Spirit boss Mike Tye, who joined the company in June as a replacement for Andrew Knight, is on a three-year incentive plan, the Punch annual report reveals. Tye, who earns a basic £400,000 a year, has a deal that provides "a direct alignment between the value growth of the Spirit business" and his remuneration to drive the performance of this business and its value to shareholders.
The Spirit Value Growth Plan (SVGP) is linked towards value growth of the Spirit business, as determined by an independent valuation, and valued as an operating company, whereby all the Spirit pubs are deemed to be leased from a separate entity. Payment from the Plan is 7.5% of the amount of value growth above a hurdle of 6% compound annual growth per annum.
Payments from the Plan are in non-pensionable cash, and are phased: 60% after the August 2011 year-end, and the remaining 40% after the August 2012 year end. Tye may be eligible for part of the award, pro-rata to the portion of the performance period that has expired and subject to the performance hurdle. If Spirit ses incremental value growth of £110m over three years, Tye earns £3.6m under the plan. If the growth is £65m, he earns nothing.