doing that, they are paid riches beyond the dreams of most people’s avarice. And yet the company says that’s not enough. They need £190m extra just for doing their jobs.

Try telling your boss you need a vast bonus for getting out of bed and doing what you're paid to do, and see how he or she reacts.

No Micro Focus isn’t offering rewards for failure, as many companies that dangle similar packages under their executives' noses do. But the trouble is, awards like this have a habit of driving up awards at other, less successful firms, which then push future awards for Micro Focus bosses still higher, which then... But you can guess the next part.

As such, it is still very much an example of what has gone wrong with the way executive pay is set.