Carillion chairman Sir Neville Simms could bag more than £3m if he can double the former Tarmac construction arm's share price over the next three years.

The company announced last week that 121 directors and senior managers had signed up to the management incentive scheme, called the "Founder's Equity Plan", which allows them to buy up to a year's salary-worth of Carillion shares.

City analysts welcomed the move but most felt that the management should have committed itself to the scheme at the time of the demerger from Tarmac, in the summer.

Under the deal, if Carillion's share price doubles from 138p within the next three years, managers will get four free shares for every one invested. Sir Neville has ploughed in his full salary of £340 000, for which he could collect £3.4m. Simms said the target to double the share price was "challenging for our industry".

Sir Neville's pay raised eyebrows in June when it emerged that he would receive a £1.37m one-off payment as compensation for giving up the chief executive role of the larger Tarmac materials business.

Carillion continues to be surrounded by bid speculation, with many analysts saying it is vulnerable to takeover.