Poundland boss Kevin O’Byrne is being offered £2.7m of shares in Steinhoff if he stays on under the ownership of the South African retail group.
The budget retailer’s shareholders will vote on 7 September on whether to accept a £610.4m offer from Steinhoff, which owns furniture chains Harveys and Bensons for Beds in the UK.
Earlier this week, the South African retail group increased its offer for Poundland by 5p a share to 227p, including a dividend, after an activist investor, Elliott Capital Advisors, amassed a shareholding with the potential to upset the takeover.
It is not clear if Elliott, which is estimated to have made about a £3m profit from its late intervention in the deal, will definitely accept the new offer. But Poundland’s chairman, Darren Shapland, said the deal offered shareholders the chance to cash in their shares at “an improved price and on an enhanced premium to Poundland’s undisturbed share price”.
The final details of Steinhoff’s offer were sent to shareholders on Friday and the document reveals that O’Byrne will be handed Steinhoff shares equivalent to four and a half times his £600,000 annual basic salary in lieu of the Poundland shares he had been promised when he became chief executive this year. However, he will receive the payment only if he stays with the company for about three years from November, when he was originally due to be granted the Poundland shares, and meets certain undefined performance criteria.
If he chooses to leave before November, O’Byrne will be granted a cash payment equivalent to 55% of the share award reduced pro-rata by the amount of time he has spent in the job – in other words, a much lower amount.
The share bonus scheme indicates that Steinhoff is keen to retain O’Byrne, who is understood to have had a meeting with a key shareholder in the South African firm, Christo Wiese, at the Ritz last month.
Whether he decides to stay on or not, O’Byrne will collect £772,000 from the sale of his 600,000 shares in the company. He bought most of those shares at 179p each in March, making a profit of at least £154,000 in just a few months.
But O’Byrne’s windfall pales in comparison to former boss Jim McCarthy, who will cash in more than £22.7m from the sale of his shares in Poundland.
Last month, it emerged that rebel investor Elliott Capital Advisors had taken control of a 13.2% stake in Poundland. Since then the US hedge fund, which has a history of pushing for better terms in takeovers, has bought more shares and now speaks for 17.5%.
