Reckitt Benckiser chief Rakesh Kapoor in line for £15m windfall from Mead Johnson deal

Reckitt Benckiser chief Rakesh Kapoor stands to gain at least £15 million from the benefits of a proposed takeover of US baby milk target Mead Johnson.

Kapoor, the second-best-paid FTSE 100 chief, has a lucrative share award that will pay out if he boosts earnings by 10% a year between now and 2018 and City analysts expect the looming takeover to help Reckitt surpass that figure, triggering the windfall.

The pay deal was agreed last year as part of a controversial long-term incentive plan, which prompted a partial shareholder rebellion with one in five voting against the package.

Under the scheme, Kapoor will receive 240,000 shares worth £15.4 million plus an extra 400,000 share options potentially worth millions if he grows earnings per share by more than 10% in 2016, 2017 and 2018.

Berenberg and Royal Bank of Canada analysts are among those expecting Mead’s takeover to push Reckitt over the 10% hurdle. They previously expected earnings to grow by between 8.4% and 8.7%, underneath the hurdle.

The proposed deal has fuelled concerns that earnings per share is too narrow a measure on which to judge Kapoor.

“We would like to see a broader set of measures for his long-term incentive plan. If you do a big cash deal like this, it will give you a big leg up on EPS growth,” one investor said.

Reckitt said that the 10% target was “extremely stretching,” and added that the policy was based on “long-term value creation for shareholders”, and “management only win if shareholders win.”