Investors in troubled insurance outsourcer Quindell yesterday welcomed the firm’s appointment of Richard Rose and Jim Sutcliffe as chairman and deputy chairman, despite it coming to light that the pair have been granted a combined 18.6m share options.
The Hampshire-based firm’s stock was up 26 per cent in trading yesterday following the news.
“All appointments seem to have been well-received by investors, which is at least partly due to the experience and strong reputations that the new appointments appear to have,” said Motley Fool investment expert Peter Stephens.
Despite the calibre of the appointments, corporate governance concerns were raised over the company’s decision to grant over £25m in share options to their top executives. Some investors oppose paying non-executives in share options on the argument that such remuneration can be obscure and warp objectivity.
Quindell investors, however, appear to have been quelled by two factors: firstly, 60 per cent of the shares will vest (when they can be sold) on 15 July, with the remainder vesting in equal monthly tranches over the following six months; and secondly, there is general acceptance that attracting candidates as qualified as the pair to a company as troubled as Quindell requires generous pay packets.
One unnamed investor said the news of the hires “is certainly welcome. So is the news that the options vest in a year’s time onwards – a lifetime by Quindell standards… What we’re buying in is credibility not just expertise or management and the new management additions are sticking their necks out to an extent.”