£26m package for Tomkins chief

ENGINEERING group Tomkins, rocked last year by claims of corporate excess, has ended 15 months without a chief executive by agreeing to pay Canadian Jim Nicol up to £26m over three years to fill the role.

Chairman David Newlands, who collected a £50,000 bonus last year despite Tomkins missing its financial targets, immediately defended the deal, saying Nicol's package was linked to the share price. 'He only makes money if our share price goes up a lot,' Newlands said. 'I hope our shareholders will be satisfied with that.'

Nicol, who quit last month as president and chief operating officer of North American vehicle components manufacturer Magna International, was the right man for the job, said Newlands.

Magna has annual sales of more than $10bn (£7bn), 63,000 employees and manufacturing facilities in 165 countries. But investors appeared unimpressed with the appointment, leaving Tomkins shares unchanged up only 5p at 202p in a buoyant market.

Nicol will be paid a base salary of £750,000 a year, to be doubled if he hits performance targets. But he will get a further £840,000 spread over three years regardless of his achievements. He will also receive £3m of options, exercisable in three years if Tomkins' earnings grow at the inflation rate plus 9%.

Under the terms of the multi-tiered package, Nicol will buy £2m of Tomkins shares, which the company-has guaranteed to match on a one-for-one basis after three years. But this ratio will soar to three-to-one if Tomkins' share price trebles. The company will issue Nicol with another five million options, which can be exercised at prices ranging from 197p to 345p over the three years.

The deal compares with the £9m which Ben Verwaayen stands to make over three years as chief executive of BT. Iain Livingston, BT's finance director, can make up to £4m over this time.

'He (Nicol) has a real passion for technology-led engineering companies,' Newlands said. Newlands, who will switch to a non-executive role, said further asset sales were possible following Tomkins' disposals of gunmaker Smith & Wesson and baker Rank Hovis McDougall. 'I'm happy that the thing is in reasonable shape but there is more portfolio reshaping to be done,' he said.