Rewards: GKN chief Anne Stevens could reap millions
Bosses of engineering giant GKN could pocket up to £70 million of bonuses if they fend off a hostile £8 billion takeover bid from Melrose, the MoS can reveal.
The revelation comes amid concerns that, as part of its defence against the bid, GKN is selling off its automotive arm Driveline on the cheap.
Documents released by GKN show it has quietly cut the price tag previously placed on the business by £800 million.
Revelations of the incentives at GKN are likely to expose top bosses to accusations of hypocrisy. Its supporters have slammed Melrose for short-termism and for high pay.
Tucked away in the documents setting out its defence against the Melrose bid, GKN disclosed a £70 million share bonus plan for around 400 managers if they beat off the takeover and then hit three-year targets.
The payout for GKN chief executive Anne Stevens has not been set out, but it is likely to be worth several million pounds. The Mail on Sunday revealed in January that Melrose’s four executives could share a bonus pot of around £300million if they succeed in taking over GKN and doubling its value.
Unions and MPs have condemned Melrose for what they see as its short-term approach. Jeremy Corbyn has accused it of being out to ‘make a quick buck’. The GKN bonus scheme runs over three years, meaning it pays out two years earlier than Melrose’s.
Stefan Stern, director of the High Pay Centre, said: ‘It is not as much as the people from Melrose are in line to receive, though £70 million is still an awful lot of money. But the real issue is the short-term time horizon.
‘The people running GKN are not following through the logic of their own position. If they really want to make the point that they are all about long-term stewardship they should have put their money where their mouth is and made a longer commitment for their own bonus scheme to run for at least five or preferably ten years. That would have shown an unequivocal commitment to creating value for shareholders in the long-term.’
GKN plans to keep its aerospace division but sell its automotive and powder metallurgy arms. Ms Stevens wants to sell Driveline to US firm Dana for £4.5 billion.
In the original defence document sent to shareholders in January, GKN put a valuation of around £5.3 billion on the Driveline business, based on recent sector deals. That is £800 million higher than the price agreed with Dana, fuelling concerns that the sale is being rushed through at a discount in an effort to defeat the takeover.
Melrose chairman Christopher Miller last week described the Dana sale as ‘hasty and ill-thought-through.’ GKN argues the value of the Dana transaction is lower than the previous estimate because it is actually carrying out a merger, rather than a takeover which would have commanded a higher price tag.
The deal is this weekend hanging in the balance. Melrose has been canvassing GKN shareholders directly in the hope of winning their support ahead of the March 29 deadline.
It increased its final offer to £8 billion last Monday. The GKN board rebuffed the improved offer, made up of cash and shares. It was worth the equivalent of around £4.60 a share when markets closed on Friday. GKN shares ended the week at 426.9p.
The offer has won support from Aviva and another major shareholder but was rejected by the GKN board. Two asset managers, Jupiter and Lancaster Investment Managers, have lined up publicly behind GKN.
The approach has sent the shares soaring to the highest level since 2007.