Firm asks shareholders to approve plan to retain senior staff with target-related share options.
Troubled support services group Jarvis has warned shareholders that it will have to offer its senior managers significant financial incentives to persuade them to stay with the company.
A document circulated to shareholders ahead of an extraordinary general meeting on Wednesday, and obtained by Building, described the loss of directors as “one of the key risks” facing the company.
The Jarvis board, headed by chairman Steven Norris, is hoping that shareholders will back a plan to give executives shares worth up to 200% of their salary. Under the scheme, a director earning £100,000, for example, would be eligible for £200,000 of share options.
The document said no more than 5% of the company’s total shares would be issued under the plan, and that it would be a one-off incentive.
The document notes that the 200% rule would not be applied to “one recent recruit”, where it was agreed that a larger number of share options would be awarded.
This is understood to refer to Richard Entwistle, who rejoined the company from Amey last month as chief operating officer 10 years after he left.
Awards in shares will be granted when unspecified share price targets are met, to incentivise senior management “to improve the company’s share price and rebuild the value of the company”.
The awards are likely to apply to up to 20 senior directors and managers. Chief executive Alan Lovell and finance director Alasdair Marnoch are unlikely to be included as they are both leaving the company early next year.
The company told shareholders: “One of the key risks for the group following the restructuring is that the loss of key employees could impact the financial performance of the business. An immediate priority is to tie in and incentivise senior management. Accordingly grants will only be made to executive directors and senior management.”
Jarvis said that because the incentive was a “one-off arrangement”, it was not considered to be part of the company’s annual performance-related bonus scheme.
So far this year, Jarvis has lost a string of executives, including former chief operating officer Andrew Lezala and finance director Alistair Rae.
Jarvis’ latest attempt at survival comes a month after it implemented a £378m debt-for-equity swap. Since then shares have risen above 80p, compared with about 5p before the restructuring.
Despite the fact that the company announced a £354m loss for 2004, it now has a market capitalisation of about £120m.
Jarvis has also recommended that shareholders vote in favour of changes to the company’s existing share schemes “to incentivise the employees who have remained loyal to the business and are essential to its continued recovery”.
On Wednesday Jarvis announced that the deal to sell its highways maintenance business to Accord had fallen through.
In a statement to the stock exchange, it said that it had failed to agree a price for the business.
Jarvis will complete its contractual obligations within the highways business.