Melrose bosses take home annual pay of £42m each ahead of GKN takeover

Company says the incentive arrangement is 'highly effective and essential”

Melrose is still awaiting UK Government approval for its £8.1bn acquisition of GKN, which could still be referred to the Competition and Markets Authority (Reuters)

Top bosses at turnaround specialist Melrose have raked in pay packets worth nearly £42m ahead of the company's pending takeover of British engineering giant GKN.

Melrose’s annual report showed four executives benefited from the payout of a five-year long-term incentive plan (LTIP), which meant the top brass were handed an extra £41.7m each on top of their salaries for 2017.

Executive chairman Christopher Miller, executive vice chairman David Roper, chief executive Simon Peckham, and group finance director Geoffrey Martin all claimed the awards.

Melrose said the LTIP payment - which was approved back in 2012 - was linked to the creation of £3.6bn in value for shareholders between 2012 and 2017, representing an average annual return of 22 per cent.

The company's remuneration committee added that the performance “validates” the incentive arrangement as “highly effective and essential”.

“We believe that this remuneration strategy has also directly driven historical outperformance when compared with our competitors and supported the company's success.

“In this regard, our remuneration arrangements are tailored to the culture and strategy of the company and provide a strong platform for the ongoing long-term success of the company,” it said in the annual report.

This year, executives are expected to see their total remuneration to return roughly to levels last seen in 2016 - when they earned anywhere between £548,000 and £987,000 each.

However, if executives meet value creation targets as part of their new incentive plan, major payouts will again be on the cards for 2020.

By that time the company could be the owner of GKN, having won the backing of the engineering giant's shareholders last month following a protracted hostile battle for the firm.

Melrose is still awaiting UK Government approval for its £8.1bn acquisition, which could still be referred to the Competition and Markets Authority.

Business Secretary Greg Clark said last month that the Government had a “statutory responsibility to consider whether the merger in its proposed final form gives rise to public interest concerns in the areas of media plurality, financial stability and national security”.

PA