Former Melrose executives take major share of £180mn bonus pot

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Three former executives at Melrose Industries, including its two co-founders, have taken the biggest share of a £180mn bonus pot in their final payout after more than two decades of dealmaking at the UK group. 

The FTSE 100 engineering company said on Monday that it had paid out share bonuses after tax to participants in a four-year incentive scheme that crystallised at the end of May. 

The two co-founders, Simon Peckham, Melrose’s former CEO, and Christopher Miller, previously vice-chair of the company, as well as former finance director Geoffrey Martin, are the biggest beneficiaries according to people familiar with the details. All three left their roles at the company, which was founded and listed on London’s junior market Aim in 2003, in the past year.

Peter Dilnot, Melrose’s current chief executive, received shares worth just over £1mn after tax at Friday’s closing price of 615.8p.

Under the incentive scheme, which was introduced in 2020, Melrose’s top 21 directors and senior staff are awarded shares worth 7.5 per cent of any increase in the market value of Melrose over a four-year period. Over the past four years, the company’s market value has risen from around £3.5bn to £8bn, valuing the total gross pot at around £330mn.

Melrose said on Monday that it had decided to reduce the amount of shares issued, in order to cover the tax payable by the participants. It said around £158mn — just under half of the gross amount — had been paid to HM Revenue & Customs in cash “for the purposes of meeting participants’ income and other tax liabilities”. 

Under the scheme, the three departed executives have to hold on to shares worth three times their final salaries, roughly £1.5mn each. They are allowed to sell the rest at any time. 

The payout — the first in seven years — is the final payday for the founders who created Melrose to buy and turn around underperforming industrial businesses and then sell them on. 

Following a series of smaller disposals and the demerger of its automotive business, Melrose is now focused on the GKN aerospace operation it acquired as part of its £8bn takeover of the UK engineering group in 2018. 

The company is a leading supplier of aircraft parts such as wings and fuselages for Airbus and Boeing, as well as a manufacturer of components for the likes of engine-maker Pratt & Whitney.

Melrose increased its annual profit forecast in March after a global recovery in aviation since the pandemic. The company told investors it expected to make adjusted operating profit of between £550mn and £570mn in 2024.