Software bosses in huge £190m shares bonanza

A staggering £191 million shares windfall is on offer to top bosses at blue-chip software firm Micro Focus International in the latest huge award fuelling the debate over soaring corporate pay.

The firm, which recently completed its $8.8 billion (£6.5 billion) takeover of Hewlett-Packard Enterprise’s software business, today unveiled details of the “additional share grant” designed “to incentivise management to deliver exceptional returns”.

The top 30 staff will be handed nil-cost options over 7.9 million shares, worth £191.4 million at the current share price of 2424p, if they manage to double shareholder returns by September 2019, three years after the deal was announced.

The biggest potential winners are executive chairman and multi-millionaire Kevin Loosemore and chief executive Chris Hsu.

Under the new plans, approved by investors at last year’s annual meeting, they could gain shares worth £26.7 million and £21.8 million.

The scheme would bring yet another bonanza for Loosemore, who was paid £4.2 million in salary and bonuses last year.

Apart from a personal shareholding worth £17 million, he already has vested share options worth £8.1 million based on today’s price, and unvested options over another £30 million in shares.

That includes a similar lucrative share bonus scheme from its $1.2 billion swoop for US business software firm Attachmate in 2014.

Under the target, Micro Focus must effectively double the share and dividend returns from 1817p to 3634p to get the full payout in 2019 although they also qualify for shares if they get more than 50% towards their goal.

Shares have recovered after a recent wobble over HPE’s performance.

Micro Focus, which has grown rapidly with a slew of acquisitions to 18,000 staff, has defended the scheme, saying achieving the full target will create some £8 billion of value for shareholders.

But the latest payout also comes against a climate of increased political scrutiny over executive rewards, with big payouts at the likes of housebuilder Berkeley.

Stefan Stern of the High Pay Centre said: “The risk is that it encourages short-termism over the share price. It does not look like a “built-to-last” model.”

According to the annual report the award can be clawed back in the year following the vesting date “in the circumstances of a material misstatement of the financial accounts during the performance period”.

The deal, one of the UK’s biggest ever tech takeovers, effectively returns to British control most of the former Autonomy business bought by Hewlett-Packard in an ill-fated $11 billion deal.