Corporate raider Melrose, which snared defence giant GKN in a hostile takeover, will overhaul bosses’ bonus schemes after a revolt over their gratuitous pay packages.
Almost a quarter of shareholders at its annual meeting yesterday voted against a pay policy that saw its four top bosses share more than £160million last year.
Influential investor advice group Glass Lewis had slammed the payouts as ‘excessive’ and recommended opposition.
The revolt marks a humiliation for the City darlings who have won a fan club in recent years as they built up a fortune for themselves and shareholders by snapping up and selling ailing industrial firms.
Melrose bosses (pictured, left to right) Simon Peckham, David Roper, Christopher Miller
The City appeared to embrace their financial engineering, making the leadership quartet of Simon Peckham, David Roper, Christopher Miller and Geoffrey Martin seem untouchable.
The 22 per cent revolt is a major sign of dissatisfaction with pay policies, which are typically passed with well over 90 per cent of investors in favour because of the high number of City blue-chip firms that own shares.
But the Melrose pay deal has drawn particular criticism as they come under growing scrutiny following their controversial purchase of engineer GKN.
Luke Hildyard, director of the High Pay Centre campaign group, said: ‘Their package was quite an extraordinary amount of money.
‘It is typical of a business mind-set that sees executives as gods who determine the fortunes of the company and must be lavished with these generous incentive packages, when ordinary workers are merely worth 1,000th of the value.
I welcome the review but with the caveat that’s it’s a bit late in the day.’
It comes amid growing dissatisfaction with bonus schemes following outrage over the £131m package for housebuilder Persimmon’s boss Jeff Fairburn.
Ahead of the shareholder vote, Melrose bosses promised to review pay in the wake of the takeover of GKN. They said: ‘Your board intends to review the existing Melrose remuneration arrangements and expects to consult shareholders.’
Its long-term incentive plan, one of the most generous in the City and renewed last year with shareholders’ approval, entitles a group of bosses to 7.5 per cent of the increase in value of the firm in three years.
Chairman Miller, chief executive Peckham, vice-chairman Roper and finance chief Martin are entitled to 68 per cent of that amount.
Last year they each netted more than £41million in shares when the previous bonus scheme paid out.
Melrose has defended the scheme, with its pay committee, headed by chairman Justin Dowley, saying in its latest annual report that it had created a 22 per cent return for shareholders during the five years of the bonus plan.
The firm has been pressured to review its pay policy under growing scrutiny from the public and politicians. It won control of GKN on March 29 with 52p of the shareholder vote.
Redditch-based GKN, which makes parts for aircraft, jets and cars, is expected to be broken up and sold.
Yesterday, Miller said: ‘We look forward to working with the GKN employees to transform the prospects of the businesses through significant investment.’