Directors pocket £16m as Rover loses £77m

The five directors of Phoenix Venture Holdings, the owner of MG Rover, increased their take home pay last year, extracting more than £16m from the car maker, even though it remained heavily in loss.

The five directors of Phoenix Venture Holdings, the owner of MG Rover, increased their take home pay last year, extracting more than £16m from the car maker, even though it remained heavily in loss.

Details of the pay bonanza emerged as the Longbridge-based company warned that its losses would increase this year because of a precipitous fall in demand which is likely to see MG Rover's worldwide sales decline by nearly one-fifth to about 120,000.

Losses at PVH came in at £77m last year compared with a deficit of £95m in 2002. Within the PVH total the MG Rover car making division lost £89m while the other businesses in the group, ranging from the Powertrain engine subsidiary to its car parts, property and motor racing subsidiaries, made a profit of £12m.

MG Rover is now planning to achieve break-even in the second half of 2005 - three years later than the Phoenix consortium originally forecast when it bought the company from BMW for a nominal £10 in May 2000.

The car maker is pinning its turnaround hopes on a wide-ranging collaborative deal to produce a range of new medium and small cars with the Chinese car producer Shanghai Automotive Industry Corporation, which MG Rover hopes to sign in the first quarter of next year.

The five Phoenix directors, led by the chairman John Towers, received £5.77m last year in salary, benefits and contributions to an executive trust fund. However, this was bolstered by a £10m windfall shared by four of them - Mr Towers, the vice-chairman Peter Beale, Nick Stephenson and John Edwards - after the repayment of a loan note. The four also received £312,000 in interest payments on the loan note.

All five Phoenix directors are set to share in a further payout worth about £2.6m when MGR Capital, a car financing business in which they own a 50 per cent stake, is wound up.

The highest-paid director last year was Mr Howe, who received £1.55m including a salary of £817,486 and trust fund contribution of £620,000.

A joint venture with Tata of India to import CityRovers has not fared well, with sales a fraction of the 30,000-a-year forecast. MG Rover is planning to tackle this by slashing the price, currently £6,995, and improving the basic specfication of the car.