Schroders has awarded its new chief executive Michael Dobson share options that will be worth 3.75m (€6.1m) if Schroders' share price doubles within the next five years, as well as annual remuneration of 3.5m in each of the three years to December 2004.
Dobson is also securing immediate access to options over 500,000 shares. Around 40% of his 3.5m remuneration will be paid according to performance.
Details of the awards to Dobson are contained within a circular detailing terms for Schroders' 33.5m purchase of his new asset management company Beaumont. Dobson and his colleagues have agreed to retain 75% of the purchase price in Schroders stock.
The circular said that when the deal was announced Beaumont had funds "actually or prospectively" under management totalling $275m (€311m). Since then, however, a client has pulled a prospective $36m away from Beaumont.
The removal of the prospective funds is embarrassing, given that Schroders is paying a high price for Beaumont. But analysts said that Dobson is the right man for the top job at the firm. Beaumont will provide Schroders with a decent entry into alternative investments. At present Schroders only has $200m under hedge fund management.
Senior staff at Beaumont will secure remuneration related to the profit performance of Beaumont. Renumeration will be paid half in cash and half in Schroder shares.
The Schroder shares that are being issued will take the form of non-voting stock, which is expected to be enfranchised at some point in the future.