BSkyB’s chief executive could be set for a bumper payday after piling the equivalent of a full year’s wage into a lucrative share plan.
Jeremy Darroch has agreed to buy £384,670 worth of shares at £6.41 a share, accounting for almost his entire after-tax salary of £426,240.
Sky will match his investment with £1.3m worth of stock at an equivalent per-share price, dependent on the company reaching a target level of growth in the three years to 30 June 2014, at which time the awards will vest.
At the stock’s current price Darroch would collect £1.7m. However, analysts expect Sky to rocket in the meantime, making the potential payday far bigger.
In three recent notes Deutsche Bank placed a target price on Sky of £9, Bank of America £9.40 and Citi £9.99.
If Sky reaches the top valuation, Darroch’s stock would be worth a cool £2.7m, including £600,000 from his personal investment and £2.1m from stock handed over by the company. This would then be subject to tax.
Darroch earned £2.68m last year, including a £1.7m bonus, and is taxed around 50 per cent of his salary.
Friends of Darroch said the investment was a vote of confidence in BSkyB’s share price, which has tumbled some 25 per cent since its biggest shareholder News Corp dropped its bid to buy the 60.9 per cent of BSkyB stock it didn’t already own following a public outcry over phone hacking.
Darroch has led the firm to a blistering run of results, taking the company’s subscribers through the 10m mark.
Chief financial officer Andrew Griffith also agreed to invest the equivalent of 75 per cent of his after-tax salary in the scheme.