Call for staff places on pay body as BAE three in line for millions

As the furore over bankers’ bonuses rumbles on, it has emerged the top three executives at BAE, one of Britain’s biggest manufacturers, are set to cash in after the group was handed almost £200m in a tax rebate which will boost its earnings to share – the measure by which annual bonuses and long-term share awards are determined.

The pay package for the year to December for chief executive Ian King, US chief Linda Hudson and finance director Peter Lynas is not yet known, but any large bonuses are likely to infuriate the workforce after the company announced plans to axe 3,000 jobs across the country, including nearly 900 at its plant in Brough, near Hull.

The cuts were announced last September before BAE launched a review into its shipbuilding operations which is expected to lead to the closure of its Portsmouth dockyard, where it employs 1,500 staff.

Its closure could potentially land taxpayers with a bill for up to £600m because within a contract signed in 2009 the Ministry of Defence guaranteed BAE work for the next 15 years and is bound to shoulder the expense of any yard closures.

And the company was recently hit by the news that its Eurofighter consortium is likely to lose its battle with French rival Dassault for a lucrative contract to provide fighter aircraft to India.

Ian Gent, staff union convenor at the Brough site, said of the bonuses: “First of all that appears to be a reward for underperformance, and the second issue is the transparency of chief executives’ remuneration – there isn’t any.

“How about we invite the trade union to sit on the remuneration committee. They will tell you they are an independent group, but the committee’s salary is set by Mr King.

“Perhaps we can have a look and see what their performance has been from an employee’s point of view. I think a lot of them (workers) would say to Mr King, ‘Come to our site and stand in front of me and tell me why you are worth that when I’m not going to have a job’.”

Unite national officer Ian Waddell called on the executives to forego the bonuses.

He said: “Big bonuses will infuriate workers when thousands face redundancy. They will see big payouts as a reward for failure.

“It will be a major error of judgment if this sort of boardroom greed is allowed to go ahead while the company faces such challenging trading conditions.”

Hull Labour MP Diana Johnson also condemned the executive bonuses.

“BAE Systems’ management is asset-stripping a key strategic UK industry and exporting skilled jobs and the prospects for future UK earnings and growth that go with them,” she said.

“For doing this, they’re asking taxpayers to foot an £100m-plus redundancy bill. Meanwhile, BAE bosses are awarding themselves huge bonuses for keeping City speculators happy in the short term, at the price of running this industry down for the long term.”

The group is expected to report a 10 per fall in underlying earnings to £2bn in 2011 as defence spending in the UK and the US comes under pressure.

The company said: “Executive pay is performance related and aligned to the interests of shareholders.

“BAE Systems’ long-term incentive plan for senior executives covers a three-year period and includes a range of measures such as Total Shareholder Return as well as Earnings Per Share.”