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Carphone Warehouse managers to share multimillion-pound windfall Carphone Warehouse managers to share multimillion-pound windfall
(3 months later)
Carphone Warehouse managers are to share a £22m stock windfall after the unwinding of the retailer's alliance with America's Best Buy group.Carphone Warehouse managers are to share a £22m stock windfall after the unwinding of the retailer's alliance with America's Best Buy group.
Between 200 and 300 senior managers running Carphone stores in the UK and continental Europe will be given an estimated 9m free shares, resulting in average payouts of up to £110,000.Between 200 and 300 senior managers running Carphone stores in the UK and continental Europe will be given an estimated 9m free shares, resulting in average payouts of up to £110,000.
The scheme was set up in 2009 as a reward for staff involved in the joint venture between the mobile phone chain and Best Buy, which saw the US retailer take a 50% share in Carphone's UK and European operations. The bonus plan was due to run until 2015 but, according to the annual report published Tuesday, it will now pay out two years ahead of schedule.The scheme was set up in 2009 as a reward for staff involved in the joint venture between the mobile phone chain and Best Buy, which saw the US retailer take a 50% share in Carphone's UK and European operations. The bonus plan was due to run until 2015 but, according to the annual report published Tuesday, it will now pay out two years ahead of schedule.
It marks the end of an alliance conceived by the company's founder and chairman, Sir Charles Dunstone, which has brought mixed blessings for Carphone. An attempt to import the Best Buy format to the UK, with big out-of-town stores selling everything from kettles to computers, floundered.It marks the end of an alliance conceived by the company's founder and chairman, Sir Charles Dunstone, which has brought mixed blessings for Carphone. An attempt to import the Best Buy format to the UK, with big out-of-town stores selling everything from kettles to computers, floundered.
Launchedjust as the credit crunch hit consumer confidence, Best Buy UK ended in 2011 with the closure of 11 British stores and the loss of 1,100 jobs.Launchedjust as the credit crunch hit consumer confidence, Best Buy UK ended in 2011 with the closure of 11 British stores and the loss of 1,100 jobs.
In the US, however, the partners succeeded in opening 190 standalone mobile phone specialist outlets and franchises in 1,000 stores, and Best Buy paid £840m to take full control of the outlets on its home turf last year.In the US, however, the partners succeeded in opening 190 standalone mobile phone specialist outlets and franchises in 1,000 stores, and Best Buy paid £840m to take full control of the outlets on its home turf last year.
The performance was less stellar in Europe, where Carphone operates under its own name in the UK and Ireland and under the Phone House brand on the continent.The performance was less stellar in Europe, where Carphone operates under its own name in the UK and Ireland and under the Phone House brand on the continent.
Underlying earnings have risen from £101m to £137m, but the company has 100 fewer stores today than at the beginning of the joint venture. The recession has held back growth, and Carphone is now conducting an "orderly exit" from France, where it has 245 wholly owned stores and 72 franchises.Underlying earnings have risen from £101m to £137m, but the company has 100 fewer stores today than at the beginning of the joint venture. The recession has held back growth, and Carphone is now conducting an "orderly exit" from France, where it has 245 wholly owned stores and 72 franchises.
Dunstone, who still owns 28% of his company, cheered shareholders by netting a second major profit from Best Buy when their European partnership ended last month. He bought back Best Buy's half-share in Carphone's European shops for £471m, having sold the holding five years earlier for £1.1bn.Dunstone, who still owns 28% of his company, cheered shareholders by netting a second major profit from Best Buy when their European partnership ended last month. He bought back Best Buy's half-share in Carphone's European shops for £471m, having sold the holding five years earlier for £1.1bn.
During that time, Carphone has also demerged its broadband and TV business, TalkTalk, spinning it off as a separately listed company whose share price has risen sharply over the period. Carphone's executives collected their rewards for the deals last year, with outgoing chief executive Roger Taylor emerging as one of the City's best-paid bosses. He received an estimated £34m in cash and shares, profiting from schemes at both Carphone and TalkTalk.During that time, Carphone has also demerged its broadband and TV business, TalkTalk, spinning it off as a separately listed company whose share price has risen sharply over the period. Carphone's executives collected their rewards for the deals last year, with outgoing chief executive Roger Taylor emerging as one of the City's best-paid bosses. He received an estimated £34m in cash and shares, profiting from schemes at both Carphone and TalkTalk.
The share options handed out to senior managers this year cannot be sold until 2015. A total of 16.3m shares, worth over £40m at the current £2.49 share price, have been set aside for the scheme. However, it is likely only 9m shares will be disbursed, meaning managers will share a £22.4m payout.The share options handed out to senior managers this year cannot be sold until 2015. A total of 16.3m shares, worth over £40m at the current £2.49 share price, have been set aside for the scheme. However, it is likely only 9m shares will be disbursed, meaning managers will share a £22.4m payout.
A spokesman for Carphone said managers were being rewarded for creating a total of £3bn in shareholder value through the Best Buy deals and the increase in share prices at Carphone and TalkTalk.A spokesman for Carphone said managers were being rewarded for creating a total of £3bn in shareholder value through the Best Buy deals and the increase in share prices at Carphone and TalkTalk.
The scheme does not include staff employed by Virgin Mobile France, a joint venture between Carphone and Virgin Group, who have separate incentives.The scheme does not include staff employed by Virgin Mobile France, a joint venture between Carphone and Virgin Group, who have separate incentives.
Salaries for Carphone's top team were frozen last year, and have not risen since the demerger in March 2010. However, having waved his bonus last year, Taylor did collect the payment in the year to 31 March 2013. As a result, his total pay including pension and benefits rose from £474,000 to £958,000.Salaries for Carphone's top team were frozen last year, and have not risen since the demerger in March 2010. However, having waved his bonus last year, Taylor did collect the payment in the year to 31 March 2013. As a result, his total pay including pension and benefits rose from £474,000 to £958,000.
A new, long-term incentive scheme is currently being devised, and Taylor's successor ,Andrew Harrison, who currently runs the European retail business, will be one of the participants.A new, long-term incentive scheme is currently being devised, and Taylor's successor ,Andrew Harrison, who currently runs the European retail business, will be one of the participants.
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