Row looms over Rover bosses' pay

13 April 2012

THE ROW over payments to the four men who bought MG Rover from German car group BMW for £10 four years ago is set to deepen after it emerged that the quartet is to earn more than £100,000 each from its leasing business.

The new money will come from the company they set up to run the group's car leasing operation and is in addition to the £1.75m each that they will earn when MG Rover‘s former finance arm is wound up next year.

Controversy surrounds the amount earned by the four businessmen, John Towers, Peter Beale, John Edwards and Nick Stephenson.

The four earned an average £350,000 in 2002 from Phoenix Venture Holdings, the company through which they run Rover. They also had extremely generous pension arrangements, something that has angered unions who say workers' pension rights have not prospered.

A report in the Financial Times, based on returns filed with Companies House, is likely to dent public sympathy for MG Rover, which enjoyed a sales boom after the buyout from BMW.

Sales of Rover cars have tailed off amid a dearth of new models and public disquiet at the extent to which the company‘s directors have profited from the business.

Details of the men‘s likely earnings are much higher than the £1m previously expected.

According to the returns filed with Companies House by MGR Capital, the leasing joint venture between the four men and HBOS, they received a 20% dividend on their £500,000 investment in preference shares. The figures contrast with the £97.5m operating loss recorded by the car maker.

The company has argued that taking over the leasing business was imperative because it would help protect used car values.

Car industry sources, meanwhile, say that the company‘s prospects hinge on the launch of its new CityRover, a bargain-priced entry-level model. The car, based on the Indian Tata Indica fills a gap in the product range since the Rover 100, originally branded as the Metro, was dropped in 1998.

MG Rover hopes to sell 35,000-45,000 CityRovers a year and bridge the gap before other new models can come on stream.

The CityRover is financially significant for MG Rover as it has not incurred vast development costs on the introduction and its launch will provide a key source of earnings, both for the company and its network of dealers across the UK.

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