HMV directors get bonuses despite float disappointment

The executive directors of HMV Group, the music retailer, received bonuses worth almost 100 per cent of their salaries last year even though the group's subsequent stock market flotation has been a disappointment.

The group's annual report showed that Alan Giles, the chief executive, received a bonus of £316,000 on top of his annual salary of £338,000, taking his total pay to £673,000. Brian McLaughlin, the chief operating officer, was paid a total of £675,000, made up of a £317,000 bonus and £339,000 salary. Neil Bright, the finance director also doubled his money to £421,000.

The payments, made for the year to 27 April, followed a disappointing stock market debut for HMV, which also owns the Waterstone's book chain. The shares were priced at 192p when they started trading in May. But declining stock markets and the threat of digital downloads to the music sector has weighed heavily on the shares. They went to an immediate discount on their first day of dealings and closed down 2.5p at 137.5p yesterday.

HMV said yesterday that the bonuses for the year to April were based on the growth of earnings before interest, tax, depreciation and amortisation. In the year to April HMV's Ebitda rose to £145m, from £119m the year before. That triggered the maximum bonus payout of 75 per cent. Debts also fell by more than £100m. The remainder of the bonus was part of a deferred bonus scheme.

Separately, it emerged that HBOS, which is backing Philip Green's bid for Arcadia, has struck a favourable deal for its part of the equity. The offer document showed that of the £75m being injected into Taveta, the investment vehicle set up to take over Arcadia, HBOS is paying £6m for 8 per cent of the equity, which the 408p-a-share deal values at £850m. Mr Green is paying £69m for the remainder. HBOS is providing a total of £880m debt finance to fund the deal. This includes £70m of working capital.

Arcadia must also pay a £3.9m break fee if a competing offer emerges.

Baugur, the Icelandic retailer which has agreed to sell its 20 per cent stake in Arcadia to Mr Green, has also agreed to waive its right to the second interim dividend, equivalent to £1.5m.