Head of Hilton Group to earn £9m from deal - Tuesday 3rd of January 2006
DAVID MICHELS, the chief executive of Hilton Group, will pocket almost £9 million over the next three years after the sale of the company’s hotel division to Hilton Hotels Corporation (HHC) of America for £3.3 billion.
Mr Michels, who has worked in the hotel industry for 40 years, will quit Hilton Group once the deal goes through, but is being taken on by HHC under a three-year consultancy-style contract paying him £239,806 a month.
IF HHC ends the contract early, he will receive the entire amount of £8.633 million due over the three years, less the total that he has been paid already.
The money is on top of the estimated £4.8 million profit that he will make from cashing in the various Hilton share option and bonus plans. He also owns shares worth almost £1.3 million at yesterday’s 363½p close, down 5¼p.
Brian Wallace, Hilton’s finance director and deputy chief executive, is being taken on by HHC on a similar contract worth £6.34 million over three years.
The duo initially will work full-time to oversee the reunification of the two Hiltons, but are expected to move to part-time consultancy roles eventually. Although they will not be on the HHC board, their contracts prevent them from taking on anything other than non-executive roles with other companies.
Analysts expressed surprise at the nature of the contracts, particularly in respect of the 52-year-old Mr Wallace, who is highly regarded in the City and had been expected to seek a high-profile chief executive role. “I doubt very much whether Brian will last three years with HHC,� one analyst said.
Ian Carter, chief executive of its Hilton International division, will retain the same job under HHC. He will be paid a salary of $735,000 (£430,000) plus bonuses and a “retention cash award� of $8.4 million over three years.
The sale of Hilton International will see the company change its name to Ladbrokes, reflecting its focus on bookmaking and internet gambling. There had been speculation that the newly independent Ladbrokes might seek to acquire either Rank or a United States-focussed internet poker business.
However, Chris Bell, the Ladbrokes chief executive, is believed to have decided to pursue an organic expansion strategy. In the case of the US, he is expected to develop an online presence by using its existing Ladbrokespoker.com operation.
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