Melrose quartet see pay slashed after £8bn GKN takeover

The executive quartet who run Melrose Industries saw their pay packages slashed last year in the wake of the company's takeover of GKN, one of the most venerable names in British manufacturing.

Sky News has learnt that Melrose will disclose in its annual report on Friday that chief executive Simon Peckham saw his total remuneration for 2018 fall to £1.05m from more than £42m the year before.

His senior colleagues - Christopher Miller, David Roper and Geoffrey Martin - were paid a combined £2m last year, down from a staggering £126m in 2017.‎ ‎ The sums represent some of the sharpest-ever annual falls in remuneration packages for the bosses of a FTSE-100 company, and put the Melrose quartet firmly in the bottom quartile of pay deals among the company's blue-chip peer group.

Melrose hopes the disclosures will underline a model for rewarding its top executives that it has been at pains to point out for many years results in lavish bonuses only when the company's shareholders do well.

Under a new long-term incentive scheme that could begin paying out next year, more than £3.1bn of value would need to be created for investors before the plan would crystallise awards for its participants.

If it does, they would be in line for tens of millions of pounds more.

The fresh disclosures will come in the year after Melrose saw nearly a quarter of investors vote against its remuneration report, while nearly 18% opposed its future pay policy.‎

The company's latest incentive scheme is currently underwater and will not pay out at all unless Melrose's share price rises to over 232p.

At Thursday's stock market close, the shares stood at 192p, following a 10% fall during the last 12 months.

Melrose's "buy, improve, sell" template for struggling industrial businesses has paid dividends for shareholders and executives alike since the company was set up more than a decade ago.

It has sold companies including metering business Elster and Bridon, an industrial cable-maker, during the last few years.‎ However, its £8bn hostile takeover of GKN last year, which was punctuated by a series of government interventions, catapulted the company and its ‎board to much wider prominence.

While their overall pay fell sharply last year, Melrose's bosses collectively hold ‎70 million shares in the company, worth approximately £115m at the end of last year.

"The Melrose remuneration policy is solely about delivering value to shareholders," said one investor.

"If shareholders don't make a fortune then the Melrose LTIP pays nothing at all.

"Only If shareholders make billions do the rewards start to kick in."

The publication of its annual report will come the week after MPs on the business, energy and industrial strategy select committee urged companies to put a ceiling on "eye-watering" remuneration packages for the bosses.

There has been growing scrutiny in recent months of companies' practice of making disproportionately large contributions to executives' salaries, forcing some, such as HSBC and Lloyds Banking Group, into rapid changes.

At Melrose, executives receive a pension contribution of 15% of their basic salary, in line with last week's select committee recommendations.

Melrose declined to comment‎‎ on Thursday.