UK ‘robber baron’ company Melrose gives bosses £176m handout

The UK engineering firm Melrose Industries has handed out a £176m reward pot to 21 of its current and former executives, with the lion’s share going to three of them.

In a move that is likely to further fuel the controversy over executive pay, the FTSE 100 company confirmed on Monday that the bosses had been issued with shares totalling £176m under a bonus scheme set up in 2020.

The business’s former finance director Geoffrey Martin, and two of its co-founders – ex-CEO Simon Peckham and previous chair Christopher Miller – have received the lion’s share of the 28.8m shares being handed out.

As they no longer work for the company, Melrose does not have to disclose how much they are getting, but it is understood it could be up to half of the total – £88m.

The trio will have to hold on to shares worth three times their former salaries, roughly about £1.5m each, but can sell the rest at any time.

The payout, which follows similar bumper deals for the bosses of UK firms such as AstraZeneca’s Pascal Soriot and David Schwimmer of the London Stock Exchange, is the product of a four-year performance plan under which managers stood to gain 7.5% of any increase to the market value of the company since 2020.

During that period, the share price of the group has increased by more than £4bn, with the business currently worth more than £8.1bn.

The scheme was set up just a couple of years after the company came in for heavy criticism over a hostile takeover of the British engineering stalwart GKN, which led to Melrose being condemned by the Tory MP Robert Halfon as “robber baron capitalism at its worst”.

While the total pot for the payout was around £330m, the company said that just under £160m had been paid to HMRC, with the company in effect cancelling 25m shares to raise the cash.

Peter Dilnot, Melrose’s current chief executive, will receive just over £1m in shares but will be unable to sell them while still at the company.

The payouts will be the final payday for Miller and Peckham, who alongside David Roper set up Melrose in 2003.

After making a series of big industrial acquisitions, its most high-profile deal came in 2018 with the GKN takeover. That prompted Melrose to refocus as a specialist aerospace company, with operations in the US, UK and Sweden. In 2023, it recorded profits of £390m on £3.4bn of revenue.

Speaking to the Sunday Times in April, Peckham said the bumper award represented a “good payout”.

He said: “You could take a view that no one should earn more than this or that, but I would say that’s capitalism working.”

The Guardian