Leighton sets a quick early Pace [updated] | FT Alphaville

Leighton sets a quick early Pace [updated]

The troubled TV set-top box maker has a new chairman.

It’s Allan Leighton, the former boss of Asda and non-executive chairman of the Post Office.

As we know, Leighton has an impressive track record as a manager — as well many other non executive commitments (Loblaw, Pandora, Selfridges, BSkyB and Peacocks) which makes one wonder how much time he will be able to devote to Pace.

Anyway,  the most interesting thing about his appointment is the incentivisation plan.

From a company press release:

As part of the terms on which he is to be appointed, Allan has agreed to purchase £200,000 of Pace shares. Pace has agreed to make a share award to match Allan’s own investment on a two for one basis, vesting after three years.

An additional award of over 600,000 shares has been made and will vest dependent upon share price performance over a four year period: 25% of this award will vest at 145p with full vesting at 190p.

Both awards are subject to the shares being retained until at least the fifth anniversary of appointment. Full details of these awards will be provided in due course in accordance with Listing Rule 9.4.2(2).

Yep, he’s being incentivised on share price performance and note that Leighton has already launched a strategic review to find the “great technology company” lurking inside Pace.

According to Vijay Anand at Espírito Santo Investment Bank there are a couple of possible outcomes of this review:

(a) Revisiting the medium-term targets (revenue growth: mid-single digit; operating margins of 8%),

(b) changes in senior management team

(c) Given Pace’s significant discount rating of 5.8x CY11 P/E, an outright sale is possible

Now a sale is possible but probably unlikely given the lack of viable bidders outside of private equity, which means we are probably looking at management change, particularly if Pace is forced to revise its margin targets.

Chief executive Neil Gaydon should be afraid.

Very afraid.

Update: 12:40pm
It’s been pointed out to us that Leighton will be leaving Loblaw at the end of June. That role had been taking up 80 per cent of him time. As such he will have plenty of time to focus on that strategic review, which promises to be wide ranging in its scope.

Related links:
Off the Pace – FT Alphaville