Can Gulett work miracle at Arc?

AMERICAN Michael Gulett has already made £450,000 from struggling tech group Arc International - and he does not even start work until later this month.

The new chief executive was awarded 10m share options when he signed up last month. The exercise price is 43 1/2p. Arc shares, once 430p, have now firmed 2p to 48p.

The options can be exercised from 2003. There are no performance criteria. Gulett will also be eligible for bonuses on top of his undisclosed salary.

His track record in the US is chequered. He ran tech groups Virata and Paradigm. Virata shares fell 88% from their peak, sparking an investor lawsuit, and lost £100m in Gulett's last year in charge. However, he collected £3.2m from selling his own stake, mostly near the top of the market. Eventually, the company was acquired.

Investors in Paradigm Technology, which he ran for five years before joining Virata in 1998, fared even worse. The shares peaked at $347 - but fell to just $1.25 before the company was also acquired. Disgruntled Paradigm employees, their option plans devastated, sued him and other directors for 'fraud, intentional misrepresentation and breach of fiduciary duty'. That case was thrown out.

Arc chairman Jan Tufvesson sais: 'We have investigated and we think this is nothing to be concerned about. These lawsuits are very common in the US.'

Arc, which designs computer chips, has its own troubles. Losses doubled to £25m in the nine months to September and the previous chief executive quit as sales slumped.

Tufvesson said Gulett has 'exactly the right kind of technical and business experience' for the role. 'He has been doing things at other companies that we want him to do at Arc.'